Posted on: Tuesday, October 19, 2004
Pension fund restarts upgrade
By Deborah Adamson
Advertiser Staff Writer
The state employee pension fund opened the bidding yesterday for a contract to upgrade its computer system, a year after settling a lawsuit with a Colorado computer firm for allegedly mishandling the job.
The Employees' Retirement System posted advertisements in Mainland and local publications soliciting bids for what is expected to be a two-year project. The ERS board also hired Maximus of Reston, Va., as a consultant to help the pension fund choose a vendor and oversee the work.
As Maximus representatives unveiled the company's plans at an ERS board meeting yesterday, board members were cautious, remembering the rancor that ended in a court battle with Colorado-based Quovadx.
Hired in 2000, the computer company was fired two years later for allegedly not coming through with a workable system for the $13 million project. Quovadx sued for breach of contract and the ERS countersued. The parties settled in September; details were not disclosed.
"When will the whole system be running?" Darwin Hamamoto, a board member who raised both hands with crossed fingers, asked Maximus representatives.
"What happens when there's a failure?" added Colbert Matsumoto, another board member. When it comes to Hawai'i's experience with systems implementation, "I don't know of one (project) that hasn't gone awry," he said Rick Singleton, Maximus' project manager in charge of the ERS system upgrade, said his firm would oversee the project daily and ask for weekly status reports from the vendor. In addition, Maximus has made the request for proposal, or RFP, much more detailed so the vendor has specific targets to meet.
The goal is to spot any problems quickly to minimize the cost to the state, he said.
Bids are due by Dec. 3 and the winner will be chosen by Feb. 15. Work is expected to start March 1 and should last until May 1, 2007. The dates are tentative; the final schedule will be determined by the vendor, Singleton said.
The ERS has been trying to upgrade its system since 1992 to speed processing of pension payments and increase efficiency. This year the pension fund switched to IBM computers from its 1980s Wang systems. But the software hasn't been upgraded.
Last year, the state auditor's office criticized the ERS for taking an average of 18 months to calculate full benefits. Retirees were shortchanged anywhere from $280 to more than $10,000 while the ERS figured out exactly how much they were owed per month, the auditor's report said. When payments were finally made in full, they did not include interest.
The stakes for a system upgrade are higher now. In the last session, the Legislature approved the creation of a hybrid retirement plan — a cross between a traditional pension and a 401(k) plan — to be implemented by July 1, 2006.
The system upgrade would have to phase in the hybrid plan by then. If not, the pension fund must go back to the Legislature to ask for an extension.
The hybrid plan would be open to 55,000 state and county government workers out of 99,000 workers, retirees and beneficiaries served by the ERS.
Reach Deborah Adamson at dadamson@honoluluadvertiser.com or 525-8088.
