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Oregon steps back from new computer vendor for Employment Department

Barely three weeks after a public announcement, Oregon has revoked its notice for the selection of a vendor for a long-awaited upgraded computer system for the Employment Department.

Acting Director David Gerstenfeld said Wednesday that a protest filed by a competing vendor compelled the Department of Administrative Services — the budget and management agency for state government — to revoke the notice issued Aug. 22. The notice said the state would enter into contract negotiations with FAST Enterprises of Centennial, Colorado, for development of the system.

The notice was announced by the Employment Department Sept. 11.

Gerstenfeld could not say how long the required additional evaluation would take. Since the Cover Oregon website fiasco in 2014, DAS and lawmakers have taken new steps to review the selection of vendors and implementation of major computer projects by state agencies. That process includes an evaluation by an independent source.

“There are limits on what I can share,” Gerstenfeld told reporters on a weekly conference call. “Our main focus is making sure that we get the absolutely best solution for Oregonians and that we have the right information for that.”

FAST Enterprises was the vendor for two major Oregon projects in the past decade.

One is the GenTax system for the Department of Revenue, which was rolled out between 2013 and 2017 to replace a system that dated back to the 1980s. The other was a new system for Oregon Driver and Motor Vehicle (DMV) Services, which just completed its three-year rollout of its Service Transformation Project this year. It enables DMV to comply with the requirements of the federal Real ID Act of 2005 to make driver licenses more secure.

FAST Enterprises also has done work for Portland city government.

“Any project of this magnitude has risks, even when it’s not being done in the midst of a pandemic,” Gerstenfeld said. But according to the third-party evaluator, he added, “We are on an improving trend of how we are handling the project.”

At a Sept. 22 hearing of the Senate Labor and Business Committee, Gerstenfeld said he would look into the problems FAST Enterprises encountered when it installed a new system in Michigan, where the system generated false findings of fraud in 2017. He responded to a question raised by Sen. Mark Hass, D-Beaverton.

Gerstenfeld held a different job within the agency before Gov. Kate Brown named him acting director May 31, after she requested and received the resignation of Kay Erickson after a mounting backlog of unprocessed benefit claims. She was the third director of the agency to be fired or retire under pressure since 2013. Computer software and security failures, some of them attributable to the age of the agency’s system, played a role in the earlier departures.

Gerstenfeld was with the agency, but not its director, when Oregon received $85.6 million from the federal government in 2009 for modernization of a mainframe computer system that goes back to 1993. The system relies on a computer language that originated in 1959.

The money has not been spent.

Gerstenfeld said modernization will enable the agency staff to automate many functions that are done manually now.

“For the long-term ability to support Oregonians through future recessions and other unseen disasters, we know that modernizing our systems and doing it in the best way possible is critical,” he said Wednesday. “It is something that we recognize the importance and urgency of. “We are moving forward as quickly as we can, but making sure that we are getting the best solution so that we can provide benefits to Oregonians as quickly and reliably, and in the way they expect to receive benefits in the future.”