State of Colorado’s $58 million computer upgrade ‘a train wreck’

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DENVER - "A disaster in the making." That's just one way Secretary of State Scott Gessler describes Colorado's new $58 million computerized accounting system.

The computer endeavor is called CORE (Colorado Operations and Resource Engine). State agencies have been told to start using it Tuesday, July 1.

However, internal documents obtained by FOX31 Denver show the system isn't even close to ready and won't work as planned.

If you receive any state benefits, pay fees or taxes, or are a vendor who does business with Colorado, this does affect you.

It'd be tough to find an accountant for any state agency who would describe the current financial tracking system as modern. We've been told it's old and slow and long overdue for retirement.

So, about three years ago, the Governor`s Office of Information Technology (or OIT) and the Department of Personnel and Administration hired the biggest private computer companies around to fix it.

CGI CentrylinkCenturyLink and CGI led the way.

CGI is the same tech company largely blamed for the website debacle.

Internal records from the Governor's OIT division show CORE's status as of May’s report was coded "red." Red is the worst rating possible, defined as “behind schedule, with no approved recovery plan(s).”

The status report shows CORE was only 65 percent completed.

IT Engineers sum up the problems with the term “excessive project crashing.”

June’s status report was officially unavailable, but unofficial internal records we reviewed indicate the project might be as much as 71 percent completed. That’s still a long way from done.

System to launch no matter its status

According to Gessler, despite the project’s many flaws and technical problems, he has been told the system will get launched on time no matter its status.

“They're going to flip it on. It's not going to work very well. People aren't going to be able to use it.” Gessler said. “It’s not fully tested. We warned the governor, saying there are some real problems.”

Gessler sent a letter to Gov. John Hickenlooper on May 6 asking that he delay launching CORE until the major glitches are repaired.

GesslerWe reviewed a copy of the letter which calls the computer project “a disaster in the making” and warned “this current path to failure is a train wreck about to happen.”

Gessler, a Republican who ran in the state's primary to challenge Hickenlooper for the governor's seat but lost, said the response to the letter was underwhelming.

“Don't bother us," Gessler said. "No data (provided). No facts that give us any comfort. In fact, some of the reports they concealed, they hid, they kept from us so we wouldn't see those reports because ultimately they didn't look very good.”

We spoke with a number of IT managers, private contractors and government employees familiar with the CORE project. As a group, they agreed with Gessler, saying it would be best to delay the launch.

Concerns include security flaws

Their list of concerns included security flaws which could expose personal taxpayer information and sensitive state financial data and invoicing information.

One IT manager, intimately familiar with Colorado's accounting system overhaul agreed to speak with us on camera about the CORE project (and other trouble-plagued multimillion computer upgrades).

He asked we withhold his identity because he believes speaking out will negatively affect his career.

InsiderThe following is a portion of a conversation taped earlier this month:
Source: Very little of what this project was scheduled to do, promised to do, or the scope that was supposed to deliver is being met. It’s in serious danger of failing and it has been for the last two years.
FOX31 Denver: This report says its only 65 percent done. Is it going to work?
Source: In my opinion – not a chance.
FOX31 Denver: You believe they are going over budget?
Source: I believe they are over budget right now. I don’t believe they are honest about their reporting of their budget, but I believe they are over budget now and they will continue to be over budget.
FOX31 Denver: Since they came aboard, how has CGI been doing?
Source: Horribly. Epic failure is the term associated with CGI’s performance. What’s more alarming to me is that after failures in things like Obamacare, who CGI was the major vendor for, there was no internal audit by the state of their ability to continue to perform on this project.

According to the insider, top OIT managers try to keep failing projects secret because too often the cost-overruns, delays and programming mistakes are directly connected to "cozy" contracts.

He said, “Hundreds of millions of dollars are being channeled to companies where spouses, friends and family work. Jobs [are] being offered to people from these companies to promote themselves within the state.”

When asked if an audit would find misappropriation of funds, the IT specialist answered, “Absolutely. In the tens of millions of dollars.”

KristenWe've reported in the past on how former OIT Chief Kristin Russell`s husband manages CenturyLink’s Denver office. OIT granted his division at least $43 million in "no-bid" contract amendments for computer projects (including CORE) while Russell was in charge.

STORY: High ranking state executive accused of steering taxpayer money to husband's business

Ethics aside, the insider said there are more serious dangers to turning on a half-finished computer system that will track $20 billion of state tax money in one central databank.

“The new systems did not deliver the security they’re supposed to," the source said. "Some of these things are poised for a failure in a way that is far beyond any other political scandals.”

“It exposes that information in a way that provides sensitive data to unfriendly individuals, both foreign and domestic. We should be concerned about that,” he added.

Launching on time is important

The Colorado Department of Personnel and Administration is overseeing the project along with OIT. A spokesperson there sent us a letter saying that launching on time was important because the state’s fiscal year begins July 1.

“Delaying the CORE implementation would extend the time period in which the State risks a catastrophic failure of COFRS" (the old accounting system), the letter said.

