Senator Ted Gaines Called for Performance-Based Contracting System

Rocklin, CA…Senator Ted Gaines (R-Rocklin), Vice Chair of the Senate Insurance Committee, today expressed outrage and disappointment at the California Employment Development Department’s (EDD) $110-million software upgrade disaster with Deloitte Consulting and called for the state to adopt a performance-based contracting system.


“This kind of software debacle happens far too often here. We waste billions of dollars, and no one is held accountable,” said Senator Gaines. “My office has been flooded with calls from panicked people who were left without their unemployment benefits. I refuse to believe that this is the best California can do.”


The EDD selected Deloitte Consulting to upgrade its antiquated software system. However, EDD and Deloitte grossly underestimated the number of existing claims that would be mistakenly hit with “stop payment flags” during the upgrade, resulting in the stoppage of payments to roughly 300,000 Californians.  In addition, the project cost nearly doubled from $58 million to $110 million.


The problems with Deloitte are not exclusive to California. Other states, including Massachusetts, New Mexico and Florida have experienced similar troubles with upgrades to their unemployment software.


Senator Gaines attended today’s Assembly Insurance Committee oversight hearing on the software fiasco, and emerged committed to improving California’s IT contracting system.


“It is critical that we put into place a better process, better oversight and more accountability,” said Senator Gaines. “That is why I plan to explore a legislative solution utilizing performance-based contracting, which includes better incentives and remedies to protect taxpayers, and can factor in past vendor performance when awarding contracts. If the same company keeps failing, that should really tell us something.”


Performance-based contracting would flip the traditional government service contract focus away from satisfying meaningless box-checking categories, and instead, towards successful, measurable outcomes. By clearly laying out the desired end result, this change in contracting could lead to greater accountability both on the part of the contractor and government agencies.


Senator Ted Gaines represents the 1st Senate District, which includes all or parts of Alpine, El Dorado, Lassen, Modoc, Nevada, Placer, Plumas, Sacramento, Shasta, Sierra and Siskiyou counties.