$89M down the state drain

CFO Alex Sink pulls the plug on Aspire, a failed privatization project.

Published May 18, 2007

TALLAHASSEE - The state of Florida on Thursday declared its effort to privatize its accounting systems an expensive failure, as Chief Financial Officer Alex Sink suspended all work on the 3-year-old project.

After spending $89-million to build something new, the state is left with the 25-year-old system it had before.

"We didn't want to run the risk of wasting any more money and not have a good outcome," Sink said, noting the state's lack of oversight played a large role in the embarrassing collapse.

Known as Project Aspire, the venture was an ambitious but unwieldy attempt to hire a private firm to develop a streamlined accounting system capable of serving 36 separate state agencies with vastly different missions.

The goal was to replace a decades-old system that, according to Sink's spokeswoman, can't track how much money is left in an agency's budget. The new one was supposed to be capable of tracking every financial transaction in a state that spends $70-billion-plus a year.

The decision to pull the plug on Project Aspire is the latest in a series of sharp shifts in policy direction since Jeb Bush left the Governor's Office in January.

Project Aspire was under the direction of the Department of Financial Services, run by then-state CFO Tom Gallagher from 2003 to 2006. Gallagher changed project directors in 2005 and oversaw changes to the contract with a goal of implementation by July of this year.

The original budget for the project was $100-million, not including interest on borrowed money. So far, the state has spent $89-million "with no end in sight," Sink said.

A report issued in February by Gartner Inc., an information technology consultant hired by the state, noted progress in the project. But the report cited uncertainty in future state funding, lack of an up-to-date master plan and inconsistent expectations from different state agencies.

"There is no senior governance process in place to provide discipline, executive guidance and decisionmaking," the Gartner report said.

The major contractor on the project, BearingPoint, parted ways with the state in December, shortly after the election and weeks before Sink took office, foreshadowing Sink's decision.

Cathy Pomanti, BearingPoint's executive vice president, noted that her company had not received any payments since March 2006. But Pomanti cautioned state officials at the time that "it is not in the interests of the state or its taxpayers to stop the project at this time."

Since September 2004, the letter said, the state has requested 56 additional elements to the system, then 158 changes, followed by 65 more changes, then 23 more.

BearingPoint spokesman Steve Lunsford said the company had no immediate comment on Sink's decision.

Sink, a Democrat who ran on a platform that promised closer scrutiny of outsourcing deals, said the state itself played a role in the collapse of the project by failing to seize ownership of it.

"These projects need high-level executive involvement," Sink said.

Project Aspire was one of three large outsourcing projects begun under Bush that Sink and Gov. Charlie Crist said in February were overdue for scrutiny.

The other two projects, which are still under review, are a privatization of state purchasing, known as MyFlorida MarketPlace, and all payroll and human resources functions, known as PeopleFirst!

Crist said he fully supported Sink's decision to shut down Project Aspire.

Crist agreed that as he and state legislators criticize city and county officials for overspending in the property tax debate, the costly failure of Project Aspire undercuts any state claims to fiscal prudence.

"I think it teaches all of us that we need to be vigilant about reviewing these types of contracts," Crist said. "I'm all for privatization, but only if it benefits the taxpayer and it's done with integrity. ... If it's bad, get out and stop the waste."

Steve Bousquet can be reached at bousquet@sptimes.com or 850 224-7263.

Fast Facts:

Project Aspire's troubled time line

May 1999: Legislature orders study of state's outmoded, 1970s era financial management systems.

October 2003: State awards contract to BearingPoint/People Soft. Initial amount: $81, 270, 000.

2005-06: CFO Tom Gallagher orders review of project after missed deadlines; new project directors are assigned; state alters project requirements.

December 2006: BearingPoint "disengages" from project as a review is conducted by the state.

May 2007: CFO Alex Sink suspends project, citing lack of "a clear strategy."

Source: Florida Department of Financial Services