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State fining Deloitte $15,000 per day over glitchy computer system

The state of Florida is also withholding $3 million in payments to the systems integrator

By Chris Kanaracus, IDG News Service
December 24, 2013 01:21 PM ET

IDG News Service - The state of Florida has begun fining Deloitte US$15,000 per business day until the systems integrator finishes fixing a number of alleged bugs in an unemployment compensation software system it built.

Florida is also withholding $3 million in payments to Deloitte in connection with its work on the unemployment system, which is called Connect, according to a notice on the state's Department of Economic Opportunity website.

"While Deloitte has made progress over the last few weeks, and many claimants are able to process claims without incident, the bottom line is that the overall system is still not working properly and the base code has not been stabilized," DEO executive director Jesse Panuccio said in a statement. "The people of Florida deserve better and after two months, Deloitte's failure to provide this functionality is simply unacceptable."

Deloitte has also come under fire of late for its work on troubled unemployment compensation systems in Massachusetts and California.

In Florida, the main problem lies with unemployment claims that need to be adjudicated, or reviewed for validity, according to the DEO. "Only claims that are flagged for potential ineligibility go through the adjudication function, meaning a majority of claims do not need to be adjudicated," according to a statement. But "defects in adjudication functionality have caused the active adjudication caseload -- and the wait times for adjudication -- to increase to unacceptable levels."

The $15,000 per day fines will continue "until Deloitte delivers a fully functional system to the State of Florida," the statement adds.

It will require a "significant increase" in IT staffers to get the system working properly in short order, and if Deloitte won't provide that help the state will be forced to take "costly and burdensome" steps such as hiring, additional consultants, according to the DEO.

Connect has been up and running since Oct. 15, with "the vast majority of eligible claimants" able to access it successfully, Deloitte said in a Dec. 19 letter to the DEO. The system has already "surpassed, many, many aspects of the multitude of non-integrated legacy systems previously used," and will only continue to improve as it matures and users get acclimated to it, Deloitte added.

Deloitte attributed problems with the adjudication functionality to "workforce transition issues."

For example, adjudicators are doing research outside of Connect "and then manually imaging these custom documents," hampering productivity, the letter states. Also, there are varying degrees of productivity among adjudication units, it adds.

"Throughout this project, Deloitte has worked in good faith to meet or exceed DEO's criteria for acceptance of our work," Deloitte spokesman Jonathan Gandal said in a statement Tuesday. "We have successfully completed the tasks and activities outlined in our contract and all subsequent amendments."

"As we have communicated to DEO, we believe that any remaining issues deemed 'high impact' by DEO's own definition either require Departmental actions or are otherwise beyond Deloitte's control," Gandal added. "We will continue to provide warranty support to DEO, in accordance with our contract, and work diligently to resolve any warranty items as they are identified. We will also continue to work with DEO to clarify the true nature of the remaining issues and will hold ourselves strictly accountable for fixing anything within our control as quickly as possible."

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