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Mendoza suspends $5.7 million in payments to Morneau Shepell

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Illinois

* AP…

Illinois Comptroller Susana Mendoza has suspended $5.7 million in payments on an online state-employee health insurance program, a project so botched it also prompted her to begin ordering performance reports for all large state technology contracts.

Mendoza told The Associated Press she will review the contract with Georgia-based Morneau Shepell before deciding on payment. She plans a Monday announcement on that and the new requirement that state agencies complete annual reports for the public on the progress of their information technology deals exceeding $5 million.

A state audit last week found that the previous administration’s contract with Morneau Shepell for a custom-benefit portal that was supposed to save the state $500 million a year was so sloppily executed that the program, which auditors determined could have been done in house, is costing taxpayers $10 million extra a year and still isn’t delivering the services promised. […]

The Democrat’s Monday announcement will detail her “IT Milestone Report” for contracts over $5 million, which will be made public. Not only will it require updates on the purchased work’s progress, but agencies will have to confirm that everyone involved in contract decision-making has completed required paperwork disclosing potential conflicts of interest. And if a contract doesn’t include a provision for ensuring minority- and women-owned business participation in the work, the agency must explain why.

* Press release excerpt…

MyBenefits shifted state program administration from CMS offices in Springfield to a Morneau Shepell call center in Atlanta where the Canadian company created between 100 and 115 new jobs.

Following its rollout, MyBenefits users soon reported wrongful termination of health insurance for new retirees; unexplained changes in life insurance policies; difficulty accessing flex spending accounts; difficulty receiving claims reimbursements; and payroll errors.

Mendoza’s office will now suspend over $5.7 million in payments to the vendor pending further review. Next steps regarding outstanding payments to the company are to be determined, Comptroller Mendoza said.

“What happens next is going to be a balancing act. Taxpayers must be represented and employees and retirees need continuity when it comes to their benefits, especially health care. Should the contract be renegotiated or invalidated? Do we bring these functions back in house? What’s clear is Morneau Shepell failed to meet performance standards, and they owe it to the State of Illinois and the nearly 500,000 MyBenefits users to make this situation right as soon as possible,” Comptroller Mendoza said.

Mendoza’s office will also implement new contract reporting standards for Information Technology vendor agreements over $5 million. State agencies will be required to provide certifications that all conflict of interest disclosures have been submitted by state employees. If minority contracting goals aren’t included in a contract, agencies will have to explain why they have been omitted.

Most significantly, the Comptroller will implement an Information Technology Milestone report that, for the first time, will require state agencies to publish progress and performance updates on ongoing IT initiatives.

Comptroller Mendoza said both state agencies and the IT vendor community need to work quickly to restore confidence and integrity to the contract procurement and performance process.

“Over the last four years, the state has expended hundreds of millions of taxpayer dollars on IT projects, like MyBenefits, with little or nothing to show for it. Its past time to bring more transparency and accountability to a function that ultimately costs the state over $1.5 billion each year,” Mendoza said.

posted by Rich Miller
Monday, Apr 8, 19 @ 1:16 pm

Comments

If Morneau Shepell has an accounts receivable system that’s been developed in house, they won’t even miss the 5.7 million.

Comment by PublicServant Monday, Apr 8, 19 @ 1:22 pm
How about the financial ERP? Mendoza should not let the need for a timely CAFR blind her to the ERP’s flaws.

Comment by Smitty Irving Monday, Apr 8, 19 @ 1:24 pm
It’s a coincidence that Nick Ayers, Trey Childress, BJ Walker and Morneau Shepell all came to us on the midnight train from Georgia.

Comment by Thomas Paine Monday, Apr 8, 19 @ 1:27 pm
Payments to Deloitte need to be suspended as well. The state has spent hundreds of millions on an ERP program that started under Blago that still doesn’t work.

Comment by Tired Monday, Apr 8, 19 @ 1:35 pm
In addition to Morneau Shepell and SAP ERP, the state’s new grant system with Streamlink is also interesting. Not sure how many millions that thing is gonna cost each year, as well as how diligent that contract was even bid out.

Comment by Pool guy Monday, Apr 8, 19 @ 1:38 pm
Do you mean to tell me that the knew technology agency, DOIT, allowed this and ERP to fail? And why was this agency created again other than to post massive amounts of supervisory jobs?

Comment by Arthur Monday, Apr 8, 19 @ 1:41 pm
They should look at the HFS IMPACT system as well since it was developed to credential doctors but doesn’t.

Comment by Ben Monday, Apr 8, 19 @ 1:41 pm
==for the first time, will require state agencies to publish progress and performance updates on ongoing IT initiatives.==

In the private sector, this is what we call normal business operations.

Comment by City Zen Monday, Apr 8, 19 @ 1:45 pm
The My Benefits site is a joke. When I try to make insurance payments, at least half the time I wind up needing to call CMS directly to get it done. And tracking down information is nigh impossible. Yuch.

