March 01, 2010
Comptroller Maragos Recommends Cancellation of Flawed $82 Million Technology Contract
Nassau County Comptroller George Maragos recommended County Executive Edward Mangano cancel an $82.7 million technology upgrade contract previously awarded by the Suozzi Administration. The technology upgrade was intended to consolidate the County financial, payroll, inventory, purchasing, and benefits administration into one state-of-the-art system solution.
The contract, still at its early stages, is fundamentally flawed without detailed design specifications, clear deliverables, milestones and performance responsibilities. The $82.7 million price is made up of $21.7 million in capital costs and $61.6 million in operating costs over 15 years.
After performing a management review of the contract, the Comptroller found missing prudent contract terms and determined that significant risks exist which can result in costly project overruns and delays. Additionally, the purported savings and benefits used to justify the contract expense were found to be unsubstantiated and unrealistically high.
"We found that the contract with the implementation vendor is without clear milestones, deliverables, and responsibilities. The detailed system design and functional specifications, needed in all new technological systems, were not done prior to the commencement of the project and do not yet exist,” Comptroller Maragos said.
Comptroller Maragos went on to explain that “this is like attempting to construct a multi-story building without detailed blueprints or a single person clearly responsible to complete the construction. This formula guarantees that you will not get the result you expect.”
Comptroller Maragos added that, “this is in no way a reflection on the implementation vendor but rather the manner in which the contract was structured by the prior County Administration and the apparent lack of expertise in technology systems.”
Comptroller Maragos recommended the County Executive cancel the contract by giving the implementation vendor the requisite 30-day notice which will stop the County’s obligation for monthly payments and give the County the flexibility to re-evaluate other solutions and even renegotiate with the existing vendor.
"The County needs this upgrade in its technology and the project is essential,” Comptroller Maragos said. “The new system, however, must be well designed and properly contracted and managed. In doing so, any new system can be implemented earlier, and at a significantly lower cost over the existing contract,” concluded Comptroller Maragos.