Meet the Consulting Firm That's Screwing Up With Your Tax Money, and Keeps Getting More
Since 2011, multinational consulting giant Deloitte had been developing California's online unemployment application and benefits system. This system "rolled out" over Labor Day weekend. Large parts of the web-based system do not work, and as many as 120,000 Californians are still waiting for their benefits. Legislators and much of California's news media continue to cover up the multi-year, multi-million disaster created by Deloitte and California Employment Development Department administrators.
California-based programmers report that the Deloitte California EDD system was known to be troubled from the start, yet EDD administrators continued to approve new stages of the project. The EDD launched the new system over Labor Day weekend while being fully aware of the problems. The minimal investigative journalism that has been done has uncovered documents showing repeated product failures during the time the program was being tested. Individual unemployment recipients who are aware of the problem and have documentation from project insiders indicating why the website doesn't work have been told by their state elected representatives to "keep quiet."
The failed system reportedly cost the state of California $69 million, and it's not the first time this has happened. In 2003, Deloitte received a $33 million contract to develop a case-management IT program linking the California state courts system. After seven years, Deloitte's system was still not operational and the state had spent $310 million.
How does a company like Deloitte continue to charge hundreds of millions of dollars for a product that doesn't work? Deloitte is proudly on top of the government IT contracting list for 2013. It is also top in its category of lobbying expenditures, according to Open Secrets.
Deloitte is also not alone in its failures. Other companies producing expensive, failed systems include Accenture, IBM, and Integrated Data Systems (the credit processing company). The website for Covered California, the Affordable Care Act-mandated health insurance exchange, is not operating as I type this article.
Dublin, Ireland-based Accenture, not Deloitte, is responsible for the Covered California failures, which are similar to those of the state's unemployment benefits website. The online system is called the California Healthcare Eligibility, Enrollment, and Retention System (CalHEERS) and the $359 million contract to develop it was awarded to Accenture in November, 2012. Accenture's bland name and Dublin headquarters conceal the fact that the company is the surviving corporate entity of Arthur Andersen, LLP, a history that would reduce most people's trust in the company's performance. Arthur Andersen once employed nearly 90,000 people worldwide, but surrendered its CPA license and dissolved after being convicted of criminal accounting fraud related to the 2001 Enron energy scandal.
Why are these programming failures so pervasive? Programming insiders say that the major multinational companies outsource the code for these complex programs to a vast network of coders in India and Southeast Asia. Budgets for the actual work are often set per line of code, with the only criteria being "as cheap as possible." As programmers seldom understand the overall task they are performing and are working quickly to make money per line of code, errors persist and proliferate, leading to the ultimate failures when programs go live.
The losers in these projects aren't the companies that make millions of tax dollars for shoddy, late work, nor are they government executives who pay premium rates only to receive substandard work performed by foreign workers. The losers are those who depend on the technology working: unemployed people and those seeking health care benefits.
No business would accept such poor performance for such a high price tag, and it would never issue a new contract under similar circumstances. What will it take before people realize that our government is like Joe Cross? Fat, sick and nearly dead, but sadly, not fixable with a 60-day green juice fast.