NOMADS wandering lost, confused

Sunday, Aug. 22, 1999 | 9:28 a.m.

CARSON CITY -- When the name "NOMADS" is mentioned in state government circles, people usually cringe. One top official even calls it "the poster child" on how not to implement a computer system.

NOMADS is the acronym for the project to develop a integrated system for the state Welfare Division that would go beyond any computer system developed by any other state -- with "would" being the key word. So far, despite the years of effort and the millions of dollars poured into it, NOMADS is not Nevada Operations Multi Automated Data Systems, but nomads -- a group of baffled computer programmers wandering in a technological minefield toward an elusive goal.

In theory the original concept for NOMADS sounds logical. State welfare workers would be able to utilize one computer system to ensure that child-support payments and other welfare programs are managed in a timely and accurate manner.

But in practice setting up the complicated programming and entering the data for tracking thousands of families with widely divergent support arrangements from widely different types of social programs has proven to be a task far larger than anyone in state government ever dreamed it could be.

And it's also about $75 million more expensive than anyone ever imagined.

"The state did not know what it was getting into," said state Sen. Bill O'Donnell, R-Las Vegas. "We did not have the staff or the computer capability to do what somebody dreamed up we could do. And we have been paying for it ever since."

Sullied history

NOMADS began with a $22.6 million budget. Its costs -- counting state staff time and money for contract workers -- ballooned to $88.8 million as of last October and will mushroom to more than $100 million by its completion, if indeed it ever is completed.

The history of the project chronicles missed deadlines, cost overruns, staff turnover, change orders and lack of consistent leadership. Not to mention the bickering between state officials and IBM, the business giant which was hired in 1992 to develop the program within three years.

NOMADS is now in its seventh year of development with at least one more to go. The state faces a $5 million fine from the federal government for failing to bring it on line by October 1997.

NOMADS was born after a 1988 federal law required states to have a single system for child-support enforcement. The goal was to get support payments to custodial families quicker, track down "deadbeat dads" faster and otherwise streamline the system.

The Welfare Division contracted for a feasibility study. The decision was made to produce an integrated computer system, not just a single program for child support.

Besides child support, it would include food stamps, Medicaid eligibility, aid to dependent children and employment and training programs. The employment and training programs were later dropped from the planning.

Nevada is the only state to embark on developming an integrated system.

Bad omens surfaced right after the 1989 Legislature approved the project. The budget office froze the funds for nearly two years. Former state Welfare Director Linda Ryan said no reason was given for locking up the funding.

"The worst thing was we were in hopes of getting a really good contractor," Ryan said. "Unfortunately, by the time we went out to bid in 1991, all the good contractors were taken," by other states.

Ryan said there were only two bidders and one didn't measure up. A $12.3 million contract was awarded in June 1992 to Integrated Systems Solutions Corp., the consulting arm to IBM, to design, develop and implement the system. "We thought because of the IBM connection, we would have a successful contract," said Ryan, who retired in January 1993.

At the time, she said, the old computer system was "taped together" and we "had a lot of problems."

"We knew it could crash at any time," Ryan said. "A fully integrated system would make the system efficient."

NOMADS was one of the biggest headaches inherited by the administration of Gov. Kenny Guinn. The governor is hoping for an October 2000 completion date for the system's initial phase. But he's not terribly optimistic.

"Let's try one more time to fix this. If we can't, I have to stand up and make some bold recommendations," Guinn said. "I don't know what they will be as of today because I have to find out how far we get with this program.

"But the solution in the future is not going to be coming back and saying we need another $20 million to $30 million."

'Lunar lunacy'

NOMADS, according to IBM, is the biggest computer project ever undertaken in Nevada and "Big Blue" in 1997 compared its complexity, which includes 10 million lines of code, to sending a man to the moon.

Critics call it "lunar lunacy."

O'Donnell, R-Las Vegas, one of the computer gurus in the Legislature, says NOMADS has become a "major disaster." He wanted to "pull the plug" four years ago.

O'Donnell thinks the state should regroup and start again if only because the computer language is now outdated and complicated.

IBM submitted its general system design in June 1993, which was rejected by the Welfare Division, now under the administration of Myla Florence. It was another five months before IBM delivered an acceptable product.

Then came a flurry of contract changes. In June 1994 Integrated Systems threatened to pull out, saying the job was bigger than forecast. Despite some grumbling by state legislators the contract was renegotiated for an additional $6.8 million.

Welfare reform, both in federal and state law, compounded the problem in 1997. The question was whether the state should complete the work without the new laws and then fix it later. The decision was made to rewrite the codes to include the new changes. IBM was given an additional $2.6 million in November 1997 for the job.

The contract was increased by $7.4 million in April 1998 for continued development, testing and conversion. That brought the total paid IBM to $29.3 million as of March of this year and the company is still owed about $2 million for work performed last fiscal year.

The state took over management of the project last month. But IBM still has about 15 people working with the state with their pay ranging from $99 an hour to $154 an hour.