"If we delay the roll out of CORE and COFRS were to fail, it would mean having no way to record the state’s $29 billion in expenditure transactions, no way to pay vendors, no way to record payroll, no way to support collection of grant revenues of about $9 billion, no way to apply $8 billion of tax revenues to expenditures -- to name just a few of the catastrophic repercussions. We have already experienced failures of the period 12 and 13 closes in 2012, and simply cannot afford to unnecessarily risk a failure of the State’s financial system," the letter said.

By July 7, the old financial accounting system is scheduled to be turned off for good. Insiders say that is when citizens might start noticing issues.



      • Tommy Michaels

        How is this not related to the current administration? This all began 3 years ago so how does this have anything to do with Bill Owens? You sounds like an Obama lover who blames everything on the republicans. Doesn’t anybody take responsibility for their own BS anymore? And its people like you who encourage it. Ugh – no wonder America is sinking fast.

  • Sharkymike

    They should just use quickbooks. $200 a user. 1000 accounting people working for the government, = $200,000. I bet I have a 20% off coupon somewhere I would be happy to let them use.

    Millions of people use it, why can’t the state? It’s accounting software, not a nasa mars mission.

    • Mickey_NYC

      Sorry, Quickbooks can’t handle enterprise wide accounting systems that integrate with hundreds of offices throughout the state. You really think QuickBooks can handle payroll, travel reimbursement, the DMV system, tax collection, tax refunds, unemployment, EBT, the list goes on.

      Yes, this new system is a nightmare, but even in it’s present state it’s better than the antiquated system they currently use. The problem is they went with the lowest bidder. Ive been on similar projects where they go with a good contractor, and it works well. When they go with the lowest bidder, this always happens. The cheap comes out expensive. I am so glad I am not working on this project.

      • verkan (@verkan)

        “The problem is they went with the lowest bidder.”
        The problem is, they went with a no-bid “upgrade”. It’s not an upgrade. It’s an ERP system. There is a state agency using a different ERP system that works well. It would have been MUCH cheaper to copy and modify that implementation over to the other agencies.

  • Duke Paulsen

    “Barnes Dave” makes a good point. If this “project” were started under a GOP Guv, yep, we’d NEVER hear the end of this debacle. Tip the Stetson to KDVR for at least digging deep enough to give the rest of us WARNING to see “what’s coming down the track.”

    • Duke Paulsen

      Update: Just got my vehicle tags renewed during my Lunch. Perhaps I just “got under the wire” before the new system fully “kicks-in.” But what of NEXT YEAR????”

    • Mary

      Sorry Duke – but the local press seems to love to play “cover up” for WHOEVER is in charge.

      As a retired IT person, I recall the fiasco that cost a child his life several years ago – because of problems with the state’s Medicaid software – which was contracted out UNDER OWENS FIRST ADMINISTRATION (and was way behind schedule, didn’t appropriately link to other databases, etc).

  • Vincent Wolf

    The states always fail at computerization. All government does. They are usually decades behind the times and that’s because they refuse to hire companies like HP, IBM to do the job entirely under contract in which they manage it. Letting the state manage it and it’s a lost cause immediately and forever.

    • Mary

      Once upon a time, states and companies (and even the Feds – did you know that IRS is OFFSHORED) used to have their own IT departments. The natural advantage was that those IT departments had people who were familiar with the specific requirements for the state/company.

      IBM, Oracle (formerly Sun), HP et al convinced companies and states they could save on their IT bills if they’d outsource and for time that worked (when the IT company won a bid, it would often hire IT workers from the state/company) – HOWEVER, ever since the IT companies started offshoring, it has gotten progressively worse for underbidding (and few organizations in either the public sector or the private sector have the sense to “cap” a bid for overages – either in time or money), not to mention laying off the experienced US workers who generally had at least a year of experience for every month of experience the offshore workers have. It doesn’t help that the culture of many of the offshore countries (most notably India) precludes asking questions or even looking for potential problems in a design – so you end up with problems like this. Sadly, one has to know one is inside a box to think outside it – and the Indians will regularly REPEAT the same steps over and over and over and over – with precisely the same results – and finally, DAYS into a problem, the one person in the US who is the customer contact will scream to get someone qualified to resolve the issue – which is why a former 4 hour return to service (excluding waiting for any hardware) is a MINIMUM of a 24 hour return to service. In short, we are talking about paying for what you get – if it looks like a really low price, you can bet it won’t turn out that way (I’ve worked with customers whose projects were more than 2 years behind – and who had so much invested that they were scared STUPID to scrap the projects!

    • Anonymous

      If you read the article, you would have noticed the state hired one of those firms to do the job “entirely under contract”. it appears they were less than successful

  • Anonymous

    close enough for government work !
    CGI= completely incompetent
    Century Link= on permanent delay
    Nice choices for vendors !
    now- who exactly is going to jail for this….? ….yeah, I thought so.


    From 2000 to 2005 I had to use a circuitous route to post transactions to COFRS because I could not add new account numbers – COFRS was overloaded and system failure was a concern of the auditors. When I retired, that was still the case. Everyone knew we needed a new system, but the governor and legislature simply could not or would not fund it. In fact, some of my private industry peers had said by the time COFRS was brought into service (1991 or 1992), it was already several years behind the “rest of the world.”

  • Just another Sunday night

    They need to check out some local providers of I.T. consulting. There are a few big ones in town that would make this company look like a bunch of uneducated fools.

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