Oregon’s plans to replace the obsolete computer technology that runs its unemployment benefits system has suffered another setback, with a vendor who lost out on the selection process challenging the state’s choice.
The formal protest means the Oregon Employment Department must revisit its selection process, an additional step that will further delay the troubled replacement project. The state’s ongoing review of the employment department’s modernization project shows it was already in serious danger of going off track.
Oregon’s faulty computers are central to the state’s failure to promptly pay unemployment benefits to workers who lost their jobs or lost hours during the pandemic. Hundreds of thousands of Oregonians waited for weeks or months through the heart of the pandemic for their payments.
The state has worked through much of its backlog now, paying out more than $4.4 billion in jobless benefits since the start March. Thousands are still waiting, though, including 49,000 people stuck in adjudication – a mandatory process for sorting through difficult claims that can last for months.
And Oregon says it’s unaware of any other state that has failed to pay hundreds of millions of dollars in federal benefits for workers’ first week of unemployment. Congress authorized those “waiting week” payments in March. Oregon says its computers have delayed the payments; it now hopes to begin delivering them in November, eight months after congressional approval.
Oregon received $86 million in federal money to pay for a computer upgrade in 2009, but a succession of failures at the employment department delayed the project for many years. As a result, Oregon’s benefits program has been hobbling along with rickety technology from the 1990s.
The state finally chose a vendor to replace the computer system earlier this month, settling on a Colorado company called Fast Consulting for a project that may ultimately cost up to $123 million and isn’t due to wrap up until 2025.
The employment department didn’t identify which vendor contested the selection of Fast Consulting for Oregon’s project, but there was only one other finalist in the final stage of the process: Deloitte Consulting.
“We are aware that this will further delay progress of the UI Modernization Project, but we believe it’s critical to get every step of the process right, and glean as much information as we can,” Melanni Rosales, the department’s communications director, wrote in an email Monday.
The department will now return to Round 4 of the four-stage selection process, and will repeat virtual site visits to other states where each vendor has built similar systems. Rosales did not say how long the process will take.
It took Oregon nearly six months to move from Round 4 to preliminary vendor selection during the first go-around. It’s not clear why it took so long, or whether the start of the coronavirus pandemic delayed the process.
Even before that delay, the state’s ongoing review of the tech upgrade classified the project’s status as “Red,” meaning it faced high risks “that are not being appropriately managed.”
As The Oregonian/OregonLive reported in August, the state identified a number of problems with choosing a vendor and managing the project’s budget in a report issued last spring. The employment department had hoped to launch its upgrade this past December.
The resignation of a number of people leading the project, the state’s inability to find long-term replacements for them, and complications caused by the pandemic, have all increased the risks to the technology upgrade effort, according to a new progress report this month.
Additionally, the new status report found the department had not communicated with clients about the upgrade – failing to include employers and benefits claimants in the planning process.
“Not communicating and including customers early on in the project may lead to customers not supporting the system as desired, and as a result, the new system may not meet their needs,” the state report found. “And early opportunities to improve the modernization effort may be missed.”