The
Public
Eye

From Assemblyman Jeff Klein
Chair, Committee on Oversight, Analysis and Investigation

In February 2003, Chairman Jeff Klein (D-Bronx) reported on over half-a-billion dollars in potential government waste. Klein said: "The Pataki administration has not finished an inventory of computer assets which, under state law, should have been submitted in October 2002. Industry-based research suggests that States put at risk billions of dollars each fiscal year for failing to do such inventory management. Chairman Klein was joined by Assemblywoman RoAnn Destito, as Chair of the Assembly Committee on Governmental Operations and David Koon, as Chair of the Assembly Commission on Government Administration, in calling for prompt action.

"This is Management 101," said Klein. "Even the smallest of local businesses knows that one of the first things that it must do is take stock of its assets and inventories. How can anyone know what additional items they need to buy, without knowing what they already have? What is obsolete? What is on hand? "

Klein’s analysis was, in part, based on an October 2002 report by the Aberdeen Group, a Boston-based consulting firm, which suggested that organizations can shave up to 35% of information technology (IT) costs by just performing asset management. According to estimates by Federal Sources Inc., a consulting group serving the public sector vendor community, New York State spent $1.6 billion on information technology in FY 01-02. Applying the Aberdeen estimate, in just the last fiscal year, $560 million dollars might have been saved. Klein said: "This year it has to stop. This State is in a fiscal crisis. Budget cuts are on the horizon. The Administration should not get any more money for computers until it gives a full accounting of the billions of dollars it has already spent."

Klein also found that computer contract overruns cost taxpayers millions:

• 1,347 information technology contracts increased in cost by $430 million.*
• 38% percent of these contracts showed some increase, with the average increase per IT contract of $319,000. *
• 14% percent of these contracts increased by more than half of their initial value. *
• 91 contracts increased over 100%. *
• CONNECTIONS: A foster care tracking computer system has climbed $110 million dollars over the original cost and still does not work properly.
• WICSIS: An information system for the Women’s, Infants and Children food program (WIC). At last count, the prime contractor is getting paid 54% over the original bid. A hardware subcontractor is getting a 112% increase. These two increases reflect 20 million dollars in additional cost.

(*Source data from the Office of State Comptroller)

In February, Chairman Klein recommended:

• full Compliance with the Reporting law. This will provide the Legislature with a complete accounting of the State’s IT costs – existing and proposed. This will be critical as the Assembly proceeds with budgeting for the future and the State ensures its information security.
• a complete accounting of all IT contracts where costs have increased by over 100%.
• Executive accountability for these failures. With both a Chief Information Officer (CIO) appointed by the Governor by Executive Order, and a Director of the Office for Technology (OFT) pursuant to State Law, problems like these should not be happening.

• Office for Technology fails to issue report required by law. Klein follow-up leads to agency promise to report by June of 2003... Klein will keep 'The Public Eye' watching for promised report.

  that the Governor’s Budget Submission reveal IT projects as separate items of appropriation and require that the procurement method, scope, cost and timeline of such projects be firmly established in such submissions.
• that the Director of the Budget submit a report to the Legislature that includes IT project specific information. The report should include details on vendors, anticipated lifetime contract costs, the availability of each contract to other governmental bodies, cost increasing contract amendments, the total of all money spent on each contract, and financing arrangements for projects.

Chairman Klein, joined by 23 of his Assembly colleagues, introduced Assembly Bill 6977. This legislation will help to ensure that the Legislature is provided with detailed information at budget time about State contract costs. Specifically, the legislation would require: 1) more detail in the State budget about proposed appropriations for IT projects and 2) a separate Budget report providing a complete picture about contracts’ anticipated life-time costs, overruns and financing. Together, this information will provide the Legislature with the needed information to make informed decisions during the budget process about the true costs for IT contracting.

Klein concluded "When laws such as this are violated, my concern continues to be, 'At what cost to the State?'". The Assembly is committed to strong government management principles. The taxpayers of this state deserve a tight-run ship and I promise to follow this very closely."

PUBLIC EYE #2 (May 2003) is the second in a series of updates from Chairman Jeff Klein detailing his work as Chair of the NYS Assembly Oversight, Analysis and Investigation Committee. Other issues will follow. The Committee is charged with reviewing implementation and adequacy of laws and programs to ensure compliance by the public and government agencies. Through its monitoring and investigative activities, it seeks to determine whether programs are operating as required and whether funds allocated for programs are spent effectively, efficiently and in accordance with legislative intent.

District Office: 728 Lydig Avenue, Bronx, NY 10462, 718.409.0109
Albany Office: Room 637, Legislative Office Building, Albany, NY 12248, 518.455.5844
Committee Office: Agency Building 4, 12th Floor, Albany, NY 12248, 518.455.3039
kleinj@assembly.state.ny.us