YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

June 2005

Report No. 2005-36

The following was discovered as a result of an audit conducted by our office of the Department of Mental Health, Office of Information Systems (OIS).

The oversight and monitoring by the Department of Mental Health (DMH) of vendors engaged in the development of the department's Customer Information Management, Outcomes and Report (CIMOR) computer system has been inadequate.  System development costs and timeframes have significantly exceeded expectations.  According to department records, system development costs, as of June 30, 2004, totaled over $6 million and the implementation date for the first part of the system is now planned for spring 2005.  The Director of OIS estimated that for the four years ended June 30, 2004, the department spent approximately $8,664,000 for computer hardware, such as network upgrades, servers, and PCs which are directly related to the CIMOR project. The funding for the CIMOR project has been achieved by redirecting resources from other systems and services, which included a combination of Office of Information System's (OIS) core money, facility funds, and other department funds. 

In September 2000, the DMH and the Office of Administration (OA) awarded a contract, totaling $3.7 million, to Innovative Systems, Inc. (iServ), for software and license, installation, and training for a comprehensive, integrated computer system.   The DMH and iServ amended the contract twice to reflect changes to the software platform, payment and delivery schedule, and other changes. The DMH and OA terminated the contract with iServ in January 2003 because iServ had not complied with the delivery schedule, had delivered software without the required functionality, or had not performed in accordance with other provisions of the contract.  DMH immediately hired Rose International (Rose), a subcontractor under the iServ contract, to complete the project.  However, Rose did not deliver a functional system either.  Rose and DMH negotiated a new agreement in which DMH paid Rose over $480,000 for the additional work on phase one functions exceeding the original scope.

In March 2004, DMH personnel took over the system development with help from Rose personnel.  The CIMOR October 2004 news release indicated that the project's Foundation Release in Spring 2005 would include system administration, organization management, contract management, service codes, and appropriation/allocation management.  It is clear that significant, additional costs will be incurred to complete all aspects of the CIMOR project. However, the DMH has not developed an estimate of additional expected costs for the completion of the project, and the oversight committee is again expressing concern about schedule overruns in the development of CIMOR phase two functions.

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