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Virginia ditched DMV customer service overhaul after spending $28M

- The Washington Times - Tuesday, April 3, 2012

RICHMOND — Virginia's Department of Motor Vehicles shoveled $28 million into a massive overhaul of its customer service system before scrapping the troubled project last year and quietly adopting a new plan, according to a state audit.

In 2005, the DMV started the process to modernize its primary customer data system in order to increase efficiency. The upgrade, originally projected to cost $32.5 million, ballooned to more than $90 million by early 2011. The project was suspended in May 2011 — but not before nearly $28 million had been spent.

The technology overhaul was ultimately scaled back and broken down into a series of 34 smaller projects, which on their own are raising concerns from Virginia's auditor of public accounts.

"They're cutting it down into smaller chunks, and I don't know where it's going to go," state Auditor of Public Accounts Walter Kucharski said. "This is nice, you let them do a whole bunch of small projects, but is there a point at which this ends?"

The department anticipates that it will be able to reuse $6.3 million of the hardware and software purchased over the course of the project and says the work of consultants, such as a $1.5 million business-process analysis, will aid in future initiatives, the audit said.

"All the work we did in the past with the other vendors, even though we didn't go with their solution, we're still using the products and services they provided," DMV spokeswoman Melanie Stokes said.

But with regard to studies and analyses, the audit noted the difficulty of assigning dollar figures to such items since they've been through several versions over the life of the project.

An interim report on the project said that as a result of one phase of the overhaul, the agency implemented 38 process improvements resulting in $107,305 in savings, $486,501 in revenue and "numerous improvements and efficiencies in service."

Consulting firm SAIC was awarded a $24 million contract for the project in February 2009 that was terminated in October 2009. Another firm, Accenture, was awarded a $36 million contract in November 2010 that was terminated in May, after which the original project was suspended.

Accenture and the DMV butted heads over the consulting firm's use of overseas resources. Accenture wanted to do 75 percent of the work on-site, while the DMV wanted all work performed on-site.

In November, the department released a road map to close out and transition the original undertaking into multiple smaller projects.

Ms. Stokes also said the eventual completion of the 34 smaller projects will end up saving the state money in the way of lower information-technology costs.

"Since we're upgrading our system, those fees will be millions lower," she said.

The new program, known as FACE (For All Customers and Employees), has identified 34 projects needed to replace the system and has started or will be starting 13 of those by September.

The office projects that the 13 projects will cost almost $8 million and will be complete by June.

As for the rest?

"I don't know where this is going to go, and I don't know what the final cost is going to be," Mr. Kucharski said.

The DMV issues more than 1.7 million driver's licenses annually, registers almost 6.4 million vehicles, weighs about 17.5 million trucks, and collected $2 billion in revenue in fiscal 2011.

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