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.
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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.