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NC’s license upgrade deal poised for termination

RALEIGH (AP) — North Carolina is poised to cancel a contract with a company that promised three years ago to create high-tech driver’s licenses but officials have said failed to deliver.
The Division of Motor Vehicles wrote a termination letter in September to MorphoTrak, which was awarded in 2010 the job to develop and manage the state’s Next Generation Secure License program, according to documents obtained by the Associated Press.
The licenses are supposed to include laser-embossed 3-D driver images and other anti-counterfeit measures to comply with federal license standards. But DMV says the company repeatedly hasn’t met requirements of the contract, which if ultimately cancelled could mean the state spending more than $5 million with little to show for it.
A pilot project originally expected to begin in July 2011 never happened. DMV previously told MorphoTrak to stop working on the project in 2011 and 2012 because of perceived problems. The state’s chief information officer also once suspended the project, documents given to the AP said. The dispute has now stretched into Gov. Pat McCrory’s administration.
“What has been provided to NCDMV is incomplete and inadequate as a solution, and is therefore without value of any kind to NCDMV,” then-DMV Commissioner Nick Tennyson wrote Sept. 18 to MorphoTrak President Daniel Vassy in directing his company to cease work.
The letter compelled the CEO of Safran Morpho, MorphoTrak’s French parent company, to come to Raleigh in late September to try to work out the dispute. Since then, DMV has delayed contract termination until Nov. 22.
State transportation officials are working “to determine the most effective way to complete the required work with the most efficient use of taxpayer money,” DMV spokeswoman Marge Howell said in a statement. “The department hopes to reach a resolution and announce the path forward before the end of this year.”
A spokeswoman for MorphoTrak, based in Alexandria, Va., didn’t return calls Tuesday or Wednesday seeking comment on the disagreement. But MorphoTrak said in previous correspondence it hadn’t breached the contract and blamed DMV for seeking too many 11th-hour project adjustments.
The company “cannot absorb the additional cost of implementing changes defined very late in the process; nor can MorphoTrak accept the continued running costs of implementing the program without beginning to see revenue,” MorphoTrak project director Leevi Raassina wrote in September 2012.
Documents provided by DMV show agency officials frustrated by delays in the project, which is supposed to help reduce identity theft and fraud by 80 percent and comply with the 2005 federal REAL ID law. The original June 2010 agreement had MorphoTrak receiving $2.12 per card issued for seven years, with an option for two more years at the same price.
In July 2011, then-Deputy DMV Commissioner Johanna Reese noted several deficiencies in the project, many of them technical matters. But they also included what DMV called MorphoTrak’s failure to provide industrial cameras at branch offices to take driver photographs with little or no adjustments required. The cameras MorphoTrak proposed would have been subject to repeated calibrations, she wrote.
“MorphoTrak has been largely non-responsive or has given oblique responses that have not resulted in progress being made,” Reese wrote to MorphTrak in the first stop-work order. Another similar order signed in September 2012 mentioned 27 disputed items in the pilot program. Raassina responded that the company already has made changes valued at more than $300,000 without charging the state.
The state Attorney General’s Office wrote MorphoTrak this March that the vendor was violating the contract by missing multiple deadlines.
The state Department of Transportation, which includes DMV, said it’s invested $2.3 million mostly in internal personnel costs for the project, $2.1 million in computer hardware and $1 million in software. The computer hardware will be “repurposed” within the agency, DMV said this week.
DMV and DOT have been talking with another company that provides North Carolina’s current driver’s licenses to take over the project. The situation is unusual because the company is MorphoTrust, a sister company of MorphoTrak that had already been expected to provide back-office operations for the next generation license, DMV said. MorphoTrust, previously called L-1 Identity Solutions, was purchased by MorphoTrak’s parent in 2011.

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