Workers expect their defined contribution plans to play a greater role in their retirement income than annuities.
Oct. 27--Employment Development Department officials are trying to explain how a new computer system essentially blew up in their faces, leaving hundreds of thousands of Californians without much-needed benefit checks for weeks.
There are always problems with new computer systems and software upgrades. Always. Buried in the millions of lines of code written for such systems are thousands of chances to make a mistake, essentially typos.
That's why the roll-out of most new software programs includes a beta testing period, a time when the software is released but users are warned they'll probably encounter glitches. During that testing period the bulk of the glitches are detected and fixed.
The big roll-out
On Labor Day weekend, the EDD rolled out its new software to handle unemployment insurance claims. Immediately there were problems. Some 80,000 claims were stalled, the EDD said. State workers labored around the clock to hand-process the claims, the agency said. Internal emails tell a different story. Some 300,000 claims were affected.
This system was developed by the New York firm Deloitte Consulting, one of the state's biggest contractors but also a firm with a history of delivering projects over budget and with problems.
In 2003, the state estimated it would cost $58 million to upgrade its 30-year-old unemployment benefits system. By 2010, when Deloitte got the contract, the price had jumped by $30 million. Now the state has spent $110 million.
And it's not just in California. Deloitte's upgrades to unemployment software in Massachusetts, Pennsylvania and Florida have been problematic, too.
Why do we keep going back to the same company?
Deloitte LLP is one of the nation's big four accounting firms. It has evolved into a major player in management and information technology consulting, providing tech services to, among other government agencies, the IRS.
But it also was one of the big contractors deploying the Affordable Care Act, the roll-out of which has been a software disaster.
So why does the state keep going back to Deloitte? Follow the money.
In the past two years, according to the Los Angeles Times, Deloitte has spent more on lobbying California lawmakers that any competing firm it its field. And it's paid off. Over the past decade the firm has done more than $540 million in tech work for the state.
It's time to demand that Deloitte perform, but it's also time to demand that state officials working with firms like Deloitte do their jobs. Why, for example, did the state enter into a contract for the EDD software years ago but only on Aug. 30 sign a contract amendment awarding the company another $3.5 million for five months of maintenance and operations costs? Why wasn't maintenance and operations part of the original contract negotiations when, presumably, the state had a stronger bargaining position?
Deloitte isn't answering many questions these days, but likely will have a chance. Legislative hearings are planned in Massachusetts this week and in the weeks ahead in California.
Deloitte welcomes the "opportunity to have a dialogue with legislators about the launch of this new system," company spokeswoman Courtney Flaherty said in an email to the Times. She also said the California EDD software is working.
If you ask the thousands of desperate Californians who waited weeks to get their unemployment benefits checks, they'd likely disagree.
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