DMV Spent $44 Million on Failed Project : Technology: Agency’s director says six-year effort at computer modernization can’t be saved. Legislative probe is ordered.

SACRAMENTO —  The California Department of Motor Vehicles has spent $44 million over the last six years on a computer modernization project it now admits is a hopeless failure, prompting the Legislature to order an investigation.

DMV Director Frank S. Zolin, who has been on the job since 1991, said Tuesday that the project got off on the wrong track and that he has ended it.

A report by the independent legislative analyst’s office said the DMV didn’t understand the technology and mismanaged the project.

Zolin, an appointee of Gov. Pete Wilson, has offered to accept responsibility for what may shape up as an election-year embarrassment, but critics in the Legislature want much more.

“Unless he’s got $44 million in his pocket, I’m not interested,” said Assemblywoman Valerie Brown (D-Sonoma). “Just taking responsibility doesn’t solve the problem.”

The governor’s office refused to comment on the matter and directed reporters to Robert Pipkin, assistant secretary of the Business, Transportation and Housing Agency. Pipkin said the DMV “apparently made a false start on this thing and now the goal is to get the best deal we can for the taxpayers” by finding another use for the computing equipment.

The botched project came to light Monday at a subcommittee hearing of the Assembly Ways and Means Committee, which has jurisdiction over state spending proposals. Zolin had asked for an additional $7.5 million to pay off equipment costs of the failed project and to launch a dramatically scaled-down version.

Committee members said they were stunned at the taxpayer investment gone awry and ordered an investigation by the Legislature’s lawyers, fiscal advisers and auditors to determine if any of the investment could be recouped, possibly by suing the computer contracting companies.

Zolin on Tuesday denied assertions that the Administration had been inattentive and allowed the project to get out of control. He said he became concerned about its feasibility shortly after he became DMV director and ordered an investigation.

He said he became convinced the project could not be revitalized without spending $157 million more.

“I’ve pulled the plug on it,” Zolin said. “What happens in these kinds of projects (is) they kind of run away from the folks who are managing and the problems keep accumulating, almost geometrically.”

The project was conceived in the mid-1980s during the Administration of Gov. George Deukmejian and launched in 1988-89.

The DMV in the mid-1980s needed to modernize its antiquated computer systems so it could easily match up such fundamental information as a name on a driver’s license with a vehicle’s registration number.

According to DMV officials, however, the programming language of the DMV system was not compatible with later developments in technology.

Zolin said department officials worked with Tandem Corp., the computer hardware vendor, and Ernst & Young, the accounting firm and software vendor, to try to make the proposal work during a five-year period, but failed. In the meantime, costs of what started out as a $28-million enterprise soared.

In a report to the Legislature in February, the state legislative analyst’s office branded the project a failure and said the DMV had not provided a substantive explanation for the its botched database project.

Among other things, the analyst blamed the department’s limited experience in computer technology, a gross underestimate of the project’s scope and size and lack of consistent and sustained management.

Assemblywoman Brown, a committee member, said she believes the issue went unnoticed by the Legislature because the DMV was under no requirement to periodically advise the Legislature on the status of the project.

“It is beyond my belief that this kind of thing happens,” Brown said. “They (DMV) came to the committee asking for more money to start something new. My reaction was, wait a minute. You’ve spent $44 million on a computer system that you are now telling us does nothing and is worthless.”

Assemblyman Jim Costa (D-Fresno), chairman of the subcommittee scrutinizing the department’s budget, and Assemblyman Richard Katz (D-Sylmar), chairman of the Transportation Committee, criticized the department for lack of attention to business.

“For an Administration that likes to indicate that government ought to be run like a business, there is certainly a lack of follow-through in this area,” Costa said. “We are going to determine what can be salvaged.”

Katz said the contracts with the computer vendors would be examined to determine if they bore any liability. Katz and Costa said it appears the contracts may not have contained strict performance or liability standards.

Officials from Tandem Corp. and Ernst & Young could not be reached for comment late Tuesday.

Zolin said his office tried to fix the problem and save the project.

“We made a major effort to analyze and see if there was a way to put it back on the right track,” Zolin said. “Probably, it was on the wrong track from the beginning.”

With costs hitting the $44-million mark, he said he pulled the plug months ago and believes that the department now can embark on a drastically scaled-down program that involves purchasing off-the-shelf computer software.