Monday, January 15, 2001
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Posted on: Monday, January 15, 2001

Software feud dogs state

By Lynda Arakawa
Advertiser Staff Writer

The Legislature has paid $1.7 million for computer software that wasn’t up and running in time for the past two legislative sessions and won’t be available for this week’s start of the 2001 session either because state officials can’t get it to work.

Unable to wait for the problems to be resolved, legislative staff began working last summer to create a new system of their own, which will be used this session for functions ranging from drafting bills to archiving data. State officials said no work has been disrupted because of the software problems.

The state attorney general’s office is negotiating a settlement with KPMG LLP, which was awarded the software contract in October 1997 despite having submitted the highest of three bids for the job. Deputy Attorney General Dave Karlen declined to reveal the nature of the talks.

"We’re pursuing all available options for negotiations, and to comment further would be inappropriate," he said.

KPMG, which provides accounting, tax and consulting services, was paid the balance due on the $1.7 million contract after it delivered the software in June 2000, more than a year after it had missed delivering a system in time for the 1999 legislative session.

But the system didn’t work, Karlen said. Senate Chief Clerk Paul Kawaguchi said the staff embarked on their own system — called Eclipse — last July.

For the 1999 session, the Legislature had to rely on a previous system maintained by Louisiana-based Public System Associates Inc., which had held the contract since 1987.

Without a KPMG system for the 2000 session, officials asked PSA to continue maintaining its system — called Shadow — for the Legislature, but PSA refused. The state sued, alleging that PSA threatened to disable the system, for which it held a license. According to the lawsuit, PSA said it would continue maintaining the Shadow system only if the state terminated its contract with KPMG, which the state refused to do.

Company sued back

PSA countersued, saying the state breached its agreement by, among other things, continuing to use the Shadow software after PSA terminated its license. The case is still pending.

Karlen said the Legislature has given KPMG a list of the software’s shortcomings, but the company hasn’t necessarily agreed there is a problem.

"KPMG, in responding, said different things about each of the deficiencies on the list, such as "we don’t think this is a problem (or) we need more information to tell one way or the other,’" Karlen said. "We’re in the process of evaluating those responses."

KPMG referred questions to Tim Harris, the company’s lawyer in Virginia, who did not return phone calls.

Karlen said the negotiations with KPMG began late last year, and both sides are working hard to settle the matter.

"And if we can’t resolve it," he said, "then we’ll do whatever the next step is, but at this point, we’re trying to work with them and they’re trying to work with us, and they realize that they were late on delivery and that it’s not being used for this current session."

An evaluation committee of several legislative staff members and one legislator recommended KPMG to the House and Senate over two other companies, including PSA, Kawaguchi said.

PSA’s bid was $877,377. A second Mainland company, Pythia Corp., submitted a $1.4 million bid. KPMG’s bid was $2.6 million, nearly three times the lowest bid. Legislative officials said the state awarded KPMG the contract and then negotiated a lower price, although they said price wasn’t the only factor in evaluating the bids.

"KPMG came in with the highest points," Kawaguchi said.

Kawaguchi and House Chief Clerk Patricia Mau-Shimizu declined to disclose problems with KPMG’s software because of the settlement talks. But last year, Mau-Shimizu blamed the delay partly on KPMG subcontractor XLINK, a Mainland company, which she said didn’t deliver acceptable software and then went out of business.

XLINK officials could not be reached for comment.

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