The State Worker

Chronicling civil-service life for California state workers

August 15, 2013
State officials blame payroll debacle on contractor, other agency

130815-state-paychecks.jpgOfficials with the California State Controller's Office spent the better part of a three-hour hearing this afternoon explaining how their now-defunct project to overhaul the state payroll system fell victim to contracted vendors' shoddy work, poor evaluation guidelines and, in one instance, another department's insistence that the company's credentials couldn't be more deeply scrutinized.

The Senate budget subcommittee hearing, chaired by Sen. Richard Roth, D-Riverside, also underscored how term limits and employee turnover in the talent-starved information technology industry give officials a measure of cover when long-term, multimillion-dollar computer projects crash.

For most of the hearing, Roth asked 21st Century Project Manager Tony Davidson about points raised in a recent Senate Office of Oversight and Outcomes report that portrays the controller's office as nearly powerless to manage the project's downward spiral while simultaneously concealing the problems from lawmakers.

Roth asked, for example, about a May 2012 internal email noted in the report. The email said that some human resources staff refused to participate in payroll system training, fell asleep during training classes or displayed open hostility to change.

Davidson blamed SAP, the vendor. SAP was in charge of managing software training, he said, and had "scheduled our folks to 172 hours. ... Four days of training, then their fifth day at work doing their jobs. For five weeks. I would have been frustrated myself."

But all the state could do was issue a so-called "cure letter" to SAP to do a better job of training. The company insisted the rigorous schedule was "best practice," he said.

(Davidson started dropping in unannounced on training classes and didn't see evidence of disinterest or rebellion, he said.)

Later, Roth held up a March 2012 report card on the project that used a red, yellow and green grading system to show the project's progress. It showed 14 of 15 areas measured were green, including "vendor viability."

A few months later, SAP launched a disastrous pilot payroll program that ended with the project's termination earlier this year.

"Who prepared this?" Roth asked, holding up the report card.

Davidson acknowledged that project managers scored the project, but said they didn't devise the green-yellow-red scoring guidelines. The report card measured progress from a few months earlier, he said, so it didn't include issues that cropped up just before the failed pilot. And the viability question, he said, covered SAP's financial stability, not its performance on the project.

"We followed the rules" in writing the report card, Davidson said.

Even so, he called the rating system "subjective" and suggested the Legislature could "do a great service" by mandating objective IT reporting standards.

Davidson also said that some officials at the controller's office wanted to do a "deeper dive" into whether SAP could handle the job during a first-ever "bake off" with another company to award state tech work.

But the Department of General Services, which handled IT procurement, squashed the idea, he said, since there weren't clear guidelines for the extra backgrounding.

"DGS said it might be perceived as some sort of favoritism," Davidson said.

"I wasn't here," was easily the most-repeated phrase during the hearing, as various speakers made it clear that they inherited the 9-year-old project or its oversight from predecessors.

Roth, a retired two-star general, is in his first Senate term. Davidson got involved with the 9-year-old project just a few years ago. State Controller John Chiang didn't attend the meeting, but he's got some distance from the project, too.

Chiang took office in 2007 and inherited the payroll system overhaul from his predecessor, Steve Westly. (If you start with the first $1 million appropriation to study overhauling the payroll system, the 21st Century Project is actually 15 years old.)

PHOTO: State paychecks roll out from a printer at the California state controller's office on C Street in Sacramento on Thursday May 22, 2003. Sacramento Bee/ Randall Benton

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About The State Worker

Jon Ortiz The Author

Jon Ortiz launched The State Worker blog and a companion column in 2008 to cover state government from the perspective of California government employees. Every day he filters the news through a single question: "What does this mean for state workers?" Join Ortiz for updates and debate on state pay, benefits, pensions, contracts and jobs. Contact him at (916) 321-1043 and at


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