A study of NOMADS in March of this year said its development has been "fraught with problems," part of them due to IBM. Maximus, the consulting firm that performed the study for the Welfare Division, said, "State project staff have expressed sentiments that IBM's overall performance has been less than satisfactory, both in managing the project and in delivering timely, high quality work products."

IBM blames part of the problem on the big turnover of high-level workers assigned by the state to the project.

In November 1996 and February 1997 IBM warned that the state must get ready to take over NOMADS with extensive training for workers and by publishing user handbooks and setting up a "help desk." It said it could do the job for $1.6 million. Charles Gibb, the IBM project executive, said the company was "very concerned" about a smooth rollout of the system.

In June 1998 Frank Pekovich, who succeeded Gibb, expressed fear the "project is in jeopardy" because of turnover in the state staff and lack of training. There was the loss of 10 key state employees. And the change orders, initially at 48, grew to 62, Pekovich said.

'Trail of tears'

During development of NOMADS, there were four directors from 1991-1996 in the state Department of Information Technology, which played a large role in working with IBM on the project. IBM also changed its project director four times.

Marlene Lockard, director of the information technology department since 1996, called NOMADS a "trail of tears." Staffers from her agency left the project on the average of one to two a month because of burnout and high pressure. That's been curtailed since Guinn secured money this year for bonuses for those who stay with NOMADS.

In February this year the U.S. Department of Health and Human Services said a November 1998 inspection found deficiencies in all areas. And it recommended the state take over the project from IBM.

The federal agency reported: "We have serious reservations as to whether the Nomads project can remain viable and can be brought to successful completion under present conditions.

"State staff indicated there would never be a break-even point for NOMADS. Based on the current projected costs and benefits, costs will always exceed benefits."

The program language used by IBM in building NOMADS is antiquated, according to the federal report. The federal agency said the state should look at the cost of converting to up-to-date programming.

Some suggested the state scrap NOMADS and begin again. But Maximus, the consulting firm hired by the state, said that could mean the loss of $25 million to $30 million a year in penalties from federal welfare funds. And it would take three to five years to develop a new system that would be just for child-support payments.

Guinn agrees. California stopped its development and the federal government is seeking $300 million back from that state, the governor said. Lockard backs the decision to stay the course, saying, "The shortest road to victory is to continue."

Initially the federal government contributed about 80 percent to the cost of the Nevada projects. That contribution dropped to the mid 70s and now is about 67 percent. And the federal money was cut off in September 1997 because the state didn't meet the deadline.

Guinn, Florence and Lockard flew to San Francisco this spring to negotiate with federal officials. Government aid started flowing again.

Lack of control

And the governor convinced legislators of the need for a full-time state project manager with a salary of $125,000, the highest of any state workers except physicians. That lack of control has been another one of the problems with the project -- nobody in the state is in full charge, Guinn said. In 1997 the Legislature refused to finance a full-time director.

"You have to have these kinds of people or you're at the mercy of consultants who charge you millions of dollars," Guinn says. "You can't ask people to run these complex programs on the side. A Myla Florence who has a very tremendously difficult and tiring and very busy job ... You can't ask her to do it on the side."

Applications are being accepted now for the first full-time director and Lockard hopes someone will be hired soon.

The federal government has agreed to refund $3.3 million of the proposed $5 million fine if the state meets the Oct. 1, 2000, deadline, Guinn says.

Lockard said NOMADS has been "the poster child on how one (computer system) should not be implemented."

There are currently 113 staff members testing the final code and entering cases. So far 15.9 percent of the child-support cases are in the system and 22 percent of the public assistance cases have been entered.

"It's a myth to say there is no system and it won't happen," Florence says.

She hopes to complete the work by September 2000 so the federal government can test and certify the system by October 2000, the new deadline. Eight other states have not yet had their systems approved by the federal government.

NOMADS still faces other difficulties.

Child-support cases, which are not involved with public assistance, are handled by counties and this data has to be fed manually into the state system. District attorneys, who supervised the support enforcement program, were reluctant to turn over the job to a system that couldn't prove itself. They didn't want to see any interruption of the monthly checks going to custodial families.

Counties are now converting their cases into the state system. An incentive plan has been adopted to pay people to work after hours, weekends and holidays to speed up the process.

Still not working

Washoe County District Attorney Dick Gammick said the system still isn't working properly. His staff still must work late at times to balance the checks going to families, making sure they receive the correct amount.

The system requires 900 pages of instruction and it is "very cumbersome," Gammick said. He is hiring 12 additional people when he "should be cutting staff."

But Florence is optimistic.

When completed, the system will automatically determine a person's eligibility for welfare and compute the benefits. "People are now doing it by hand, which is very error-prone," she says. There will be coordination between child support and other programs. And it will enable the state to nationally track for "deadbeat dads," who don't pay their child support.

If there's one lesson, Florence said, it's that the state bit off more than it could chew. Both Florence and Lockard said the project should have been done in stages, rather than as a single endeavor. The federal government required only a child-support program.

And the story of NOMADS will continue in the future.

Lockard said the system will have to be changed each time the state and federal governments enact new laws.

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