County supervisors voted Tuesday to negotiate with PeopleSoft Inc. on a $64.5-million contract for business-management software despite the company's history of cost overruns and computer glitches.
Earlier this month, California Auditor Elaine M. Howle released a sharply critical audit of a software system being built by the company for the California State University system. Howle's report found that the cost of the system, which was intended to track personnel, student and financial records on 23 campuses, was expected to soar more than $200 million over earlier projections.
Although several large PeopleSoft clients have publicly complained about the company's software in recent years, David Janssen, the county's chief administrative officer, called the PeopleSoft platform very solid.
Janssen said the county's aging financial system added a sense of urgency to the search for a replacement, which could take two to three years to go online.
"We're all nervous about this undertaking, but the county's central financial system is 15 to 20 years old," Janssen said. "We need to move forward to keep on some kind of schedule."
Supervisor Gloria Molina, who abstained from the board's 4-0 vote, questioned the wisdom of pursuing the contract, saying that her research into PeopleSoft's performance suggests that the state university system's problems are typical.
"Their track record says that whatever they say it will cost you, it will cost more," she said.
Other supervisors said they were confident that the county was not making an irreversible commitment to PeopleSoft. The board is scheduled to review the contract before June, and Supervisor Zev Yaroslavsky said there will be time for the county to back out if it is unable to secure contract guarantees that protect the county's interest.
Steve Swasey, a PeopleSoft spokesman, would not comment on the planned contract with the county, citing a company policy against discussing ongoing negotiations. But he defended the company's record and its products' performance, saying that more than 300 state and local governments and 650 higher education institutions use its software.
"By and large, PeopleSoft has enormously successful programs [and] highly satisfied customers," Swasey said. "At times there will be a time when things aren't working perfectly [and] many times that is not the fault of PeopleSoft."
Wherever the fault lies, PeopleSoft has been repeatedly accused of selling software plagued with expensive glitches.
In Ohio, Cleveland State University ran into trouble with PeopleSoft programs that allegedly scrambled the university's financial aid system. By 2000, it had spent $16 million on glitch-ridden software that it thought would cost $4.3 million. "We've spent a small fortune, and it's still not anywhere near satisfactory," university Vice President Joe Nolan said at the time.
Other customers have complained that the software firm put more effort into selling its products than ensuring their smooth operation. At one point, seven of the Big 10 Midwestern universities wrote a joint letter to PeopleSoft, complaining about sloppy programming and insufficient testing.
In California, the San Francisco school district spent several years and millions more than expected trying to fix the bugs in its PeopleSoft system.
Jon Fullinwider, Los Angeles County's chief information officer, described the selection process that yielded PeopleSoft as the preferred vendor as "the most disciplined I've ever participated in." Fullinwider said the PeopleSoft products outperformed other systems, based on more than 3,000 requirements that were evaluated by as many as 150 employees from each county department.
But state Sen. Richard Alarcon (D-Sylmar), who requested the audit of the state university software system, was skeptical.
"It seems that these companies may have purchasers over a barrel, because they have the [technological] expertise. I'm not sure they're not selling us Cadillacs, where we might get by with a tricycle," Alarcon said.