Payroll contract has left US state 'dependent on consultants'

13 June 2017

The West Virginia state government has wasted $24m hiring contractors to operate a computer system when staff should have done the job, according to an audit.

By using the consultants Salvaggio, Teal and Associates (STA), and its later owners Information Services Group (ISG), to operate the wvOASIS financial services system, the state’s Enterprise Resource Planning (ERP) Board made the government dependent on contractors, said a report.

Instead of using consultants to assist in project planning and training, the ERP Board “allowed the consultants to embed themselves into critical line functions necessary to the daily operation of wvOASIS,” said the report.

The wvOASIS computer software system is designed to streamline the processes of state government, including payroll, and has taken more than seven years to implement.

“Presently, seven years into the wvOASIS project, the state’s payroll still cannot be run without the direct work of consultants,” the report added.

The failure means that the state is paying subcontractors between $30,000 and $47,000 per month.

“Thus, by failing to properly manage the consulting company, the ERP Board paid contract employees what the average state employee makes in a year, for one month of work,” the audit added.

The audit said the state had paid over $24m since 2010 in consulting fees for services that state employees were supposed to perform after training. The state will be forced to continue the use of consultants for at least another year.

Over 76 months, one consultant alone was paid $2.5m by the state, averaging $33,000 a month in payments.

Qualified computer personnel could have been hired as state employees at a fraction of the cost of consultants, the report found.

The consultancy charges hourly rates ranging from $90 for a project management operations administrator to $225 for one of ISG’s partners.

By comparison salaried wvOASIS employees are paid between $15.38 per hour for a help desk analyst and $51.03 for the director.

The auditor questioned whether there had been sufficient oversight of the multi-million dollar consulting contract.

“Due to the size, scope and cost of this project, the inability to verify the accuracy of over $24m invoiced for 134,867 consultant hours worked is a concerning hindrance to ensuring the state is being invoiced correctly,” said the report.

The auditor said the ERP Board should make the consultant’s transfer of knowledge to state employees a top priority.

It also questioned the validity of a renewed contract with ISG signed in March 2016, saying it could find no documentation that the ERP Board discussed or held a vote to enter into a new contract with ISG or any other vendor.

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