Pa. unemployment system upgrade left hanging
State leaders are trying to decide the next step in a project to modernize Pennsylvania's unemployment computer system more than six months since they canceled a contract that was $60 million over budget and 42 months behind schedule.
The Department of Labor and Industry in July dropped computer giant IBM because the company's work on a third and final phase of the system wasn't working, and there was “no high confidence estimate” for when IBM would be able to deliver a reliable program, according to a review by Carnegie Mellon University, which was paid $800,000 by the state to examine the project.
The failed project, which had been financed by $153 million in federal funding, prompted a call for an investigation by state Rep. Mario Scavello, R-Monroe County. But he has since backed down and said he was satisfied that state Labor Secretary Julia Hearthway and the administration of Gov. Tom Corbett would figure out the best way to proceed.
“It's her call and the governor's call on what's going to happen,” said Scavello, who is chairman of the Labor and Industry Committee in the House.
The department has made no decision about whether to hire a vendor to finish IBM's work, what its next step should be or even when it may arrive at a decision, spokeswoman Sara Goulet said.
The state owed IBM $170 million for its work, but the department held back $17 million while the state's Department of General Counsel reviews the contract to see if it can recoup any previous payments.
A review is continuing “of the voluminous amount of documentation spanning the many years of the project,” Goulet said.
Officials with IBM could not be reached for comment.
State Rep. William Keller, D-Philadelphia, and minority chairman of the Labor and Industry Committee, had called attention to the problems in the months leading up to IBM losing the contract. Keller could not be reached for comment.
Scavello said he and Keller have met with Hearthway to discuss what is needed to complete the system, which would update the computer system Pennsylvanians use to file for unemployment benefits — and speed payment of those claims.
“The system that we have right now doesn't work,” he said. “There's a problem, and we definitely have to correct that problem.”
The state awarded IBM the contract in 2005 for the three-phase project to update software for case management, for collection of unemployment tax from employers and for claims processing. It was supposed to be ready by the beginning of 2010.
Goulet said the first two phases were completed, but third phase would have established a more user-friendly and faster system for people looking to claim unemployment compensation.
With the old system that's still in use, the state must mail forms to an employer to confirm that someone filing for compensation had been employed and laid off.
The system “would have automated all that. ... A two-week turnaround would be two days,” she said.