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$46m jobless benefits system has over 100 defects

Senate testimony is first accounting for software

Michael Marino, who formerly oversaw Deloitte’s business with Massachusetts government, acknowledged to a Senate panel that better communication would have helped.

Lane Turner/Globe Staff

Michael Marino, who formerly oversaw Deloitte’s business with Massachusetts government, acknowledged to a Senate panel that better communication would have helped.

More than seven months after its rollout, the $46 million computer system for managing unemployment benefits for tens of thousands of jobless workers still has more than 100 defects, representatives of the consulting firm that built the system told a state Senate panel on Tuesday.

Officials of Deloitte Consulting said 11 defects surfaced when the system was unveiled on July 1, but those problems multiplied as the system came into wider use. Deloitte has been steadily fixing defects ever since, but company officials did not disclose the total problems addressed.

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Still, their testimony before the Senate Post Audit and Oversight Committee marks the first time the New York consulting firm has provided an accounting of bugs in the computer system, which was rolled out two years late, $6 million over budget, and riddled with problems.

The Deloitte officials were among a long line of state officials and other witnesses grilled by lawmakers as they continued their investigation into Deloitte's performance and how the state purchases technology services. At least one other system built for the state by Deloitte encountered widespread problems.

The state Department of Revenue discovered 1,000 system defects during a test of a tax collection system and later fired Deloitte midway through a $114 million contract. Although the state had spent $54 million on it, the system could not even print forms or calculate interest and penalties.

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Among those testifying Tuesday was Rachel Kaprielian, the recently appointed secretary of labor and workforce development. Kaprielian succeeded Joanne Goldstein, who took a job at Northeastern University.

Kaprielian struck a different tone from her predecessor, who had characterized the new system as an overall success.

Kaprielian acknowledged problems, testifying that she had “seen reams of documents about where the problems are” and was working on a plan to fix them. She said that in her preliminary assessment, it appears the Labor Department did not have sufficient resources to roll out the new system correctly.

“We’re trying to see what the big picture was, and is,” Kaprielian said Tuesday. “Obviously this is a very big and burning issue.”

She said another challenge is reducing the average wait time of 40 minutes for people calling the department with problems with the system or in need of help filing claims. The Globe has reported that many callers have waited on phone lines for hours, only to be disconnected.

Before her appointment as labor secretary, Kaprielian led the Registry of Motor Vehicles, where, in 2012, she approved $76.8 million contract with Deloitte to build an online licensing system.

When asked by Senator Cynthia Stone Creem why the registry hired Deloitte to undertake another major IT project considering its other problems in other state agencies, Kaprielian said she was aware of the Revenue Department’s issues, but not the Labor Department’s.

In questioning Kaprielian, Creem, a Newton Democrat and committee chairwoman, noted frequently — and with increasing frustration — how difficult it was to find anyone to testify who had hands-on experience with the contracts in question. Many people involved left their positions with the state, including Goldstein, and John Letchford, the state’s former technology chief.

“What we’re trying to do, struggling with, is coming out with ideas of how to do better,” Creem said during Kaprielian's testimony.

Creem asked the six Deloitte executives at the hearing about reports she has received that show a breakdown in communications between Deloitte consultants and Labor Department employees working on the system. Earlier in the hearing, Michael Marino, who formerly oversaw Deloitte’s business with Massachusetts state government, acknowledged that better communication would have helped.

But Arun Natesan, a Deloitte partner now overseeing the unemployment computer system project, said the firm is “absolutely confident” about fixing new problems that have cropped up.

Problems with the Labor Department system began as early as 2009, when the state launched the first phase to allow employers to file unemployment insurance taxes online.

The bugs in the system forced state officials to hire an additional 30 employees to take calls about problems and waive fees and defer interest on late tax payments.

William Oates, the state's newly appointed chief information officer, suggested there will be greater oversight from his office. “There needs to be meaningful involvement from my office in all of these projects,’ he said.

Megan Woolhouse can be reached at megan.woolhouse@globe.com. Beth Healy can be reached at beth.healy@globe.com
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