Comment by Flapdoodle Monday, Apr 8, 19 @ 2:00 pm
Setting aside whether I agree with her or not on this specific contract, I don’t think it’s appropriate for the Comptroller to manage state agency contracts. That’s not her job and IMO exceeds her authority. If she wants to control the payments, fine. She can do that. But she has no business doing anything else

Comment by Demoralized Monday, Apr 8, 19 @ 2:04 pm
Rauner’s pinstripe patronage gone terribly wrong. As previously mentioned once they are through with Morneau Shepell cut ties with Deloitte.

Comment by The Dude Abides Monday, Apr 8, 19 @ 2:09 pm
Agree with Pool Guy. Seems like a lot of the “centralizing” efforts by the state has cost nothing but time, resources, and money from agencies. The vendors are making money and the taxpayers and grantees are losing it.

Comment by Anonymous Monday, Apr 8, 19 @ 2:12 pm
The office of the comptroller maintains aging financial systems and they have put out requests for bids for their own new systems. It will be interesting to see how well they do themselves.

Comment by IT guy Monday, Apr 8, 19 @ 2:28 pm
IT Guy -
Hopefully, if they go “Commercial Off The Shelf” they’ll get the government version, not the private sector version, as the SAP ERP is reputed to be.

Comment by Anyone Remember Monday, Apr 8, 19 @ 2:41 pm
Benefits portals and insurance software offerings in the private sector are generally awful. A lowest bidder world where no one really seems to care about service quality.

If I were the state I’d throw together something along the lines of the “US Digital Service” that Obama put together as a response of the healthcare.gov debacle, they were showing some real progress with government web sites (sadly when Obama left their effectiveness seems to have cratered).

I’d also look into open sourcing and sharing IT efforts with other states - there’s no reason to fill the pockets of consultants on this.

Comment by ChicagoVinny Monday, Apr 8, 19 @ 2:42 pm
This is a problem. It’s her job to pay the bills not design the outcomes and monitor compliance. You need a clear line of authority and she is mucking this up.

Comment by NeverPoliticallyCorrect Monday, Apr 8, 19 @ 2:48 pm
Anyone remember -
I’m not sure it’s always that simple. If so, I’m sure the IOC put that requirement in the bid the request for bids they out out. Like I said, they have an opportunity here to show us all how system replacement can be done.

Comment by IT guy Monday, Apr 8, 19 @ 2:51 pm
The annual employee health insurance enrollment period starts less than a month away. Any chance this payment suspension causes issues with that?

Comment by thoughts matter Monday, Apr 8, 19 @ 2:52 pm
–This is a problem. It’s her job to pay the bills not design the outcomes and monitor compliance.–

There’s an $8 billion backlog of old bills. The comptroller has a lot of discretion in prioritizing payment. These grifters might want to straighten up and fly right.

Comment by wordslinger Monday, Apr 8, 19 @ 2:57 pm
IT Guy -
Most major private sector financial COTS ERP software has a non-DoD federal version. Yes, IOC / Illinois requirements are different - my point, don’t mess it up like the SAP ERP.

Comment by Anyone Remember Monday, Apr 8, 19 @ 3:00 pm
==SAP ERP is reputed to be.==

The state govt runs SAP? Hope they know German.

Comment by City Zen Monday, Apr 8, 19 @ 3:25 pm
As was previously mentioned, Deloitte should be the next to go. Please, let’s stop naively trusting outside corporations to do work that state employees did better and more honestly to begin with. I want my tax dollars to go toward paying hardworking state employees, not to pad shareholders’ pockets.

Comment by Dome Gnome Monday, Apr 8, 19 @ 3:29 pm
The projected $500 million/year savings was, and is, absurd. Just another Rauner/privatization scam.

Comment by formerpro Monday, Apr 8, 19 @ 3:35 pm
== The projected $500 million/year savings ==

Let’s be clear here. The software itself was not going to generate any savings. It was supposed to create a way to choose between multiple tiers of health insurance coverage.

The “savings” was going to come from cost shifting the expense of health insurance from the State to the employee.

Comment by RNUG Monday, Apr 8, 19 @ 3:48 pm
The SAP ERP comments here are spot-on. It’s a disaster.

Comment by m4a Monday, Apr 8, 19 @ 7:02 pm
I wish that someone would look into all the changes that were made to the State Employee Deferred Comp because since Rauner’s team changed all the investment options there have been no dividends paid. Was this how all his investments made so much money?

Comment by BigD Monday, Apr 8, 19 @ 7:23 pm
$500 million was Rauner’s people’s words fwiw.

Comment by Sonny Monday, Apr 8, 19 @ 8:16 pm
Thank you, Susana Mendoza. It makes absolutely no sense to spend money for something created by a Canadian company, with an office in Georgia, that has never worked.

Comment by Left the chaos Monday, Apr 8, 19 @ 9:35 pm