Lawmakers OK $4.2 million fund transfer for higher computer program costs

Brendan Riley

Wednesday, March 25, 1998 | 11:46 a.m.

CARSON CITY - A $4.2 million fund transfer to help cover higher-than-expected costs for a new state computer project has been approved by state lawmakers.

The Legislature's Interim Finance Committee voted Wednesday to approve the transfer for the state Division of Child and Family Services, which has a contract with a McLean, Va., firm for a $14.2 million computer system.

Assemblyman Morse Arberry, D-Las Vegas, voted against the transfer after questioning why the total cost of the contract with BDM International Inc. was so much higher than an initial $6 million estimate in 1996.

But other IFC members endorsed the plan after being told that the early estimate was made by a consultant before some dramatic changes occurred in the computer programming industry and drove the price upward.

Assemblyman Lynn Hettrick, R-Gardnerville, said the explanation made sense to him, adding that the state agency also built extensive safeguards into its bid proposal to ensure costs wouldn't soar any higher later on.

Child and Family Services Division chief Steve Shaw said the contract includes performance bonds and other provisions to make sure the system is properly set up.

Shaw added BDM has guaranteed it will train division employees in use of the system that will, in line with a federal mandate, track child welfare cases, corrections programs and mental health projects.

"We built triple guarantees into this," Shaw said following the IFC approval. "We shifted the risk from the state to BDM."

Factors that drove the cost up from its initial estimate included the absence of such systems in any state in 1996. But when Nevada went to bid last year, 19 other states were doing the same thing.

In addition, employee costs for companies like BDM soared since 1996 because of the demand for programmers to work on massive computer revisions needed throughout the industry. That's due to the transition from the 20th to 21st century - the "year 2000 problem."

The division's costs, including state and federal funds, now is about $11 million for the new program. The rest of the $14.2 million total, another mix of federal and state dollars, will be needed next year.

The computer project is the latest in a series of projects that have experienced high costs, delays or other glitches.

The $54 million system for the state Division of Welfare that was installed in 1989 still isn't on line. The state Taxation Department went to court to force a Reno contractor to pay more than $500,000 to fix a computer program it installed. And the Legislature's $1.7 million system was never fully operational during the 1997 session.