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Nassau spends $43 million - and computer system still is obsolete

A Nassau official spoke Wednesday about why, after spending $43.4 million over three administrations to merge outdated computer networks, the county still doesn't have its new computer system in place. (Credit: Newsday / Shelby Knowles)

More than a decade ago, Nassau County awarded a multimillion-dollar contract to a consultant hired to merge into a single system its failing, outdated computer networks that manage everything from employee paychecks to contractor payments.

The project's expected completion date was in 2012. It was then pushed back three years, according to contract documents and letters obtained by Newsday under the Freedom of Information Law.

Now, after spending a total of $43.4 million in borrowed money for the project, the county still doesn't have its new computer system in place, county comptroller records show.

The result: Nassau is using an obsolete patchwork of computer systems — some that can't be repaired, others from companies that no longer are in business — that manage more than $3 billion annually in county spending, including the payroll for 14,000 employees of the county and Nassau Community College.

If systems were to malfunction, delays in paychecks for county workers and payments to the thousands of outside vendors Nassau uses for key functions including roadwork and operation of red light cameras could result, county officials warn.

“If the system were to fail, it would severely hamper the ability for the county to operate,” said Jeffrey Schoen, deputy Nassau County comptroller and chief counsel for the county comptroller's office.

"It’s everything from the cradle to the grave — we need to be able to monitor the transaction from the original appropriation through the actual payments,” Schoen said.

The fact that a new system isn't up and running is "really a story of mismanagement right from the beginning,” said Schoen.

Officials in the administration of County Executive Laura Curran and Comptroller Jack Schnirman say the overhaul of the county's financial system is at least several years away and could cost another $10 million or more.

But one part of the system, for human resources, may be ready to launch by the end of February, administration officials said.

Since 2007, when the project got underway during the administration of former County Executive Thomas Suozzi, Nassau has paid more than $20.9 million in consulting costs for the project, county comptroller records show.

Nassau has spent another $22.5 million for costs including hardware, software licenses and outside contractors who worked on the project.

Of the $20.9 million in consulting costs, $19.1 million went to primary contractor CMA Consulting Services, a Latham, N.Y.-based company where former Republican State Senate Majority Leader Joseph Bruno served as CEO during the early part of the Nassau contract. Bruno joined CMA in July 2008, several days after retiring from the Senate, according to a story in The Business Review in Albany.

Nassau used CMA between 2009 and 2015 to develop a new Enterprise Resource Planning system to integrate key county operations such as finance, budgeting, purchasing, payroll and human resources.

Nassau also paid software company Oracle approximately $4.5 million for licenses from PeopleSoft to operate the new software.

“We acknowledge that there has been a lot of money spent," said Melissa Gallucci, commissioner of the county's Department of Shared Services. "We acknowledge that it's something that is very important to the [Curran] administration to be done and move forward," so the county can take advantage of "efficiencies" the new system could provide.

Schoen said county officials have fast-tracked the project over the last two years, “as quickly as possible, so that this money wasn’t put toward nothing.”

But former Nassau Comptroller George Maragos, who served from 2009 to 2017, said, “the money is wasted and they’re no closer [to] where they were maybe eight years ago in terms of completing it."

Maragos argued that, "at some point, you have to say, enough is enough. Enough money has been spent, enough false promises have been made, and it’s time to cut the losses.”

County documents detail a more than decadelong saga spanning the county administrations of Suozzi, a Democrat, Republican Edward Mangano and Curran, a Democrat who took office in 2018.

Suozzi administration officials laid the original plans to acquire new software called PeopleSoft to power a single Enterprise Resource Planning network that all county employees would be able to use.

PeopleSoft, an e-business software program used widely in the private sector, would create one location where county employees could access their pay stubs, vacation time and other personnel data without having to first reach a payroll or human resources employee. 

The county then planned to retire its network of outdated computer systems, which also manage retiree benefits, logging of employee hours and budget reports for department managers. 

Officials said the original plan was to include an overhaul of Nassau's financial and human resources networks, but the plan was revised early on to deal solely with human resources.

County officials billed the project as the fix for numerous failing online systems that operate through an old IBM mainframe computer located in Bethpage.

As early as 2011, a report by Grant Thornton, a consultant of the Nassau Interim Finance Authority, a state board that controls Nassau's finances, warned Nassau risked a "catastrophic failure of one or more of these systems." Many of the systems provided "little more than basic functionality," the report said.

Companies that created the technology for mainframe software and existing systems were no longer in business to service them, Grant Thornton and county officials said.

