Report 94107 Summary - April 1994
The Department of Motor Vehicles and the Office of Information Technology did not Minimize the State's Financial Risk in the Database Redevelopment Project
Over the years, the Department of Motor Vehicles (DMV) has developed very large and complex databases to support its activities. More than a million transactions are processed by the DMV database system every day. The current databases and their application software programs were developed in the 1960s. Thus, the basic technology of the databases is 30 years old, and it has become increasingly difficult to maintain these old systems. As a result, the DMV determined that it was necessary to modernize their databases.
The Database Redevelopment (DBR) project was initiated in 1987 to redesign the DMV's systems and databases to meet all existing requirements and functions, structure the system to be more responsive to future changes, and improve the efficiency of electronic data processing services. The DBR project was intended to provide a variety of improvements to the system that would allow the DMV to improve service levels and move into the future. In addition to addressing technical concerns, the DMV intended the DBR to address certain strategic objectives. These objectives were prompted by legislative mandates and proposals that would require the DMV to cross-match information in their various databases, a capability it did not have at that time.
Results in Brief
During our comprehensive audit of the DMV's DBR project, we found that the DMV continued its effort to fully implement the project despite significant unresolved problems and deficiencies, which led to the ultimate failure of the project in 1994. Further, our audit revealed that the Office of Information Technology (OIT), the State's information technology oversight body, continued to recommend additional funding for the project despite the fact that the DMV had not followed approved policies to minimize financial risk to the State. Additionally, we found that the DMV's actual and obligated costs were $5.1 million higher for the project than originally reported to the Legislature and the Department of Finance, and that the DMV violated numerous contracting laws and regulations, including falsifying a purchase order for approximately $46,000. Specifically, we noted the following:
- The DMV progressed beyond the developmental stages of the DBR-the operational assessment and the working model-even though it had failed to accomplish the objectives of each stage and had not resolved significant technical problems encountered during the development process. In its unsuccessful attempt to implement the DBR, the DMV spent an additional $34.6 million. Rather than complete each stage as planned, the DMV substantially modified the stages or failed to complete them altogether.
- Initially, the DMV established a meaningful set of development objectives for an operational assessment and working model of the project. Each of these objectives was supposed to be accomplished before proceeding with the project and incurring additional expenses. However, the DMV continued to develop the system and incur expenses without first solving technical and performance problems that arose.
- The OIT continued to recommend additional funding for the DBR project, thus allowing the DMV to attempt to put the DBR project into operation, even though it knew the DMV had not successfully developed a working model of the project as the OIT had previously required before the DMV could proceed with the project.
- The DMV did not use a formal costreporting system to monitor expenditures related to the DBR project. The DMV's actual and obligated costs for the project were at least $49.4 million, which is $5.1 million more than the $44.3 million in project costs that the DMV originally reported to the Legislature and the Department of Finance.
- The DMV falsified a software purchase order for approximately $46,000 to pay for consulting services that Tandem Computers, Inc. had provided through the use of subcontractors. Approximately $28,000 was for services provided before the DMV awarded Tandem a contract, and approximately $18,000 was for services that Tandem provided during the contract period, but for which sufficient funds did not exist under the contract to pay for the services. Although the DMV paid an invoice which indicated the software was received, no software products were ever delivered.
- The DMV did not always adequately justify its use of sole-source consulting contracts for the DBR project. Specifically, of the four sole-source consulting contracts into which the DMV entered for the DBR project, the DMV did not adequately justify three, entered into from November 1987 to July 1990 and totaling $2.8 million. Additionally, the Department of General Services (DGS) approved the contracts even though the DMV had not provided adequate justification.
- From November 1987 to November 1991, the DMV allowed contractors to begin work before the DGS approved the contracts or contract amendments. In addition, the DMV significantly modified one contract without obtaining DGS' approval.
These problems occurred because the project's management desired to keep the project on schedule, incorrectly believed that the technical problems could be resolved, and incorrectly asserted that critical developmental objectives had been achieved. In addition, the situation was allowed to continue because the DMV management failed to establish an effective quality assurance process that would provide an independent assessment of progress and because management did not satisfactorily react when they were ultimately informed by the project's management team that problems existed.
Furthermore, the OIT did not exercise its authority to insist that the DMV accomplish the working model before recommending continued funding.