Raleigh

No one should be shocked or surprised when a state auditor issues findings that are critical of a state government project that is two years behind schedule and facing huge cost overruns.

That is generally what state auditors do.

Apparently the concept is alien to the folks over at the state Department of Health and Human Services.

Department officials recently expressed outrage at findings from the office of State Auditor Beth Wood that delays and cost overruns for a new Medicaid claims computer processing system might have been lessened with better analysis, monitoring and clearer contract terms.

The audit estimates that cost overruns could reach $320 million, a figure the department disputes. Not in dispute: A twice-delayed project of critical importance to the state (started first in 2004 and again in 2009) is now expected to be completed in mid-2013.

In answer to these shocking findings, the department and its secretary, Lanier Cansler, issued a 31-page response (the audit is 15 pages) that is a remarkable soliloquy of denial.

It first questions the integrity of Wood's office for releasing findings early to state legislators (as if any state agency that depends on legislators for their lunch money doesn't generally jump when they call). Then it questions the expertise of auditors.

The response goes on to call the audit flawed and of no value. It refers to one finding as "asinine."

The response is either disingenuous or pretty asinine itself.

Here's why: The basic point of the audit is that some of these delays and cost overruns should have been foreseeable with a little more digging. In fact, they were foreseen.

A January 2009 letter from Raleigh lawyer Mark Ash to then-department secretary Dempsey Benton predicted what has occurred.

Ash represented EDS, a competing computer systems vendor which lost out on the state contract to build the new system. He was protesting the award of the business to the current contractor, Computer Sciences Corporation.

At the time, Ash wrote that the department's failure to consider CSC's experiences creating a Medicaid payment system in New York, a project plagued by delays and overruns, would lead to the same problems here. He correctly suggested that CSC, in its bid, had underestimated the scope of the changes required from the New York system.

Interestingly enough, the "asinine" comment from the department referred to an auditor finding that the department accepted a CSC claim that it could use 73 percent of computer code from the New York system without any documents or analysis to back up the claim. The company ultimately decided it could use only 32 percent of the code.

In Cansler and the department's defense, there are legitimate differences about the level of cost overruns.

Changes to the Medicaid program, whether made in Washington or Raleigh, guaranteed some delays and added costs.

That doesn't change the fact that creating this system has been a costly mess, no matter the length of any official denials.

Scott Mooneyham writes for Capitol Press Association in Raleigh. Contact him at smooneyh@ncinsider.com.