Finance Commissioner details breakdowns and increased cost of state payroll software system

With the launch in a few months, the Maine financial agency ran tests in early 2020 of a state-of-the-art but expensive payroll program intended to replace a decades-old system that officials say state, was “held in place with duct tape and paper clips.” . “

The test results did not inspire confidence.

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

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

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

In lengthy testimony to the Government’s Oversight Committee, Figueroa estimated that the total cost of the project will likely reach $ 55.4 million by the end of fiscal 2023. 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 that is not held together with tape and paper clips.”

“Workday Maine has taken its fair share of bumps, tight turns and breakdowns,” Figueroa said. “There will inevitably be more. But there was no fraud, waste and abuse of funds. Throughout the process, DAFS has been – and will continue to be – good stewards of state interests.

Lawmakers expressed frustration that they did not receive the dozens of documents – including contracts, change orders, emails and other correspondence between state and Workday officials – before Friday’s hearing . The ministry made the documents available for download on Thursday morning, but the large files were too large to email, so most committee members had not yet seen them until the start of Friday’s meeting. at 9 o’clock.

“I think DAFS should have given them to us two or three days ago because they knew it was going to happen,” said Senator Jeffrey Timberlake, R-Turner. “It’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 interest in hearing Workday’s take on the sequence of events in mid-May of last year.

The Government’s Oversight Committee considers 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 of the legislature. Maine for nearly a decade to implement a new human resource management system.

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

Maine’s current paper-based payroll software system is over 30 years old and written in a computer language – COBOL – so outdated that only two state employees even know how to program it. One of those who just 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, with the aim of launching the system in January 2020.

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

DAFS officials said on 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. 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 months, Workday informed DAFS that it would not be able to deliver a significant part of the contract: a “labor cost allocation” feature to allocate employee time and costs to workers. 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 extend the go live date from January 1, 2020 to April 1, 2020. But after payroll system testing revealed an error rate of over 50 % in early 2020, the state pushed back the launch date again despite assurances from Workday Professional Services that April 1 was still realistic.

Relations seemed to deteriorate further thereafter.

In May 2020, Workday Professional Services briefly removed its staff from their positions due to escalating disagreements with government 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 that we need and that we expect from Workday.

The state and Workday Professional Services then embarked on a months-long, still unresolved attempt to agree on a new “change order” outlining the company’s obligations. Then, in February of this year, the employees of Workday Professional Services left their jobs again.

Workday officials said on Friday they remained 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 didn’t want to spend state resources in the meantime. The state has no basis to terminate our service contract for cause. We are currently in contact with our contacts with the state to try to find a way forward. “

The day before the work stoppage, a Workday official raised concerns about the relationship between the two parties.

“I’m increasingly concerned with the overall progress and status of the Workday rollout project, the lack of visibility into what the State of Maine thinks about how to move forward and the relationship Global between Workday and the State of Maine, ”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. The Maine attorney general’s office is negotiating the terms of the termination, although Workday officials said in a statement month that the state had no reason to terminate the contract and the company was still committed to complete the project.

The state is preparing to terminate only the professional services contract, not Workday’s development of the human resources management system. But the state is also asking Workday for $ 22.2 million.

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

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