Case Study 14: How Texas Wasted $367 Million on an Unusable Child Support Enforcement System

After investing $367.5 million in a child support enforcement system, the only thing that the state of Texas has to show for is some hard-won lessons. 

Initiated by the Office of the Attorney General (OAG) in 2007, “T2” aimed to deliver a secure, web-based system to automate manual functions, streamline daily operations, enable staff to manage case information online, and offer multiple platforms for parents to communicate with the Child Support Division (CSD). Other planned improvements included a comprehensive electronic case file system, standardized forms, an integrated solution for reporting systems, automated generation of child support case documents, and enhanced automation to efficiently establish and enforce child support orders.

Fifteen months behind the original completion date of December 2017 and saddled with a budget that had ballooned from $223.6 to $419.6 million, as of May 2019, state workers were still without a workable system to standardize and simplify child support applications. This angered federal backers to the point where they decided to absorb the loss of the 66% of funding they had contributed to T2. 

Senator Jane Nelson, a Flower Mound Area Republican who co-chairs the House-Senate budget conference committee summed it up with: “Stop the bleeding.” This was echoed by Rep. Giovanni Capriglione, a GOP budget writer, who pointed out: “This was a $60 million idea — $340 million ago.”

Perhaps not surprisingly, the project was abandoned four months later.

To be clear, this decision has not affected payments from non-custodial parents to their children and former spouses. After all, a clunky “T1” mainframe system of record keeping – complete with glowing green computer screens that date to the mid-1990s – is still in use by state workers. As they continue to use the system designed by Accenture, under an earlier contract, most workers would be lost without their “quick reference card” that is crammed with acronyms they need to enter before inputting a client's personal information.

Even with their antiquated system, Texas child support workers managed to collect $4.4 billion in the last state fiscal year — the largest amount collected by any state.

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For a list of all my project failure case studies just click here.

Timeline of Events

2007

In 2007, talks commenced on the need to update the child support enforcement system to establish orders, enforce compliance, and collect and disburse payments.

Soon after, Deloitte was hired to make tech recommendations and create a roadmap to implement the new child support enforcement system.

2009

In 2009, the OAG estimated that the system would cost $223.6 million to develop and would be completed in 2017.

2010

Since August of 2010, the T2 project has been under federal independent verification and validation (IV&V) by the Office of Child Support Enforcement. 

That October, Accenture was awarded the contract to develop the system, which was valued at $69.8 million.

2011

A research team at the University of Texas’ Center for Advanced Research in Software Engineering (ARiSE) was contracted to complete semi-annual reviews on quality and progress in July 2011.

2012 - 2014

Deloitte delivered its final blueprint in 2012 and exited the project.

From March 2012 to November 2014, there were 27 change orders initiated by the CSD that inflated the value of Accenture’s contract to $98.3 million.

2015

Ken Paxton took over as the attorney general in 2015, succeeding Greg Abbott (who became governor).

In an excerpt from the October 2015 IV&V report, it was noted that the T2 project was: (1) being driven by an “unrealistic schedule”; (2) the quality of the code components Accenture delivered were “below the expectations” of the OAG; and (3) uncertainty about the development strategy would likely have a “negative effect” on the work environment (including cost increases, staff turnover, and lower productivity).

On November 30, 2015, the OAG was notified that federal funds for the T2 system development contract were frozen pending the approval of an updated project schedule and corrective action plan. The following month, legislators were given a rundown of how the project went off the rails. Their reactions ranged from stunned and confused to frustrated.

"I am kind of speechless," said Rep. Helen Giddings, D-DeSoto.

"I’m just going down a rabbit trail to Wonderland," explained Rep. Dawnna Dukes, D-Austin.

When a reporter referred to the project as "a challenge," Rep. Borris Miles, D-Houston, had this to say: "I’m not going to call this a challenge. There are some other words I’d like to call it, but we’re being videotaped."

At the same time as Accenture took responsibility for some of the failure, its spokesperson seized on University of Texas software expert Herbert Krasner's testimony that Deloitte's $46 million system blueprint was "not worth the paper it was printed on." Deloitte’s media representative responded that when they exited the project in 2012, neither Abbott's office nor Accenture voiced any concerns over their blueprint.

2016

The OAG's office and Accenture agreed to a major contract amendment in 2016. It called for increased reporting to a new state executive steering committee, payments that were commensurate with the quality of the work, and a $20 million "hold" on Accenture's final check until it was clear that the federal Administration for Children and Families would sign off on the work.

Along with the project governance, Amendment No. 1 reset the T2 delivery date to December 2018 and increased the contract to $150.1 million. 

2018

Due to changing federal form requirements, Amendment No. 2 (issued in January 2018) reset the T2 delivery date to March 2019 and increased the Accenture contract to $156.9 million. 

