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The Boston Globe

Business

Hearings on state’s computer woes set to begin

John Letchford, the state’s top technology official, knew more than a year ago that he had a big problem on his hands.

State agencies were struggling with two troubled technology projects worth $160 million, and the firm that built the systems was about to lock in a third contract with another agency, worth tens of millions more.

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So Letchford looked outside for help — and hired yet another consultant. The state is paying that firm, McKinsey & Co., $2 million to analyze all large technology contracts, including a “deep dive” on the troubled $46 million unemployment benefits computer system built by Deloitte Consulting, which delivered the project late, over budget, and riddled with glitches.

“We recognize we’re having some challenges here,” Letchford said in a wide-ranging interview.

Letchford is among the public officials and Deloitte executives scheduled to testify Monday at a legislative hearing examining problems with the unemployment computer system that have, since a July 1 rollout, left hundreds of jobless people per week without benefits.

Also expected to testify before the Senate’s Post-Audit and Oversight Committee on Monday will be Joanne Goldstein, the state secretary of Labor and Workforce Development, who has defended the system as largely successful.

Senator Cynthia Stone Creem, a Newton Democrat who chairs the committee, said she is holding hearing to explore the problems workers are having using the unemployment system. She said she also intends to delve into how the contract was awarded and administered, as well as the larger issue of how the state buys IT services.

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The hearing comes as troubled IT projects have gained national attention. The new online system for Americans to buy health insurance through the Affordable Care Act is experiencing widespread glitches. In addition, problems with a recently launched system for managing unemployment benefits in California, also built by Deloitte, have skewed the national reporting of weekly unemployment claims by the US Labor Department.

Technology specialists say large projects in both the public and private sectors are often riddled with problems, especially when complex systems are rolled out all at once after insufficient testing. State and federal government agencies, specialists added, seem particularly ill-equipped to oversee these projects. Often, it’s a question of resources: too few lawyers to vet contracts thoroughly and too few people with technical expertise to closely monitor large and costly jobs.

In Massachusetts, for example, Letchford described an Information Technology Division that’s nearly in crisis in terms of staffing. It has received less for IT projects than the governor requested for three straight years.

Since July, a dozen members of Letchford’s management team of 20 have left. Seven were senior staffers, including the chief technology officer, director of engineering, and director of security. They left for the private sector and academia, he said, where they can earn far more than their state salaries of more than $90,000 a year.

“It’s been very, very difficult,’’ Letchford said.

The recent exodus came long after the troubled contracts were awarded, however. The project to move unemployment benefits online started in 2007. The first phase, for employers, began in late 2009, with numerous problems.

Then, Deloitte delivered phase 2, for unemployed people to apply for benefits, two years late and more than $6 million over budget. In August, the Department of Revenue dismissed Deloitte after it botched a $114 million system meant to modernize the Commonwealth’s tax-filing system. The state had paid the firm $54 million.

Lauren Jones, spokeswoman for the Labor Department, said, “Secretary Goldstein has worked closely with legislators as part of the launch of UI Online, and looks forward to continuing the conversation on how the new system can best serve job seekers.’’

A spokesman for Deloitte declined to comment.

Letchford would not say how Deloitte won the $76.8 million Registry of Motor Vehicles contract at the end of last year, while it had two other major contracts under duress.

Only two companies bid on that contract, he said.

Letchford’s group plans to change the way the state handles IT projects, in part by broadening the pool of “prequalified vendors,” or those approved by the state to compete for business, and weeding out underperformers.But those changes won’t be put into place immediately; they’ll come as contracts expire and as part of future IT borrowing bills.

In the meantime, Letchford is dispatching McKinsey to examine what’s gone wrong with the unemployment system. And he had lawyers from the Department of Revenue advise the Registry of Motor Vehicles to make sure they held Deloitte accountable on the new job.

Letchford is also addressing another pressing problem: managing his own time. With a staff of 337 — 317 of them in union positions — responsible for providing IT services to the state, Letchford’s time is often taken up dealing with immediate problems, such as making sure a data center in Springfield is working, rather than overseeing the installation of multimillion-dollar systems.

”I don’t know if I could be put in a place which is as far removed from delivering the mission of government if I tried,’’ Letchford said.

Beth Healy can be reached at Beth.Healy@globe.com. Megan Woolhouse can be reached at Megan.Woolhouse@globe.com.

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