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Investigation Reveals State in Arrears with Thousands of Vendors

Bill Britt

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By Bill Britt
Alabama Political Reporter

MONTGOMERY—Open Alabama Checkbook has not been updated since the beginning of fiscal year 2016. In an attempt to find out why,  alreporter.com investigated, and uncovered the ugly truth that the State’s new payment software has left hundreds of thousand of dollars in arrears with thousands of vendors waiting months for payments. According to three high-level agency employees, the State has fallen behind in its payment obligations since June of this year.

The Alabama Department of Transportation (ALDOT) alone has approximately 23,000 vendors who have not been paid in a timely fashion. Even the state attorneys’ Bar Association memberships have lapsed because of the State’s non-payment.

An email dated November 19, 2015, from the Alabama Bar Association to lawyers for the State read, “Subsequent to yesterday’s email reminder that certain members of the bar have not yet paid their annual license fees, we learned that there is an issue with the new statewide accounting system which has delayed some of those payments for certain state employees. Please rest assured that we are aware of this problem and that as a state employee you will not be penalized for late payments processed through the State Comptroller. We will continue to work with the State Comptroller to resolve this matter as quickly as possible.”

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So dire is this situation, that the State is having to pay interest on payments owed, which one source says is a first in Alabama history. So advanced is the problem, that even a National Guard Armory in North Alabama had their electricity turned off because TVA did not receive payment from the State.

The fault lies with a $47 million dollar software package purchase from CGI.com.

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CGI has held a maintenance contract with the State since around 1980, which was renewed annually for “maintenance only.”

As one sourced recalled, “Suddenly, the State put out an RFP and was getting in proposals, then Bill Newton and Rex McDowell decided to do away with it and to modified CGI’s maintenance contract awarding them a nearly $50 million, no-bid contract.”

CGI Federal owned by CGI Group was the company behind the botched rollout of Obamacare.

After a report by alreporter.com in Aug. 2013, Gov. Robert Bentley sent a memo to all department heads, telling them to end the practice of no-bid contracts; yet, Newton seems to have ignored his boss’ warnings.

The project for the new system with the acronym STAARS, which stands for State of Alabama Accounting and Resource System, began in December 2013, with a goal of “implement[ing] a single software solution to modernize the State’s accounting, procurement, personnel, payroll, budget and reporting functions across all state agencies.”

The Executive Steering Committee over the STAARS implementation was Finance Director Newton, Secretary of IT Brunson White, Assistant Finance Director McDowell, State Treasurer Young Boozer and Agency Representative (DOC) Steve Brown.

Under the new system, agencies are required to submit all payments to the State Finance office where the comptroller issues the actual checks for payments. According to a highly-placed source within State government, this is where the process has broken down, because of the new software.

A sources who has worked with the new system said, “This system…and the fact that we, at the agency level, have no control over the process. We are the ones that deal with our vendors but ultimately it is the Finance Department that has to cut the checks and it is their system that is causing all of the problems.”

According to sources close to the new software project, the system was hastily implemented and never thoroughly tested and they challenge the statement that it was customized for Alabama. “They bought a canned version, then didn’t do any modifications. They implemented before testing and it has been an absolute disaster.”

Hardest hit has been ALDOT because they have the biggest and most expensive vendors. Companies have been forced to acquire bridge loans because of the State’s slow payments. Sources say ALDOT has been passing out forms to vendors to claim interest because payments are so overdue. And, at least one concrete company has threatened to declare bankruptcy because of the failure of the State to pay.

The Finance Office has tried to keep the system failure under wraps, refusing to return agency phone calls and even sending out emails saying, “Don’t call us, we are working on it.”

The situation has become so serious that comptrollers are having to declare emergencies to get things paid.

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One State employee who spoke about the broken software system said, “Contrary to what politicians and public figures like to say about public employees, most of us care about what we are doing, too. We see things like this and what the impact has been not only on big business but every little mom and pop store out there that is waiting on a $500 check and we are powerless to do anything.”

So, it was not that Open Alabama was not working, it was the entire $47 million dollar system that is at fault.

Calls made to the Finance and Comptroller’s offices were referred to the Governor’s communication’s office.

 

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