2019

In September 2019, Ken Paxton’s office confirmed that the (much-maligned) T2 software project had been abandoned, and that they were seeking a cheaper alternative: 

“The costs of moving forward with those challenges, when coupled with the ongoing costs to maintain the system upon completion, can no longer be justified when newer technologies exist that are capable of providing the necessary functionality at a lower cost to build and maintain, thus providing a better value to Texas taxpayers.”

What Went Wrong

Exploding Costs

In January 2007, Deloitte’s contract to update the model for OAG’s child support services had an initial value of $1.8 million. Following the OAG’s 5 renewal options, the final contract was valued at $46 million. In that same vein, the system development contract (awarded to Accenture in October 2010) was valued at $69.8 million. After the OAG issued 30 change orders, the value increased to $156.9 million.

According to the Legislative Budget Board, from the idea phase through to January 2019, it cost $367.5 million — $124.9 million of which was state funding. 

Outsourcing Challenges

In order to turn a profit, Accenture had to outsource much of their custom development work to 165 programmers in India. Despite security concerns, the Indian programmers were given access to state data and worked on code remotely. 

Reviewers repeatedly noted they were “concerned with the low level of quality for work products and deliverables submitted by Accenture.”

Performance Issues

On multiple occasions, the IV&V team reported that T2 had resulted in sub-standard processing speeds, and that switching on key security software only made the issue worse. Although improvements were made over time, the performance was never deemed satisfactory by IV&V. 

Defects and Integration Issues

In the summer of 2018, OAG staff ordered additional joint system testing of T2, which revealed over 1000 defects – ranging from minor typos to severe security issues that had to be resolved before proceeding.

Compounding the issue, the process to pull financial data from the original T1 system into T2 was not working correctly.

Infrastructure Updates

Due to delays, the core security software had lost vendor support and needed to be upgraded before T2 could be deployed. This upgrade could not begin until all system defects were addressed.

How OAG Could Have Done Things Differently

Better Contracts

During a recent hearing, Accenture T2 project executive sponsor, Ben Foster testified to Capriglione's sub-committee that the company "did not deliver the value you expected of us." However, since the 2016 contract amendment gave the company financial "skin in the game," Foster said, "We've made tremendous progress."

In response, Capriglione claimed that, while researching Accenture's work in other states, he spoke with people who'd tell him "it's really not a software company, it's a contracting company. They make very good contracts. It's very difficult to get out of [them]."

Capriglione, who spent two sessions as head of the appropriations sub-committee probing the state's contracting woes, said of Accenture: "I'm totally torqued at them. Now, if there's any good that can come of this, it is that we are now learning all of the things we should never do when we write contracts."

On a related note, I recommend reading "10 Important Questions to Ask before Signing your Cloud Computing Contract."

Being Transparent and Realistic

As early as 2011, ARiSE researchers noted significant problems that only worsened over the years. The records detail how state officials – under Abbott’s chief of child support, Charles Smith – failed to hold Accenture accountable as the project missed major deadlines and morphed into an overly complicated tangle of hundreds of software bundles.

Records show that each time a deadline was about to be missed, state officials simply extended the timeframe (this occurred on at least seven occasions). Officials in the Child Support Division referred to this as a “re-baseline” – a maneuver that obscured the project’s failings, increased costs, and delayed completion. 

For more insights on this topic, please see "8 Signs of Troubled Projects for Project Sponsors."

Executive Sponsorship

In many companies, these projects tend to fall under the category of “group responsibility.” Extending this thinking to, say, an incoming Attorney General, it is easy to pass the buck ("Oh right, that project that was led by my predecessor"). 

Every software project must have a competent director who owns it and is responsible for both the successes and failures from idea phase through to completion. Without end-to-end managerial involvement, today's business software projects are doomed to whole and half failures. Anyone who does not understand this would do well to postpone new projects.

See "Successful Projects Need Executive Champions" for more on this topic.

Be a Responsible Buyer of Technology

In any organization, it’s crucial to buy technology and implement services responsibly, not to mention work well with suppliers. More than any other factor, projects fail because these skills are lacking. 

While some people may argue that suppliers should have all the skills that are required to make a company’s project a success, that’s a matter of wishful thinking or good luck. Responsible buyers are capable of spotting when a supplier and/or the product is failing, and can mitigate risks by taking decisive actions.

For more insights on this topic, I invite you to read "Be a Responsible Buyer of Technology."

Closing Thoughts

At the time of writing, state workers are still clinging to their "quick reference cards" to input acronyms and fill in their client's personal information. They wait in limbo for the system that was supposed to help them get rid of paper files, access services remotely, and benefit from automated prompts and the ability to generate drafts of court filings. These employees and American taxpayers are the real losers in this debacle.

