Deloitte State Contracts Repeatedly Over Time, Budget: Report


As part of a series of contract disappointments, Deloitte Consulting's latest flop has taken it out of the government contract game in Massachusetts, which Monday said it has fired the company after investing more than $54 million on a contract with the IT consulting firm.

The of New York-based consulting company has had public contracts in 45 states with many helping to develop solutions to modernize government systems. However, it also has a track record of going over budget and over time, the Boston Globe reports.

In the latest installment, Massachusetts contracted Deloitte to develop a new tax return computer system for the state for $114 million. However, the state was forced to fire the consulting company after already investing $54 million in the project allegedly due to substandard work, the Globe reported.

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"The decision to halt this project and sever our relationship with Deloitte was not an easy one and something we all took very seriously. But ultimately, we had an obligation to protect taxpayer dollars and to ensure that the program we set out to create was one we knew would deliver for the state," Department of Revenue Commissioner Amy Pitter said in a statement to CRN.

Pitter said that there were regular delays with the project, as can be expected with a contract of this size, but Deloitte failed to deliver after 37 weeks of testing revealed more than 1,000 defects in the system. The issues were around failures to calculate penalties and interest, notice printing and registration of taxpayers into the system.

"Once we became convinced we were going to fall far short of our goals to replace our now obsolete technology with a new system that would improve reporting and business intelligence capabilities and achieve better customer service, particularly online and self-service, we severed our relationship with Deloitte," Pitter said.

The rest of the contract has been put up for bid and will salvage as much of the Deloitte software as possible, the Globe reported.

It wasn't the first contract with the state that the company reportedly struggled with. A contract Deloitte had with the Massachusetts Department of Labor came in $6 million over budget and two years later than expected. Other states have reported problems with the company's contracts, including Pennsylvania, Florida and California.

"Going back four decades, we have served over 45 states in areas of health and human services, finance, unemployment, tax and revenue and transportation with IT implementations. We are sensitive to the implications of this work given the impact on people and families across the country. Thousands of these projects have been delivered without incident and we acknowledge the challenges we have had with certain engagements. That said, we are proud of what we've done in this segment and would not want these few projects to be held up as reflective of our entire body of work," said Dan Prince, director Deloitte Consulting, in a statement to CRN.

Kevin Counihan, CEO of Connecticut Health Insurance Exchange, the government group rolling out Obamacare for the state, said that he contracted with Deloitte to help in the setup of Connecticut's system. In regards to the healthcare system, Counihan said that the overall program rollout has been going extremely well, though there were some hiccups along the way. As vendors work to figure out exactly what the problems are, he said, additional funds would be needed as companies contracted to do one job found out they actually needed to another, a problem best handled by working with the vendor to address the problems together.

"Because our view is that we are going to succeed together. ... It's all about making it work," Counihan said.

PUBLISHED OCT. 7, 2013