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Michigan state audit reveals millions wasted

Audit report shows Secretary of State's office's failed computer system project cost state millions

DETROIT – For more than a decade, the Michigan Secretary of State's office tried and failed at upgrading its driver's license, vehicle and voter registration computer system.

According to a 3-year-old audit report done by the Auditor General's office, the project started in September 2003 at an estimated cost of $50 million. The audit found that nine years after the Business Application Modernization (BAM) Project started it still needed improved oversight.

State employees ignored a breached contract and paid the contractor millions of dollars despite poor performance, according to the report. To this day, the system does not work properly.

The contract was improperly bid. The report says the original contractor, EDS, which was eventually bought out by Hewlett-Packard, assisted in designing the bid process which it eventually won.

Then, to top it all off, workers delivered misleading and inaccurate reports about BAM problems to the legislature.

And there's more: "Through June 30, 2011 the Department of State had authorized payments to the development contractor for $27.6 million whish was 78 percent of the total owed ... even though only a small portion of BAM system functionality had been implemented."

The audit found a former Department of State senior executive overrode internal controls by approving eight payments totaling $4.5 million, that the BAM project manager disapproved. Later, the audit found four more similar payments totaling nearly $2 million.

Finally, the development contractor owed the state damages of approximately $12.5 million that, as best we can tell, never were paid back.

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