Don’t let your project fail like this one!

Discover here how I can help you turn it into a success.

For a list of all my project failure case studies just click here.

Sources

> Texas Child Support Enforcement System 2.0, Overview of System Development and Project Monitoring & Oversight, December 2015

> Overview of the Texas Child Support Enforcement System 2.0, February 2019

> An Audit Report on The Development of the Texas Child Support Enforcement System 2.0 at the Office of the Attorney General, July 2011

> Legislative Appropriations Request for Fiscal Years 2018 and 2019

> Legislative Appropriations Request for Fiscal Years 2020 and 2021

> Paxton drops contractors on tech project that's $107 million over estimated cost

> After $367.5 million, Texas gets no new child support computer software

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The True Cost of Excluding Executives from the IT Decision Making Process

Throughout the past 15 years that I’ve been working as an independent project recovery consultant and interim CIO, I have observed executives’ frustration – even exasperation – with information technology and their IT departments generally. Some of the more common refrains are: 

“I don’t understand IT well enough to manage it.” 

“Although they work hard, my IT people don’t seem to understand the very real business problems we’re facing.”

In fact, the complaint I hear most often from CEOs, COOs, CFOs, and other high-ranking officers, is that they haven’t reaped the business value of their high-priced technology. Meanwhile, the list of seemingly necessary IT capabilities continues to grow, and IT spending consumes an increasing percentage of their budgets. 

So why is this happening, and what can you do to prevent it?

Though it may come as a surprise, one of the most effective measures you can take is to ensure a senior business executive plays a leadership role in a handful of key IT decisions. I say this because when business executives hand over their responsibility for these decisions to IT executives, disaster often ensues. You need look no further than my project failure case studies to see the sheer number of botched adoptions of large-scale customer relationship management (CRM) and enterprise resource planning (ERP) systems. 

It would be easy to assume that the CRM and ERP disasters resulted from technological glitches. However, the problems generally occurred because senior executives failed to realize that adopting the systems would create business challenges – not just technological ones. 

To be clear, IT executives are the go-to people for numerous managerial decisions, including choosing technology standards, advising on the design of the IT operations center, providing the technical expertise the organization needs, and developing the standard methodology for implementing new systems. But an IT department should not be left to their own devices to determine the impact these choices and processes will have on a company’s business strategy.

In an effort to help executives avoid IT disasters, and, more importantly, generate real value from their IT investments, I have made a list that outlines the measures they should take and the decisions they should oversee. Whereas the first three bear on strategy, the latter items relate to execution. At the risk of a spoiler: IT people should not be making any of these decisions, because, in the end, that’s not their job [or their area of expertise].

1) How much should we spend on IT?

Given the uncertain returns on IT spending, many executives wonder whether they will reap the benefits of their investment. So the thinking goes: If we can just get the dollar amount right, the other IT issues will take care of themselves. For this, they look to industry benchmarks to determine “appropriate” spending levels.

In my experience, they should be approaching the question very differently. First, executives should determine the strategic role that IT will play in their organization to establish an organization-wide funding level that will enable technology to fulfill their objectives. After all, IT goals vary considerably across organizations – from streamlining administrative processes to feeding a global supply chain, providing flawless customer service, or cutting-edge research and development. 

Clearly, fulfilling these objectives requires different levels of spending, planning, and administrative oversight. 

2) Which projects should be funded?

I’ve seen relatively small companies with 100 IT projects underway. Despite the fact that they are not equally important, executives are often reluctant to make choices between the projects that will likely have a significant impact on the company’s success, and those that will provide some benefits but aren’t essential.

Leaving such decisions in the hands of the IT department means that they will be the ones prioritizing business issues, or, just as troubling, they will attempt to deliver on every project a business manager regards as important. When presented with a list of approved and funded projects, most IT units will do their best to carry each of them out. But this typically leads to a backlog of delayed initiatives, not to mention overwhelmed and demoralized staff.

3) Which IT capabilities need to extend company-wide?

Business leaders are increasingly recognizing the significant cost savings and strategic benefits that come with centralizing IT capabilities and standardizing infrastructure throughout an organization. Leveraging technological expertise across a company enables cost-effective contracts with software suppliers, just as it facilitates global business processes. On the other hand, standards can restrict the flexibility of individual business units, limit the company’s responsiveness to diverse customer segments, and give rise to strong resistance from managers.

When IT executives are left to make decisions about what will and will not be centralized and standardized, they typically take one of two approaches. Depending on the company’s culture, they either insist on standardizing everything to reduce costs, or they grant exceptions to any business unit manager who raises a stink (recognizing the importance of business unit autonomy). Whereas the former approach restricts flexibility, the latter is expensive, limits business synergies, and drains human resources. 

