The state’s long-plagued, computerized child-support enforcement system, which has already racked up more than $100 million in federal penalties for delays, is still not running and state officials and the latest vendor are blaming each other.
The state has terminated its contract with Hewlett Packard State and Local Enterprise Services, a division of HP, and has asked that the company be barred from future state contracts, according to documents filed with the state’s procurement office, which hears initial contract disputes.
HP said in its filings that what the state has done is unlawful and unjustified. HP also has alleged that the state has mismanaged the gigantic project and is responsible for delays.
“We disagree strongly with the state’s action,” said Bill Ritz, an HP spokesman, “and will defend ourselves vigorously.”
South Carolina remains the only state, officials say, that hasn’t installed a computerized child-support enforcement system as required by a 1988 federal law. The state Department of Social Services has been leading a team of state agencies on the project since 1997.
Sen. Thomas Alexander, a Walhalla Republican who chairs the budget committee that oversees DSS, said he is angry at yet another delay in the project that was supposed to be finished more than a decade ago.
“It infuriates me. It frustrates me,” Alexander said. “How in the world we can be out of compliance when all the other 49 states are in is just beyond me.”
HP is the third vendor to work on the project.
In its documents filed with the procurement office, the state, represented by attorney Marc Manos, said that HP materially breached the contract by failing to meet the halfway milestone of system testing.
The state alleges that the company breached the contract “by failing to timely complete the system test, failing to properly test the application, failing to properly staff the project, failing to properly document project work, failing to maintain and estimate the project schedule, and failing to participate in an orderly transition upon the state’s termination of the contract for cause,” Manos wrote.
HP denied the state’s allegations and made some of its own.
“The fact is that the state’s claims against HPSLES arise largely from its own mismanagement of the CFS project,” HP’s lawyer wrote in a response filed in the case.
“Since the beginning of the CFS project, HPSLES has been forced to ‘hurry up and wait’ while the state floundered through technical requirements it had no ability to understand.”
HP also said in its response that “time and time again, the state changed its mind with regard to the type of system it wanted, pulling the rug out from under HPSLES as it tried to accommodate shifting demands and moving targets.”
The federal government asked all states to create an automated child-support enforcement system so that state agencies’ computers could interact with each other and search for those behind on child support.
The government gave South Carolina a 1997 deadline to have its system running, almost 10 years after the 1988 law.
The first contractor and the state parted company after reaching a settlement agreement in 1997, officials have said.
The contract was rebid and the company that won the contract, Saber Software, was purchased by Electronic Data Systems, which was eventually purchased by HP.
As part of a contract dispute, HP agreed last year to pay any penalties assessed through the federal 2012-13 fiscal year, officials said then in a report to the Legislature.
An HP official told The Greenville News last August that the system was being tested. He said the scope of the project had been changed over the lifespan of developing the system and that had impacted its delivery schedule.
HP said in its filings that responsibility for failures in the project “rest squarely with the state.” It also alleged that state officials repeatedly sent mixed signals on the project.
“On one hand, the state wanted various changes to the system,” HP said in a filing to the procurement office. “But on the other hand it refused to pay HP for the changed work.”
HP also alleged that some delays were caused by the state providing “dirty” data, and that HP had “substantially performed” in its contract.
On June 25, HP said, it and the state made a joint demonstration of the system to show its functionality, an analysis showed the computer code written by HP was reliable and testing of the system was almost complete when the state terminated the contract.
Of 424 test scripts, HP said in its filings, 361 were approved by the state prior to termination. Of the remaining 63, HP alleged, 28 related to one or more of the “state’s broken interfaces,” leaving 35 test scripts at issue.
“The state’s decision to terminate HPSLES without notice was not only unlawful and procedurally improper but was without any substantive justification,” HP said.
The state has denied HP’s allegations in its responses filed in the procurement case.
HP has said in its filings that a request for debarment is unjustified.
“It is also surprising that the state would raise the specter of bad faith when its own conduct suggests that it failed to inform HPSLES that it had no plans to pay for work on the project, in violation of the contract and applicable law,” HP alleged.
The state has countered that it always has maintained reserves to pay for the project. It said that some invoices haven’t been paid because HP should have submitted certain forms required for federal matching funds. It also said that in the case of termination, outstanding invoices aren’t paid until a final account is known for the costs of completing the project.
Manos said state officials are trying to do what they can to get the system running.
“DSS and the project team, which has folks from the clerks of court and the judicial department, is analyzing the system that has been built so far, figuring out what parts of it they can continue to use and getting together a plan to move forward and are moving very rapidly with that,” he said.
Manos said as part of a contract settlement with HP, the system was supposed to roll out to all 46 counties in August and September.
He said it is “more likely” that the state will hire subcontractors and supervise them but it is still possible the state will hire a new contractor.
Manos said the dispute will be heard by the chief procurement officer for construction on Oct. 21. If either party is unsatisfied with his decision it can ask for a review by the State Procurement Review Panel, he said. That process operates like a new trial, with both sides presenting their evidence again.
That panel’s decision can be appealed to the Circuit Court, Manos said.
“We’re not waiting for the litigation case to end,” Manos said of the state’s efforts to get the system online. “They are going to go ahead and get moving, salvage as much as they can and keep moving forward.”
Part of litigation, Manos said, will determine who will pay the federal penalties for the upcoming federal fiscal year, which starts in October.
The state began paying penalties in 1998, the year after the deadline, according to DSS. The penalty that year totaled $893,628 and has risen each year since, according to the DSS report to the Legislature. In 2012, the state was assessed a penalty of $11 million.
As of last year, according to DSS, the state was assessed $104 million in penalties. But because of the amounts vendors have agreed to pay, the state’s total bill for penalties, prior to this year, was about $66 million, a DSS official said then.
That, plus the $50 million state portion of the $151 million cost for the project, means the state’s bill for the system will total about $116 million.
The system is designed to boost child support collections by networking with a number of agencies to locate parents and to allow better monitoring of compliance.
It also will increase the state’s ability to provide remedies for deadbeat parents, such as intercepting their taxes, lottery winnings or suspending their driver’s licenses.
Custodial parents will be able to visit a website to check on the status of child-support payments, officials say.
Businesses must now submit money withheld from wages for child support to the county where the child support payment is due.
For large corporations, that may mean payments to each of the state’s 46 counties. But with the new system, employers will send payments to one entity, the state’s new disbursement unit, officials say.