Dispute halts $60m IT project in Oregon

Dispute halts $60m IT project in Oregon


Oregon has halted a $60 million retirement system project after costs more than doubled and an administrative review found an unacceptable risk of failure. State officials disagree on whether the project is well-planned and managed.

Jim Hill, chairman of the Oregon House Ways and Means Subcommittee on Electronic Government, pledged to block further funding for the Oregon Pension Administration System after holding hearings on the project. The House General Government Budget Review Committee began its own OPAS hearings April 23.

Dawn Phillips, a spokeswoman for Hill, said the OPAS project had spun out of control because the retirement agency has 'added bells and whistles' that needlessly increased cost.

Oregon's Public Employee Retirement System, a state agency with an 11-member board of directors, has been working on OPAS since 1997, board chairman Emile Holeman said.

Other state pension agencies have expressed interest in the preparatory work on OPAS that the retirement board has carried out with contractor Covansys of Farmington Hills, Mich.

A technical manager for the pension agency defended the plan to build OPAS and countered specific charges of problems with the project.

But the Administrative Services Department's IRM Division recommended April 10 that work should stop on the system. Oregon chief information officer Ann Terry, in a letter to the retirement agency, called for the design of a new system to automate pension administration 'at an affordable cost and with acceptable risk.'

Design defended

Terry's letter followed a review of OPAS by the division's Strategic Planning and Review Section that led to the recommendation that OPAS undergo redesign.

Ed Johnson, administrator for information systems at the retirement agency, defended the design and management of the system. He said he was not aware of any of the factors that had led Terry to recommend suspension of the project, such as the charge that OPAS has unnecessary features.

Sandra Herring, manager of strategic planning for the Administrative Services Department, said OPAS' costs had been estimated at about $30 million when the project began. Since then, cost estimates have increased to between $60 million and $100 million, she said.

Johnson said that based on firm cost estimates, his agency expects OPAS will cost between $58.6 million and $64.5 million. 'As far as the $100 million figure is concerned, we don't have any insight into how [the department] developed that number. Our estimates don't go anywhere near that number,' he said.

In her letter to the retirement agency's executive director, Jim Voytko, Terry said two insurmountable issues prevent OPAS' continued development: The project can't be divided into scalable modules, and the agency's staffing levels 'are inadequate to manage the project.'

She added that the retirement board should develop a proposal for a new system that includes scalable modules, adequate staffing, independent quality assurance and a clear accountability structure.

But Johnson rejected the charge that his agency lacked project management resources or a plan for recruiting IT staff.

He described a plan under which OPAS contractors initially would provide IT consultants, who would progressively be replaced by state employees as the project matured.

'Rep. Hill is very concerned,' Phillips said. 'We had a similar problem with a Motor Vehicles Department project a few years ago and don't want to go there again.'

Open design

The agency designed OPAS as a Web-ready system using Java, with Unix and Microsoft Windows NT as the operating systems, Johnson said.

'The open design of the system would avoid our being locked in to any one vendor,' he said. 'Vendors tend to leap-frog each other's technology.'

OPAS would be highly portable, Johnson added, saying that it could run on the state's mainframe or on smaller servers.

The design is modular, he said. The OPAS project design called for an incremental approach that was iterative because parts of the system would be built separately and progressively added to the whole, Johnson said.


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