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Turf wars, out-of-control spending, lack of oversight plagues OIT

By Bill Britt
Alabama Political Reporter

Legislation making the Office of Information Technology a stand-alone agency will go into effect on October 1, 2017, but nothing in SB219 as proposed by retiring State Senator Phil Williams, R-Rainbow City, will mitigate the failures of the office, or stem the flood of red-ink coming from the agency.

More money, bigger salaries under new legislation for OIT

Republican Gov. Kay Ivey, along with Finance Director Clinton Carter, are working to clean up the shambles left by former Gov. Robert Bentley and OIT’s leadership. But replacing Agency Chief Dr. Joanne Hale nor the retirement of her assistant, Cheri Martin, is slowing the agency’s spending, or the crippling in-fighting that has led to hundreds of millions in taxpayer funds squandered on high-priced personnel, incompatible software and rank incompetence.

OIT was created by legislation some four years ago, but an enabling bill removing it from under the leadership of the Department of Finance was not passed until the 2017 Legislative Session. According to several current and former employees, Hale’s acting replacement, Jim Purcell, is leading a new round of unbridled spending. And once again, management turf wars are causing widespread panic within the agency’s rank-in-file workers.

As one staffer put it, “The current Secretary is leading a spending spree on so-called essential new services that has caused the agency to be running in the red and panic is setting in under the new management.” Speaking anonymously for fear of losing their jobs, many career IT specialists are alarmed by what they see happening to a department they built. Specifically, there is grave concern about a new managed services provider contract which controls all hiring of new contract personnel throughout the state.

Also of concern is the billing process that is slowly coming online. “This new process is causing a cash flow nightmare,” said one employee. “OIT is on the hook for several million a month up front but is only being reimbursed by the agencies over multiple month[s].” OIT contracts its service to other state agencies, which then pay OIT for its services. This reimbursement scheme is due to poorly written legislation, and even worse implementation say APR’s sources. “There is a cash flow nightmare, taking hold and the Governor’s office and the Legislature are in the dark,” according to one team member.

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One senior staffer warned, “The Governor will be blindsided by a failing new agency she has allowed to go unchecked. She would be incredibly wise to immediately audit the financials of OIT before it is too late.”

Ivey and Carter are not known for sweeping problems under the carpet or avoiding hard facts, but as one former senior consultant told APR, “You can’t fix what you can’t see, and some of these folks are real good at hiding.”

Nearly four years ago, APR began documenting the lavish spending and system-wide failings of OIT. However, Bentley spurred on by then, Acting Finance Director Bill Newton and his assistant Rex McDowell refused to heed all warning because of the tremendous power wielded by Newton and McDowell as sole Czars over information technology. During their watch, the Bentley administration sought to implement several different software systems — STAARS, eSTART and CARES — with little success. Each software system failed in some way costing taxpayers millions in both implementation and legal fees resulting from lawsuits.

Investigation Reveals State in Arrears with Thousands of Vendors

As an example of bureaucratic waste, pallets of Cisco phones, perhaps millions of dollars’ worth, sat gathering dust in a warehouse in January 2016. For over a year, they sat in storage because of McDowell, countered agencies who had requested the purchase of a Cisco system for VoIP. The Office of the Attorney General, the Medicaid Agency, and the State Personnel Department all ordered the Cisco phone system, but Newton and McDowell had other plans.

Pallets of Phones Gather Dust Under Newton’s Orders

According to several inside OIT, a new plan is afoot to enter a new voice over IP contract is which according to APR’s sources will “lead to another financial fiasco.” The new plan is to convert all state buildings to new voice and data systems one building at a time. The problem according to a tech expert is that it will cost tens of millions of dollars, “because each building has to be completely rewired with fiber which is a major renovation project for each building.”

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While the tech expert agrees the plan will yield savings in the long run, he questions the wisdom of spending more tax dollars given the current financial instability of OIT as a whole. “I have to wonder if anybody minds the store over there,” he said.

Newton and McDowell replaced Cisco phones with ones purchased from Huntsville-based company Digium. Now instead of stacks of Cisco phones wasting away unused there are pallets of boxed Digium phones stored in abandon offices space.

Current and former IT staff confirm that OIT is quietly committed to outsourcing management of the state mainframe central computer. “If that occurs then taxpayers will pay at least double what is being spent on current mainframe expenditures,” said an APR source.

Another point of concern is a movement started under previous leadership to outscore IT personnel through professional services contracts. “Billing rates for all contract IT employees are at least double the cost of senior merit staff (including benefits and retirement),” said one senior advisor. “Also, once the vendor is in control of all state mainframe services the real rate hikes will begin,” she said.

APR, through its reporting, alerted the Bentley administration to the dire problems at OIT. It now appears that out-of-control spending, ineptitude, territorial battles and management’s reluctance to honestly inform the Governor’s office are still present at the newly created behemoth agency.


Bill Britt is editor-in-chief at the Alabama Political Reporter and host of The Voice of Alabama Politics. You can email him at [email protected] or follow him on Twitter.

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