Legislative Analyst's Office
February 22, 1995

Department of Motor Vehicles (2740)

Update: Database Project Suspended--Consultant Evaluating DMV Plans

The DMV has hired a consultant to evaluate its information technology needs. Pending the consultant's final report, we withhold our recommendation on $2.9 million requested for purchase payments and maintenance on a computer purchased for the failed database redevelopment project.

In last year's Analysis, we reported that the DMV had committed well over $40 million to a database redevelopment project that had not achieved its objectives and that the department had come to believe could not be implemented. In a subsequent Supplemental Analysis, we recommended that funding to continue this project be deleted from the DMV's budget, and that the Legislature direct the DMV to hire an independent consultant to evaluate the database redevelopment project and to determine if and how it should proceed. The Legislature subsequently deleted $7.5 million from the department's 1994-95 budget, and separately provided $500,000 to fund a consultant evaluation and $3.9 million to pay remaining vendor costs.

DMV Hires Consultant. Although the Governor vetoed the $500,000 appropriation, the DMV has proceeded to hire a consultant under its own authority, using redirected funds. The DMV defined the consultant's task more broadly than initially conceived by the Legislature. According to the department, the consultant's charge is to determine how the DMV should employ information technology in order to meet its business needs. Subsumed within this broad question is the specific question of whether database redevelopment is needed and how the project should proceed.

In November, the DMV awarded a contract, valued at $370,000, to the Warner Group. The contract requires that the consultant:

The DMV reports that it has currently halted work on the database redevelopment project, pending the consultant's final report in April, 1995. State regulations require that the DMV submit a formal proposal to restart the database redevelopment project or any other projects that the DMV proposes in order to implement the consultant's recommendations.

Continuing Costs Relating to Cancelled Project. Although the Legislature deleted funding for any new work on the database redevelopment project and the department has suspended work, considerable funds related to this project remain in the budget. These funds are for purchase and maintenance contracts for a new computer system that the DMV installed, but has been unable to use, for database redevelopment. Currently, the DMV informs us that this computer is running a name-searching program for law enforcement.

In the current year, the Legislature approved $3.9 million for these computer costs, and the budget proposes about $2.9 million in 1995-96. The DMV has informed us that its costs in 1995-96 will be less than the budgeted $2.9 million because the department has reduced the level of maintenance and support for the computer. The DMV intends to pay the remaining purchase debt in 1995-96; however, even after the purchase contract is fully paid, ongoing maintenance and operational costs will continue if the DMV intends to continue operating the computer.

Withhold Recommendation. While we do not dispute the DMV's responsibility to pay its contractual purchase obligations, it is not clear to us that it is cost-effective to continue operating and maintaining the computer. Following the final report of its information technology consultant in April, 1995, we believe that DMV should be able to promptly decide whether to continue to maintain and use this computer or whether to dispose of it. We therefore withhold recommendation on $2.9 million, and recommend that, prior to budget hearings, the DMV report to the Legislature on its plans to utilize or dispose of the computer.

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