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Senate panel faults state, Deloitte on technology flaws

A Massachusetts Senate investigation found that state agencies and contractor Deloitte Consulting failed to work well together on two major state technology projects, resulting in a flawed computer system in one case and millions of dollars in wasted taxpayer money in the other.

The projects included the state Labor Department’s $46 million system to manage unemployment benefits and the $114 million online tax filing system for the Department of Revenue, which fired Deloitte after spending $54 million. The investigation also found that officials at both agencies failed to adequately plan the projects while Deloitte did not take enough care in testing the systems during their development.

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“There was a failure by the vendor (in both cases Deloitte Consulting LLP) and the agency to communicate and work constructively together to move these information-technology (IT) projects forward on schedule and produce the optimal product,” the investigation report said.

The Senate Committee on Post Audit and Oversight, which conducted the investigation, held three public hearings on the systems and state policies for buying technology services after a series of Globe stories highlighted significant problems

The system to manage unemployment benefits, launched in July, erroneously delayed, cut off, or reduced the unemployment benefits to potentially thousands of people in the state, according to the committee report. The Department of Revenue’s tax collection system ran into serious problems during development: Testing revealed 1,000 glitches and a system that was unable to do simple tasks, such as calculating interest.

Senator Cynthia Stone Creem, the Newton Democrat who chairs the Post Audit committee, said in an interview Wednesday that she found one aspect particularly disturbing. Despite evidence of clear problems, the state’s Information Technology Division, which is ultimately responsible for technology projects, did not intervene, providing no project oversight or management.

For example, the report said the committee reviewed 2011 Labor Department memos to the IT Department that expressed serious concern about the project and Deloitte’s lack of cooperation with state personnel. During the committee’s questioning of state IT department officials, Creem said, it appeared that no one was clearly in charge of the project, or even knew where key reports on its progress were located.

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“In the future, we’d like to see oversight. Everybody’s responsible,” Creem said. “There should have been a project manager, and if that had happened, we wouldn’t have these situations.”

Had state officials planned better, with a clearer idea of what they wanted the computer systems to accomplish, many problems could have been avoided, the report said. “The committee did not see evidence that some agency leaders on the [Labor Department] and [Revenue Department] projects remained apprised of their projects’ key goals.”

Deloitte said it would be inappropriate to comment before it has seen the report. State Auditor Suzanne Bump, the secretary of labor when the technology project began, did not respond to a request for comment, nor did her successor, Joanne Goldstein, who left the position in February to take a job at Northeastern University.

Navjeet Bal, the former Revenue Department commissioner who hired Deloitte, also did not respond to requests for comment. Bal, who now works at the Boston law firm Nixon Peabody, testified at an October committee hearing that she was surprised to learn the project had failed, saying she had put together an “A team” of people to manage it. Her successor, Amy Pitter, terminated the contract with Deloitte in August.

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The committee’s report will be submitted to Senate President Therese Murray. It does not identify how many unemployed people in Massachusetts had benefits cut off, delayed, or reduced because of system glitches.

The report cited Goldstein’s estimate that 100 to 300 claimants were affected by the problems weekly, but the audit committee was unable to get more comprehensive numbers from either the Labor Department or Deloitte. The report, however, suggested that up to 10 percent of the more than 3,000 people filing first-time claims each week over several months could have had benefits problems due to problems with the new system.

The report recommended a reorganization of the state’s system for awarding and overseeing technology projects, including changes that would make it easier for more companies to bid on contracts. The report said the current system “unnecessarily narrows the field of IT project bidders acceptable to the Commonwealth” with complex requirements that discourage many firms from submitting proposals.

Despite the sometimes turbulent relationship between the state and Deloitte officials, the report noted that the Labor Department hired former Deloitte employee Michelle Amante to oversee the consultant’s development of the computer system, giving “rise to a perception of conflict of interest.”

Amante, who had worked on the system as a Deloitte employee, said her experience at Deloitte was an asset. She also disclosed her former employment with Deloitte with the state Ethics Commission.

The state should develop protocols regarding the hiring of a vendor’s employees for management positions, the report said, “especially on the same project.”

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Megan Woolhouse can be reached at megan.woolhouse@globe.com.