Years late, DSS child support project still undone

abeam@thestate.comDecember 7, 2013 


  • More stops than starts South Carolina’s Department of Social Services has been trying to build an automated child-support enforcement system since 1988. Here is a timeline:

    1988: Congress passes the Family Support Act, requiring all states to build a statewide, automated child-support enforcement system.

    1994: S.C. hires Unisys Corp. to build the state’s system by the 1995 deadline

    1995: Deadline is extended to 1998

    1998: Unisys stops working on the contract. S.C. and Unisys go to court. Federal government fines S.C. $893,626.

    1999-2000: Federal government fines S.C. $5.5 million

    2001: In a settlement, Unisys agrees to pay the state $17.6 million. Federal government fines S.C. $5.3 million.

    2002: DSS looks for qualified companies to build the automated system. Eight companies are found qualified. Federal government fines S.C. $8.1 million.

    2003: DSS starts writing contract proposal. Federal government fines S.C. $7.8 million.

    2004: DSS issues contract proposal, but the federal government says it does not comply with federal law and rejects it. Federal government fines S.C. $7.6 million.

    2005: DSS issues amended contract proposal. No companies respond. Federal government fines S.C. $6.9 million.

    2006: DSS offers a contract to a company but withdraws it. DSS offers a contract to another company, but negotiations are unsuccessful. Federal government fines S.C. $6.8 million.

    2007: Hewlett Packard signs contract with S.C. to build the system. Federal government fines S.C. $6.8 million.

    2008-2010: Federal government fines S.C. $20.4 million.

    2011: S.C. accuses Hewlett Packard of breach of contract. Federal government fines S.C. $10.7 million.

    2012: S.C. and Hewlett Packard settle their dispute. HP agrees to pay $33 million toward S.C.’s federal fines. HP’s contract is extended by five months. Federal government fines S.C. $11 million.

    2013: S.C. fires Hewlett Packard, asking for more than $200 million in damages. In a counterclaim, HP says S.C. owes it $39 million. DSS officials tell lawmakers they will try to finish the system in-house. Federal government fines S.C. $11.1 million.

    Source: DSS report to S.C. General Assembly

— Since 1992, S.C. taxpayers have spent $48.1 million to build an automated child-support enforcement and Family Court case-management system. All they have to show for it is two lawsuits and $115 million in federal fines.

Two decades later, the system is still not finished. Yet the federal penalties — which steadily have increased — are continuing to mount for South Carolina, the only state in the country that has not complied with a federal mandate that Congress first passed in 1988.

In July, the Department of Social Services fired technology-giant Hewlett Packard — the company the federal government just hired to rescue HealthCare.gov — and told lawmakers it planned to build the automated system itself.

The state has sued HP, asking for more than $200 million in damages to offset future federal penalties. HP has fought back, saying the state owes it $39 million.

The two sides are battling in a hearing before a state procurement officer that began Nov. 20 and is expected to last into January.

Meanwhile, DSS is asking state lawmakers for $7.2 million in next year’s budget to build the system in-house, according to the agency’s formal budget request. That system is expected to cost $129 million, with most of the money coming from the federal government.

But Katie Morgan, the state’s director of child-support enforcement, said the department still is assessing what it will do, consulting with its executive committee that includes county clerks of court, Supreme Court Chief Justice Jean Toal and staff members from the Budget and Control Board and the governor’s office.

“Why can’t we get it together in this state?” a frustrated state Sen. William O’Dell, R-Abbeville, asked DSS Director Lillian Koller during a public hearing last month.

“I appreciate your frustration. I want this thing done. We are getting this done. I’ve never felt more confident about getting to the finish line,” answered Koller, who has led DSS since 2011, when Gov. Nikki Haley appointed her. “Since I’ve been here, we have done nothing wrong. It has been HP’s failure to perform.”

DSS says HP was 14 months behind on the project, having only completed 55 percent of it. HP officials say the system they have built works — pointing out it passed 24 of 25 federal tests, “a leading indicator of achieving federal certification.” HP said DSS “delayed (and in some cases, prevented) HP from executing the project plan.”

“It’s becoming increasingly clear that HP represents the fastest and most cost-effective route for South Carolina to obtain a federally certified system in the best interests of its children and taxpayers,” HP spokesman William Ritz said.

In 1988, Congress passed the Family Support Act, requiring every state to build a statewide, automated child-support enforcement system. South Carolina had 10 years to build its system or face federal penalties.

The first company that the state hired — Unisys, in 1994 — left the project in 1998. After a lawsuit, Unisys agreed to pay the state $17.6 million in 2001.

Over the next six years, South Carolina had more stops than starts on the project due to various delays in the procurement process, including unsuccessful contract negotiations and federal rejection of state plans.

Not complying with the program means South Carolina could lose its federal funding for child-support enforcement and welfare. But South Carolina has been paying less severe penalties on the condition that it continue its “good-faith efforts” to develop the system.

South Carolina’s first fine was $893,628. This year, the fine was more than $11 million.

Of the $115 million in total fines levied thus far, South Carolina has paid $64.7 million. HP and Unisys have paid the remaining $50.9 million.

Lawmakers are getting increasingly angry. But with DSS in a legal dispute with HP, some lawmakers concede there is not much they can do.

“It has got to be the priority of the Department of Social Services,” said state Rep. Murrell Smith, R-Sumter, chairman of the House budget subcommittee that oversees the agency’s budget. “This is not a good public image for us as a state, not to be able to complete that and still being fined.”

At a recent state Senate hearing, DSS executive director Koller told lawmakers, “I will complete this system in my lifetime.”

“I meant my lifetime in this position,” she quickly clarified.

Reach Beam at (803) 386-7038.

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