Updated May 23, 2019 - 5:36 pm
Former Nevada Department of Motor Vehicles Executive Director Troy Dillard retired from his state job and, four months later, took an executive position at computer company Tech Mahindra just as his former agency hired the tech consultant to modernize the DMV computer system, a Review-Journal investigation found.
Dillard headed the $75 million push to modernize the agency’s nearly 20-year-old computer system that, if successful, would have allowed drivers to do many of the departments functions, like take license photos and register titles, from a home computer.
The modernization was a significant failure, costing motorists as much as $26 million in unusable technology, consulting and payroll, auditors and state officials said. DMV officials fired Tech Mahindra last year.
The contract sparked a critical audit and scathing assessment by another DMV contractor hired to determine what went wrong and where the agency needs to go from here. And Dillard’s move to the contractor raises questions about his relationship to the problematic modernization.
“On the face of it, you definitely raise your eyebrows when you’re talking about a contract this size,” said Assemblyman Chris Edwards, R-Las Vegas, after the Review-Journal told him about Dillard taking the Tech Mahindra job. “What were his duties and did they keep him at arm’s length for the contract? If not, it looks like a big problem.”
In 2017, Edwards co-sponsored an unsuccessful bill to create an Office of Inspector General in Nevada that would investigate waste like the Tech Mahindra contract.
Current DMV Director Julie Butler declined to discuss the bidding process that happened before she was appointed in January. She also would not reveal her opinion about Dillard’s move to Tech Mahindra.
“The contractor wasn’t performing and the agency got out of a bad situation,” she said in a phone interview. “I want to look forward to the future.”
Dillard and Tech Mahindra did not respond to repeated requests seeking an interview on the contract. Tech Mahindra is a nearly $5 billion company based in India that employs more than 120,000 people in 90 countries, according to its website.
In 2015, Dillard lobbied the Legislature for a $1 technology fee on all DMV transactions and also oversaw the request for proposal (RFP), records show. He also approved members of the selection committee that picked Tech Mahindra over better known companies like Dell and Canon, which offered to do the work for less than $75 million, records show.
In October 2015, Dillard, then 49-years-old, retired from the DMV with a state pension that this year was worth nearly $100,000, pension records show.
Four months after his retirement, Dillard joined Tech Mahindra as senior vice president of Smart Cities and government solutions, his Linkedin account shows.
State law requires employees to wait a year before going to work for a company if the official approved government contracts worth more than $25,000 for the business. But Dillard did not run afoul of that law because he left before the contract was finalized in April 2016. Records show negotiations with Tech Mahindra started in February 2016, which was the same month Dillard started his vice president’s job.
The law also prevents a public officer or employee from getting paid for representation or counseling of any private company on any issue that was under consideration at the department for at least one year after leaving the agency.
Government employees can request a waiver from the Nevada Commission on Ethics, but the requests are made public only if the employee waives confidentiality. When asked whether Dillard requested a waiver in the Tech Mahindra situation, commission Executive Director Yvonne M. Nevarez-Goodson said there is no public information available.
The state’s RFP process requires an agency to go with the best proposal — not the lowest bidder. Still, well-known U.S.-based companies offered to do the DMV modernization for less than Tech Mahindra.
Dell told the state it could do the work for about $36 million — though there were likely additional unknown subcontractor costs. Canon said it would cost $68 million. Tech Mahindra initially projected a cost of $62 million, but after discussions with the company the state awarded the final contract at $75 million, records show.
The DMV’s selection committee decided not to require prospective bidders to provide proof that their concept would work, according to bidding records. Committee members graded Canon higher on its business operations but Tech Mahindra exceeded the other bidders on IT qualifications, giving it the highest combined score, records show.
In February 2017, DMV officials extended the project’s due date for a year and added $3 million to Tech Mahindra’s contract.
A month later, state auditors started looking into the problematic revamp, records show.
An October 2017 audit found Tech Mahindra failed to provide many of the staff it promised and had staff who could not proficiently communicate in English.
The Nevada state audit also said the state did not set a timeline to deliver various parts of the project.
“In essence it was mismanaged,” state Division of Internal Audits Administrator Warren Lowman said in a phone interview. “The department didn’t adhere to their contract requirements and normal protocols and had they done that it might have mitigated some of the damage.”
DMV officials then paid Gartner Inc. $166,000 to determine what went wrong.
Gartner’s January 2018 assessment called the Nevada DMV computer revamp “one of the most troubled public sector modernization efforts that Gartner has seen in recent years and is at high risk of failure without an overhaul in many key areas.”
The state used an “unproven” technology with no history of successful implementation, and had “nonexistent” project management controls at the DMV, Gartner contractors wrote. State officials selected a low-performing vendor that produced low-quality deliverables, provided employees that lacked core skills and there was low team morale and poor communication, the Gartner study concluded.
State officials and auditors blame a project manager who had done plenty of work for the state.
In 2013, DMV officials hired Ismael “Izzy” Hernandez to write the request for proposal for the modernization and eventually work as project manager.
Q.A. Technologies, with Hernandez as a subcontractor, received nearly $1.4 million in state money between 2013 and 2018 for the project, records show. Hernandez didn’t finish the contract because he said the state terminated it in March 2018.
