2 State Officials Refuse to Testify on Failed DMV Computer

Two state officials refused Monday to testify under oath at a legislative hearing called to try to find out how and why $44 million was spent over the past seven years on a DMV computer project that will not work.

The two officials, Steve Kolodney and Dennis Walker, were involved in the computer project at the Department of Motor Vehicles during its development in the late 1980s, left the state payroll for private work in the computer business for about a year, and then returned to state employment.

Walker, a career civil servant and former DMV computer project manager, told the fact-finding hearing of the Assembly Transportation Committee that he believed the investigation was a “witch hunt.” Kolodney, a gubernatorial appointee, said he would not testify until he received legal advice.

The refusal by Kolodney, director of the state Office of Information Technology, and Walker, chief of a statewide welfare computer system in the Department of Social Services, took the legislators by surprise.

A spokesman for Gov. Pete Wilson, who last week promised the cooperation of his Administration in determining how the failed project consumed $44 million, said: “Any decision not to testify is a personal decision and not one that was made by the Administration. We were not in communication with them.”

The Transportation Committee hearing was the first full-blown effort by the Legislature to learn how so many public dollars could be sunk into a computer expansion that flopped without anyone apparently sounding the alarm until recently.

The project was aimed at redeveloping the department’s antiquated databases of driver’s licenses and vehicle information so the department could meet increasing demands of law enforcement, courts, insurance companies and the DMV.

As conceived in the 1980s, when the DMV’s equipment was then 20 years old, the database conversion was estimated to cost about $28 million. For reasons that are unclear, the project spun out of control. It was only a few months ago that current DMV Director Frank Zolin concluded, after an expenditure of $44 million, that it would never work and abandoned the project.

At the outset of Monday’s hearing, committee Chairman Richard Katz (D-Sylmar) announced that witnesses would be placed under oath, an unusual procedure for legislative committees.

He said he was concerned about an apparent “revolving door” in which state employees involved in the DMV’s computer overhaul left state service to work in the computer industry and then returned to sensitive positions in state government involving computer operations.

He produced documents that showed that Kolodney left the Office of Information Technology late in 1989 to invest in and work for a consulting company known as Government Technology Group headed by Sacramento lobbyist Michael Franchetti.

Kolodney returned to the information technology office, which oversees expenditures on computer systems, in 1991. He told the Fair Political Practices Commission that he had no conflict of interest, although he remained a stockholder in Franchetti’s business.

Walker was the manager of the DMV project starting in 1986. He left the DMV to work for Tandem Computers Inc., late in 1990. At about the same time, Tandem was awarded an $11.9-million contract to supply the DMV with computer hardware without competitive bidding, records show.

Walker and Kolodney were called as witnesses shortly after Legislative Analyst Elizabeth Hill told the committee that no one in either Wilson’s Administration or the former George Deukmejian Administration had waved a warning flag that the project was in trouble. Her investigators discovered the failure in February, she said.

Walker told Katz he would not testify under oath because the tone of a Katz letter seeking his testimony indicated that “this clearly would be a witch hunt.”

For his part, Kolodney said that without legal guidance, “I don’t believe it would be in my best interest to testify under oath.”

Katz said he could compel them to testify, but said forced testimony would have the effect of immunizing the two men in case the DMV scandal developed into a criminal prosecution. “It’s not appropriate for us to grant immunity from prosecution,” he said.