Also, computer systems were "not integrated with each other, resulting in duplicative processes and manual exchange of information," the report said.

If the PeopleSoft project were implemented, Nassau could realize $25 million to $30 million in long-term savings, the consultants said.

But Grant Thornton warned the project was "orphaned" and "lack[ed] the necessary leadership to produce the savings possible."

The report said "failure" of the PeopleSoft implementation appeared "imminent."

The job of integrating the county's computer systems was complicated from the outset, according to county records and interviews with past and current officials.

The challenge was to take data from four existing systems and merge them into a new one.

"It was a monster," recalled former Nassau IT Commissioner Ed Eisenstein, who served from 2010, when Mangano took office, through the end of Mangano's tenure in 2017. The contracts for the project had been signed by the Suozzi administration a few months before Mangano first took office.

Referring to Suozzi administration officials, Eisenstein said, "It took several months to analyze and really understand what it is they purchased."

Suozzi, now a congressman representing parts of Suffolk, Nassau and Queens, declined to comment for this story.

The biggest obstacle was putting complex county rules governing union employees' pay, days off and meal money into the new system. The rules, detailed in numerous labor pacts over the years, were "extremely complicated," Eisenstein said.

County officials say the disparate systems are a throwback to an earlier era.

Unlike with Microsoft Windows, there are no pull-down menus. Employees work on “Pong”-like black screens with green type, and they must use function keys to navigate from page to page. The computer coding is from 1992 and no longer supported by IBM, and many of the employees who know how to use it are nearing retirement, officials said.

"These systems are not built realizing that they're going to need to work together in the future," said Stuart Madnick, a professor of information technologies at MIT Sloan School of Management.

“What you ideally would have liked to have done, [is] build these … systems all at the same time, and all in harmony, but that wasn't how the world worked at the time,” Madnick said.

Records show the relationship between CMA and county officials soured early on.

In a letter in June 2010, CMA’s president and chief executive Kay Stafford, who succeeded Bruno, wrote to then-Nassau County Attorney John Ciampoli demanding “past due payments” totaling $2.4 million.

“We have continued to pay these employees while engaging in good-faith discussions with the County to address any concerns," said Stafford, threatening "legal action" if CMA wasn't paid.

"However, after five months of upholding our commitment to the County and our employees, we are now severely limited in our ability to conduct business,” Stafford said.

Bruno could not be reached for comment last week.

Deputy County Attorney Patrick Gallagher in a June 2015 letter described the CMA system as “full of errors and incomplete parts.” 

Charles Ribando, who served as Mangano's deputy county executive for public safety, recalled that Mangano asked him to look into “whether or not our money was spent wisely" on the project.

“It just didn't seem like CMA was delivering what I thought they should have delivered," said Ribando, a consultant who once was chief investigator for former Nassau District Attorney Kathleen Rice, now a Democratic House member from Garden City.

"Not for the lack of trying — they just weren't," Ribando said.

The county moved the PeopleSoft project in-house in 2015 after declining to renew its contract with CMA.

Dan Wall, CMA's vice president of corporate services, said in a statement that the company "worked closely with the County, dedicating an experienced and talented team of professionals to the endeavor. "

Wall said CMA "also sought to fully meet the evolving business needs of the County, implementing several changes that it requested to the project’s scope and schedule — all of which were properly documented."

When the company "left the project," Wall said, "the County had a fully configured system, that had undergone a lengthy testing process and was ready to be implemented."

He continued, "at the time, rather than extending CMA's contract to finalize the system's rollout, County leadership determined that it was a task they preferred to take in-house. CMA honored this request and the contract was permitted to expire at the end of its stated contract term."

Nassau officials now are working to get a PeopleSoft system to manage county functions up and running.

In July Schnirman's office issued a request for proposals for a consultant to help replace the county's mainframe-based financial system, in use since 1999. The comptroller's office said $9.6 million for the project is allocated in the county's capital spending plan.

“Right now we have a car with 200,000 miles on it, and we know it’s going to break down, and we’re willing to spend the money to make sure we’re prepared …,” Schoen said.

NASSAU COMPUTER OVERHAUL

TOTAL SPENDING, 2007-2018: $43.4 million in borrowed funds.

Of that:

  • $20.9 million paid to consultants, including $19.1 million to CMA Consulting Services, a Latham, N.Y.-based company.
  • $22.5 million spent for hardware, software licenses and outside contractors.

Source: Nassau County Comptroller

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