NC tax office, firm end computer system contract

Published 12:00 am Thursday, January 16, 2014

RALEIGH (AP) — The state of North Carolina has ended a contract signed more than five years ago with a company directed to upgrade its tax return processing system, although the project isn’t finished.
The Revenue Department and CGI Group said Wednesday they mutually decided to end the company’s work on the agency’s Tax Information Management System, which is supposed to replace the current legacy system.
Department spokesman Trevor Johnson said the state had paid about $63.8 million to CGI to date and agreed to pay another $5 million for unpaid or unbilled work. CGI finished a project phase that helps the state locate assets to garnish unpaid tax bills. Johnson said that program had helped the state collect an additional $320 million over time.
But Johnson said the agency wasn’t happy with the progress made on the other phases of the project, which called for the integration of certain tax types into the system model. The project is one in a number of recent state government information technology upgrades that have been met by delays and additional expenses.
“We thought the best path for the department was to go in a different direction,” Johnson said Wednesday evening. The agency’s still wants to complete the project, he added.
A CGI spokeswoman didn’t immediately return a phone call Wednesday night. In a company statement announcing the end of the agreement, CGI praised its work for generating more tax revenues for the state.
The Revenue Department said the contract with CGI Group was signed in August 2008. The contract termination, which was agreed to late last week, won’t affect the current tax filing season, Johnson said.
A 2013 performance review by State Auditor Beth Wood of 84 information technology projects found their actual costs were more than twice as much and took 65 percent longer to complete than originally estimated. Data from the review found the Tax Information Management System was projected to cost $97.4 million. Originally estimated in 2007 to be finished by the end of 2011, the project was labeled in the report for completion by the end of this month.
The state Department of Health and Human Services faced years of delays before going online last summer with a Medicaid billing system often labeled the state’s most expensive IT project. The Division of Motor Vehicles recently replaced its vendor to develop a next-generation driver’s license system after delays and disagreements.
Canadian-based CGI Group is the parent company of CGI Federal, which has been the lead website contractor for the federal government’s health insurance website. The Obama administration decided not to renew CGI Federal’s contract on the project.