Half-finished $208-million DMV technology overhaul canceled

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SACRAMENTO — California’s computer problems, which have already cost taxpayers hundreds of millions of dollars, have mounted as state officials cut short work on a $208-million DMV technology overhaul that is only half done.

The project was intended to revamp the process for registering vehicles and issuing driver’s licenses, with the entire overhaul scheduled to be finished this year. But state officials said they were canceling the vehicle registration component because little progress was being made.

The decision is a setback for the Department of Motor Vehicles, which has a history of such stumbles.


The state has spent $135 million total on the overhaul so far. DMV spokesman Armando Botello said officials are not sure what the final price tag will be now that the project’s scope is being scaled back.

The state’s contractor, HP Enterprise Services, has received nearly $50 million of the money spent on the project. Botello said the company will not receive the remaining $26 million in its contract.

The California Technology Agency, which oversees state computer initiatives, reported the project’s termination to lawmakers Tuesday, days after another costly project stalled. Last week, the controller’s office fired the contractor responsible for a $371-million upgrade to the state’s payroll system, citing a trial run filled with mishaps. More than $254 million has already been spent.

“There seems to be a cascade of project failure lately,” said John Thomas Flynn, who served as the state’s first chief information officer, in the 1990s.

The DMV project began in 2006, according to the California Technology Agency. Instead of using 40-year-old, “dangerously antiquated technology,” DMV staffers were supposed to get a modern, user-friendly system that minimized the risk of “catastrophic failure,” according to a DMV report on the project.

The contract was awarded in 2007 to the Texas-based Electronic Data Systems. The company was later bought by Hewlett-Packard and renamed HP Enterprise Services. Hewlett-Packard is now run by Meg Whitman, who during her failed campaign for governor in 2010 promised to save California money with better computer technology.


The project has been dogged by delays and faulty computer coding, according to a December state report. The contractor has been unable to complete some tasks and left critical positions vacant, the report said.

A spokeswoman for HP Enterprise Services, Ericka Floyd, declined to comment.

The project was canceled Jan. 31. California Technology Agency Secretary Carlos Ramos said in a letter to lawmakers Tuesday that there were “significant concerns with the lack of progress” on the system for registering vehicles.

DMV Acting Director Jean Shiomoto said in a statement that a revised plan would be developed for handling vehicle registrations.

Meanwhile, the new system for driver licenses is being successfully used by 4,000 DMV employees in all 170 field offices, Botello said. The final installation at the department’s headquarters is scheduled to be completed by March 31.

The DMV has struggled with technology upgrades in the past. The state spent $50 million on a faulty project before it was scrapped by Gov. Pete Wilson in 1994, sparking outrage and calls for better oversight.

More recently, a computer crash left officials unable to issue licenses and vehicle registrations one day last August, resulting in long lines of dissatisfied Californians.