Visit Site

'We lost all this money.' Wayne County tries to salvage software project as costs soar

This browser does not support the video element.

Posted at 5:01 PM, Oct 07, 2021
and last updated 2021-10-08 10:51:05-04

DETROIT, Mich. (WXYZ) — Wayne County officials acknowledge they may have wasted millions paying a contractor to implement a software program now years behind schedule and budgeted to cost nearly twice what officials first planned.

The county took the extraordinary step recently of walking away from the vendor, saying the company missed multiple key deadlines and ultimately lacked the right experience. Still, the company collect just under $10 million.

“I was just blown away by it,” said Wayne County Commissioner Glenn Anderson, recalling when he and other commissioners were recently briefed on the project’s failures by the county's chief financial officer.

“He basically dropped the bomb that we had lost all this money with this company," he said.

The project involves the county’s Enterprise Resource Planning system, or ERP. It's designed to track every penny of Wayne County’s $1.7 billion budget, from payroll and benefits to pensions and contracts to state and federal grants.

In Wayne County, getting the new system up and running fast is critical because the county's current decades-old payroll system is on its last leg. Officials fear could collapse at any moment, causing significant headaches.

“We could fail in pension payments, fail in payroll,” Commissioner Anderson aid. “This would just devastate everything.”

The county has worked to implement an ERP system since 2018, according to Newsome, and entered into a contract with CherryRoad, a New Jersey-based tech company, in 2019. They were selected through a competitive bidding process, scoring higher than eight other firms.

But after more than two years of work and $16 million spent between CherryRoad and other vendors, the system that was supposed to be up and running today is nowhere near completion. The county now estimate it may not be ready until the end of 2023 or longer.

Last month, the county and CherryRoad mutually agreed to part ways.

“We could not continue to put money into a contract where we were not getting the return that the taxpayers needed,” Newsome said.

According to the Wayne County, CherryRoad was in over its head. The company missed multiple “go live” dates, first in 2020 and then again in 2021.

Wayne County ultimately concluded that the company “did not have the right level of experience for this size of project and had very little experience with governmental accounting,” even though the county picked them for the job.

“I don’t think there’s anything malicious or gross negligence,” Newsome said, addint later: “These things are difficult to do.”

But not only is the project behind schedule, the cost to finish it has now ballooned. As the county looks to replace CherryRoad, the original project budget of $31 million has nearly doubled to about $57 million.

The first budget, officials say, wasn’t realistic. “It’s just very disappointing to hear that this issue is out of control at the level that it is,” said Commissioner Jonathan Kinloch.

Kinloch and Anderson say they were kept in the dark about the ERP project’s failures until about six weeks ago.

“Instead of the commission having greater oversight, if anything in the last few years it’s been less oversight,” Anderson said.

But CherryRoad disagrees with the county’s assessment, saying there’s plenty of blame to go around.

They declined comment for this story but, in a letter to county officials, faulted Wayne County for failing to provide adequate staffing resources.

They said delays were caused by the county’s refusal to follow CherryRoad’s own advice and said a revolving door of county leadership led to “significant confusion and delays.”

Wayne County went through three different CFOs and four executive sponsors of the project, CherryRoad said, during the life of the contract.

But despite costs soaring and final implementation now years behind schedule, a county spokesman confirms that no Wayne County employees were disciplined over the ERP contract.

CFO Hughey Newsome declined to call the project a failure.

“It’s a bump in the road,” Newsome said. “A direction change, a trajectory change, but I wouldn’t call it a failure. Not at this point, not at all.”

“This is like a $26 million bump in the road, isn’t it?” asked Channel 7’s Ross Jones.

“I would say no more than ten (million),” Newsome said, “and that’s at the max.”

While Commissioner Jonathan Kinloch says he’s optimistic Newsome can get the project on track, he didn’t share the CFO’s rosy outlook.

“Oh, it’s quite more than a bump in the road,” he said. “It’s like more like a sinkhole.”

Contact 7 Investigator Ross Jones at ross.jones@wxyz.com or at (248) 827-9466.