Summary

On February 2, 2001, the State of Florida, acting through the Department of Business and Professional Regulation and the State Technology Office (STO), entered into an agreement with Accenture, under which Accenture, in return for payments estimated at $69 million, will design, implement, and operate for the Department an on-line licensing system and a call center. Our review of the contracting process and the terms and conditions of the resulting agreement disclosed the following:

• No feasibility study was performed relative to the Application Management Services component of the Agreement. This component, with an estimated cost of approximately $30 million, involves the provision of technical support services, hosting services, and the management and administration of application systems. Absent a feasibility study, it is not clear that alternatives to the outsourcing of the system’s application management services had been fully considered.
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  The Department received eleven responses to its ITN. Each of the proposals received was to be evaluated by each of the six members of the evaluation team. Evaluation forms were not signed by four of the six evaluation team members. Greater reliance could be placed on the accuracy and completeness of the forms had they been signed by the respective team members.
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  Documentation was not available in the public record to explain some of the decisions made in connection with contract negotiation meetings. Absent the availability of public records describing the nature of the discussions held during the negotiation sessions, we were unable to obtain from the public records an understanding of the justification for the following Department decisions:

Approximately $16 million was shifted from the Design, Build, and Implementation of the Statewide Licensing System and Internet Portal component to the Call Center Services component, with no apparent commensurate shifting of project deliverables. The shift affected the timing and basis upon which the $16 million would be paid. Following the shift, amounts approaching a total of $23 million may be paid pursuant to a yet to be agreed-upon "benefit sharing" model for call center services.

The initial proposal based the cost of the Application Management Services component on a 5-year period. The final agreement extended this period to seven years and increased the cost from approximately $19 million to approximately $30 million.

• Certain material details included in the Agreement between Accenture and the Department had not been finalized at the time the contract was signed. Specifically:

The amount of vendor compensation to be paid for the Call Center component of the contract had not been determined. The Agreement requires the Department to pay to Accenture a share of the cost savings derived through the operation of the call center. However, it appears that since the Department, like many government entities, has not maintained cost records for call center-related activities, the actual cost savings are to be estimated using a model. The Agreement states that, at a later date, Accenture and the Department will jointly agree upon that model. The absence of agreement on the model may lead to difficult-to-resolve issues relating to vendor compensation, which could ultimately jeopardize the success of the project. As of November 2, 2001, the Department and Accenture had not agreed to a model.

The STO’s responsibilities under the Agreement had not been finalized. Consequently, the Department could theoretically be paying both the STO and Accenture a service charge for managing the same services. Moreover, the duplicative contract provisions could create confusion and conflict for all three parties with respect to whether the STO or Accenture is responsible for providing the Department particular services.

• The Agreement’s provisions related to the shared roles and responsibilities between the Department and Accenture are inadequate. For example, the Agreement does not clearly address such matters as responsibility for input and output management, job scheduling management, disaster recovery planning, and security violation resolution.
   
• Controls to reasonably ensure the safeguarding of the Department’s interest in project equipment and software had not been implemented. During the 2000-2001 fiscal year, the Department paid to Accenture approximately $5.5 million for project equipment and software.
   
•  It appears that some uncertainties may exist as to the source of moneys that will be used to finance the total cost of the Agreement. Also, the methodology used thus far to allocate the initial costs of the project does not ensure an equitable distribution of its costs to all users.
   

The Secretary's complete response to the audit findings and recommendations in audit report No. 02-112 may be viewed in its entirety on the Auditor General Web site.