Kevin D. Doty, the acting administrator of the state’s Purchasing Division, said Hernandez was at fault for many of the problems.
“The first thing required in the contract is a master project plan,” said Doty, who was not at purchasing when the contract was approved but researched the deal to determine what happened. “One was never delivered and we expect a project manager to demand it and refuse to sign off on payments until it was provided.”
Hernandez, in a phone interview, said the blame lies with Dillard’s deputy, Terri Albertson, who then Gov. Brian Sandoval appointed to the top DMV position after Dillard left.
“If the director ties your hands, you have to do what the director says,” said Hernandez, noting all of his other state projects were successful. “From the state perspective, they protect the state and blame it all on the contractors. The contractors got let go. I got blackballed.”
Albertson continues to oversee the modernization after she was moved from her appointed position to a classified state job as the director of the Office of Project Management weeks before Gov. Steve Sisolak took office in January.
Of nearly $31 million spent on the modernization project while Albertson was DMV director, as much as $26.3 million could be a complete waste, records shows.
During the Tech Mahindra contract, DMV officials spent $16.6 million on hardware and software but were able to salvage only $4.1 million for future modernization, records and legislative testimony show. DMV also sold $307,000 of the equipment to the state Department of Corrections, Albertson testified before a legislative committee last month.
The state spent an additional $14.1 million to pay for contractors, infrastructure and facilities, records show. Butler said it is not clear if any of that can be salvaged.
The state paid Gartner an additional $464,000 to continue consulting on IT issues. A Gartner spokesman declined comment. Albertson did not respond to requests for comment.
The RFP, which Hernandez assembled, directs bidders to use Oracle, naming the company and its products more than a dozen times.
“The solution shall include an integrated stack of Oracle software and hardware that provides performance, reliability, and flexibility,” says the system requirements released July 17, 2015.
Shannon Berry, former state assistant chief procurement officer, said Tech Mahindra has an expertise in Oracle hardware.
“I recall people saying it was an Oracle product and that kind of put Tech Mahindra ahead,” she said. “It gave them more points.
University of Southern California computer science Professor Nenad Medvidovic reviewed the RFP at the Review-Journal’s request, saying it was clear the document dictated Oracle’s involvement.
“Reading through the RFP, I cannot find a justification for limiting the platform to Oracle neither based on the stated deficiencies of the current system that the new system is meant to remedy nor based on the stated requirements of the new system,” he said in an email exchange. “While it is possible that Oracle’s solutions may be well suited for solving this problem, there is no indication in the RFP that justifies why Oracle is thought of as the superior solution.”
Berry, who retired in 2016 a month before the contract was officially awarded, said the bidding process was fair with no interference from Dillard. Hernandez said he never saw Dillard trying to influence the selection committee nor did he have contact with Dillard after he left for Tech Mahindra. A review of hundreds of pages of emails does not show Dillard discussing the contract with his former staffers.
Hernandez said Oracle was the only one providing a solution in 2015 and Dell’s and Canon’s bids relied heavily on subcontractors, which could have increased their costs and decreased the reliability of their work. Dell and Canon did not respond to requests for interviews.
The three evaluation committee members who have since left state employment — IT managers Brian Wilcox and Alan Rogers and DMV Deputy Director Amy McKinney — either declined or couldn’t be reached for comment.
The DMV’s current system was completed in 1999 and cost $40 million. That process seemed as flawed as the current revamp.
“The deployment of the system in 1999 was a substantial failure…,” according to state records. “In addition, the deployment became the focus of several research papers on how ‘NOT to administer a big-bang deployment of an information technology solution.’”
When Dillard testified before the lawmakers in 2015 asking for the fee to fund modernization, he assured lawmakers the agency has plans to “mitigate or eliminate” any problems with revamp.
Dillard promised a system that would allow customers to avoid hated DMV lines and register titles, take new license photos, complete eye exams and take the written test all from the convenience of a home computer.
“Imagine a world that does not exist today,” he testified.
Despite four years and millions of dollars, the world Dillard promised is no closer to existence than it was in 2015.
The DMV last month asked lawmakers to extend the $1 registration tech fee, which was scheduled to expire in July 2020, for another two years. Current DMV director Butler conceded the state will not know the cost of the modernization or even when it will be completed until consultants finish their assessment, likely next year.
And, according to his Linkedin profile, Dillard left Tech Mahindra in April — about a year after the company was fired by the agency he use to lead.
Following the money
Of nearly $31 million the Department of Motor Vehicles has spent on the failed modernization of its computer system, the agency has been able to recoup nearly $4.5 million. Meanwhile, vehicle owners will continue to pay a $1 technology fee on each DMV transaction for two additional years to pay for the revamp.
System modernization expenditures FY 16 – FY 18
Personnel, infrastructure, facilities: $14,190,942.29
Total expenditures: $30,831,435.95
DMV retained hardware/software: -$4,175,792.19
Equipment sale to Department of Corrections: -$307,550.00
Total unrecoverable costs: $26,348,093.76
SOURCE: Nevada DMV