State Auditor Blasts Management of Hawaii Tax Department IT Projects
The leadership of Hawaii’s Tax Department took a shot Wednesday from the state auditor for their “poor leadership” on a critical IT project.
Marion Higa released an audit of the department’s controversial $25-million dollar contract with Montreal-based information technology company CGI Technologies and Solutions Inc.
Since 1999, the state has spent $87.5 million on contracts with CGI, which took a lead role in developing computer systems for the tax department. Most recently, the company received $25 million to collect delinquent taxes from 2008 to 2011. CGI receives a third of the delinquent taxes collected using its system, up to a cap of $25 million, which has already been hit.
The auditor’s report charges that “a lack of planning and fractured management have undermined the state’s tax collection efforts.” It also states that weak management of the department’s IT projects “led to a contract that is not in the best interest of the state.” It includes strong language that places blame on the Tax Department for “poor leadership,” a “dysfunctional work environment,” “internal management strife,” and “minimal project management and training.”
The [pdf] was called for by the Legislature, which asked Higa to look at the Tax Department’s procurement of IT systems/projects, how it manages its contracts with CGI and its strategic planning efforts.
The audit went on to say that “the department’s performance as the tax collection arm of the state has been hampered by its inability to effectively manage its IT systems contracts … As a result of this dysfunction, the tax department may not meet the June 2011 deadline to transition away from the IT contractor.”
The report found that a 2009 contract modification increased CGI’s compensation by millions of dollars before it completed services required by a 2008 agreement.
It also noted internal conflicts among Tax Department employees over how much business CGI was receiving: “CGI was given more IT system-related business, while tax department IT staff expressed concern that upgrades that could be done more cheaply internally were being outsourced. Disagreements over how work was apportioned between CGI and state employees also resulted in a complaint filed against the department by the Hawaii Government Employees Association on behalf of department workers who believed civil service jobs were being wrongly taken by CGI employees.”
Higa made several recommendations for the Tax Department, including moving away from reliance on outside vendors, increasing its in-house IT staff, and setting long-term goals to help it function effectively and independently.
“The success of its tax collection functions is of critical importance to the well-being of Hawaii鈥檚 residents. However, a lack of planning and insufficient resources to support a growing IT infrastructure threaten to cripple these important systems. To meet these and other challenges, the department must first wean itself from a vendor which it has grown dependent on for essential services. Secondly, as it prepares for a new administration and new leadership, it must overcome the internal strife that resulted from its vendor relationship. Finally, and most importantly, (the department) must begin an IT strategic planning process that establishes long-term goals and strategies and enables the department to operate effectively, efficiently, and independently.
As with all state audits, a response from Tax Department is included in the report.
Interim Tax Director Frederick Pablo said the department has “initiated corrective actions,” including increasing staffing of its IT office, as well as training an additional 10 system administrators. He also said the department is looking for project management training opportunities locally. The full response can be found at the end of the .
