Finance commissioner details outages and rising cost of state payroll software system

With months to go before launch, the Maine financial agency conducted early 2020 testing of a state-of-the-art but expensive payroll program intended to replace a decades-old system that officials say state, was “held down with duct tape and paper clips”. .”

The test results did not inspire confidence.

More than 50% of payroll tests contained errors — a major red flag, given that this system was supposed to start handling paychecks and benefits for 13,000 state employees from April 1 this year. year. The subsequent decision to delay the launch a second time was a turning point that ultimately led to the state’s decision to cancel the contract and seek $22 million from Workday Inc.

“Any attempt to launch the product in its current state would have been a catastrophic failure,” Kirsten Figueroa, Maine Department of Administrative and Financial Services Commissioner, wrote to Workday executives in May 2020. “There is a shared responsibility for these problems. for Workday and State of Maine project personnel. However, Workday project staff showed no responsibility for their part in this flawed process.

Figueroa’s letter was among dozens of documents shared Friday with members of a legislative committee planning to launch a formal investigation into an information technology upgrade that cost the state more than $34 million. to date and is years behind schedule.

In lengthy testimony before the Government Oversight Committee, Figueroa estimated that the total cost of the project would likely reach $55.4 million by the end of fiscal year 2023. But the commissioner said that massive figure represents less than half of what some large entities pay for a fully integrated human. resource management system with less functionality and less complexity.

And Figueroa sought to assure lawmakers that the eventual system will be “a superior product that improves accuracy, performance and decision-making and is not held together with tape and paper clips.”

“Workday Maine suffered its fair share of bumps, sharp corners and breakdowns,” Figueroa said. “There will definitely be more. But there was no fraud, waste and abuse of funds. Throughout, DAFS has been – and will continue to be – good guardians of the interests of the state.

Lawmakers expressed frustration at not having received the dozens of documents — including contracts, change orders, emails and other correspondence between state and Workday officials — before Friday’s hearing. . The department made the documents available for download Thursday morning, but the large files were too large to email, so most committee members hadn’t seen them before Friday’s meeting began. at 9 o’clock.

“I think DAFS should have sent them to us two or three days ago since they knew this was coming,” said Sen. Jeffrey Timberlake, R-Turner. “That’s a lot of information and we should have had it.”

The committee plans to interview Figueroa and other DAFS staff again on April 23 and expressed an interest in hearing Workday’s views on the sequence of events in mid-May last year.

The Government Oversight Committee is debating whether to order the Legislative Assembly’s independent oversight agency, the Office of Program Evaluation and Government Accountability, to launch a formal investigation into the efforts nearly ten years from Maine to implement a new human resource management system.

This process officially began in 2012 under former Governor Paul LePage, although there were discussions of the need for a new system years earlier.

Maine’s current paper-based payroll software system is over 30 years old and is written in a computer language – COBOL – so antiquated that only two state employees even know how to program it. One of those recently retired, Figueroa said, and the second is close. The state also has separate human resource software systems to handle non-payroll issues.

In 2016, the LePage administration hired software company Infor to build the system with an initial budget of $24 million. But two years and $13.5 million later, the state terminated the contract with Infor for “lack of delivery” and entered into a contract with Workday, aiming to launch the system in January 2020.

Based in the San Francisco Bay Area, Workday provides cloud-based financial and human resources services to businesses and governments around the world. Workday’s revenue of $4.3 billion in the prior fiscal year roughly matches the Maine state government’s current annual budget.

DAFS officials testified Friday that Workday was “one of the top two vendors in the country” and that they were selected based on the company’s track record and because it offered the suite of features that Maine was looking for. The LePage administration then entered into two contracts with the company: one with Workday Inc., to develop the human resources management system and a second with Workday Professional Services to manage the integration and implementation of the system.

But within a few months, Workday notified DAFS that it would not be able to deliver a large part of the contract: a “labour cost allocation” feature allowing for an allocation of employee time and benefits, which is useful for claiming reimbursement from the federal government. government. Instead, the company offered a workaround.

In November 2019, the state and Workday Professional Services agreed to push back the go-live date from January 1, 2020 to April 1, 2020. But after payroll system testing yielded an error rate of more by 50% in early 2020, the state again pushed back the launch date despite assurances from Workday Professional Services that April 1 was still realistic.

Relations seemed to deteriorate further afterwards.

In May 2020, Workday Professional Services briefly removed its staff from work amid growing disagreements with state officials. Figueroa suggested in the May 2020 letter that the work stoppage showed a lack of commitment and willingness to work with the state before adding: “This is not the partnership we need and we expect from Workday.

The state and Workday Professional Services then engaged in a months-long and still unresolved attempt to agree on a new “change order” setting out the company’s obligations. Then, in February of this year, the employees of Workday Professional Services again walked off the job.

Workday officials said Friday they remain committed to the contract.

“We have done our part to try to make this deployment a success,” a Workday spokesperson said in a statement. “We didn’t quit work – we took a break so the state could meet certain requirements necessary for success and we didn’t want to spend state resources in the meantime. The state has no reason to terminate our contract for services for cause. We are currently in contact with our state contacts to try to find a way forward.

A day before the work stoppage, a Workday official shared a number of concerns he had about the relationship between the two parties.

“I am increasingly concerned about the progress and status of the Workday deployment project, the lack of visibility on what the State of Maine is thinking of doing moving forward, and the relationship between Workday and the State of Maine,” said Workday Senior. Vice President Christopher Curtis wrote in the email to DAFS officials.

After a 30-day warning to “correct all defects”, DAFS began the process of terminating its contract with Workday Professional Services on March 26. Maine’s attorney general’s office is negotiating the terms of the termination, though Workday officials said in a statement last month that the state had no reason to terminate the contract and the company had still stood committed to completing the project.

The state is set to terminate only the professional services contract, not Workday’s development of the human resource management system. But the state is also seeking reimbursement of $22.2 million from Workday.

Some members of the Government Oversight Committee said on Friday they wanted more information about the 2018 decision to partner with Workday and the events that led to the relationship ending – and potential cancellation. of the implementation contract – between the State and the company.

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