It’s worth keeping in mind that, in some instances, using different standards can be counter-productive – resulting in a corporate IT infrastructure whose total value is less than the sum of its parts. Knowing this, executives must play a lead role in weighing these crucial trade-offs.

4) What IT services do we really need?

I’ll get right to the point: An IT system that doesn’t work is useless. Reliability, responsiveness, and data accessibility come at a cost, but that doesn’t mean every system must be wrapped in gold. Ultimately, executives must decide how much they are willing to spend on various features and services.

For some companies, top-of-the-line service is non-negotiable. As a case in point, investment banks cannot afford to engage in a debate over how much data they would be willing to lose if a trading system crashes. They require 100% recovery. Similarly, Cloud providers cannot compromise on response time or allow for any downtime, because their contracts penalize them when their system becomes unavailable. This not only incentivizes the provider to ensure that their services will continue to run despite floods, tornadoes, power outages, and telecommunications breakdowns, it gives the client peace of mind and justifies higher costs.

Granted, not every company is a Google or a Goldman Sachs. Most can tolerate limited downtime or occasionally slow response times, and they must weigh the problems this creates against the costs of preventing them. Once again, decisions concerning the appropriate levels of IT service need to be made by senior business managers. Left to their own devices, IT units are likely to opt for the highest levels – i.e., Ferrari service when that of a Ford will do – because the IT unit will be judged on such things as how often the system goes down.

5) What security and privacy risks are we willing to accept?

Like reliability and responsiveness, companies must weigh the level of security they want against the amount that they are willing to expend. In doing so, there’s another trade-off to consider: Increasing security involves not only higher costs but also inconveniences users. As global privacy protections are increasingly mandated by governments, security takes on a new level of importance because well-designed privacy protections can be compromised by inadequate system security. Executives must assess these trade-offs. 

Bear in mind that many IT units will adopt the philosophy that absolute security is their responsibility, and thus deny access anytime safety cannot be guaranteed. They would do well to float that idea by a bank’s marketing executives, who are counting on simplified online transactions to attract new customers.

6) Can we assign blame when an IT project fails?

Finger-pointing often ensues when teams fail to benefit from new systems. There must be something wrong with the IT function in our company, they presume. More often than not, there is something wrong with the way that non-IT executives are managing IT-enabled change in the organization.

I invite you to reflect on the well-publicized examples of ERP and CRM initiatives that failed to generate quantifiable value. Invariably, the failures resulted from assumptions that IT units or consultants could implement the systems while business managers went about their daily tasks. The bottom line is that new systems have no value; they derive their value from new or redesigned business processes. 

Quite simply: To avoid disasters, executives must take responsibility for realizing the business benefits of an IT initiative. These “sponsors” need the authority to assign resources to projects and the time to oversee the creation and implementation of their projects. 

This includes scheduling regular meetings with IT personnel, organizing training sessions, and working with the IT department to establish clear metrics for determining the initiative’s success. Such sponsors can ensure that new IT systems deliver real business value.

In a nutshell: one of the most effective measures you can put in place is giving senior business executives a leadership role in a handful of key IT decisions. 

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What Executives Need to Know About Project Management

I work exclusively with executives and when there is one thing that I have learned over the years is that effective executives have at least a basic understanding about project management and their roles in it. 

When you look in a dictionary for the word "executive" you will find an entry similar to the one below. 

noun - a person with senior managerial responsibility in a business.

“a C-level executive”

adjective - relating to or having the power to put plans or actions into effect.

"an executive chairman"

An executive directs, plans, and coordinates operational activities for their organization and are normally responsible for devising policies and strategies to meet the organization's goals.

Executives hold executive powers delegated to them with and by authority of a board of directors and/or the shareholders. 

Generally, higher levels of responsibility exist, such as a board of directors and those who own the company (shareholders), but they focus on managing the senior or executive management instead of on the day-to-day activities of the business. 

The executive management typically consists of the heads of a firm's product and/or geographic units and of functional executives such as the Chief Financial Officer (CFO), the Chief Operating Officer (COO), Chief Information Officer (CIO), and of course the Chief Executive Officer (CEO). 

Almost all organizations use projects to implement their strategy and drive change. So projects are an important tool for executives to do their job. 

And in the organization's most important projects and programs it are executives that have the following roles and/or responsibilities.

> Project Sponsor

> Steering Committee Member

> Project Champion

> Select, fund, start, pause, and stop projects

Project support is priceless. Engaged executives help organizations to bridge the communications gap between influencers and implementers, thereby increasing collaboration and support, boosting project success rates, and reducing collective risk.

In a nutshell: In order to be an effective executive you should have a basic understanding about how project and project portfolio management works. You should also understand how to be a great Project Sponsor, Project Champion and/or Steering Committee Member.

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