LINCOLN — The State of Nebraska is jettisoning two major computer projects after sinking more than $12 million into the pair.

Officials said Wednesday that the State Department of Health and Human Services is going back to the drawing board on the larger project — the construction of a new Medicaid eligibility and enrollment system.

On the other, the Department of Administrative Services is opting for a cheaper and less complex alternative than building a new system to consolidate five personnel and budget systems.

In both cases, the state had spent $6 million on projects that were partly completed, but it pulled the plug because in the first case, the project was significantly behind schedule, and in the second case, the project turned out to be more complicated than expected.

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Nebraska Medicaid Director Matthew Van Patton addressed the first project. He said HHS has pulled the plug on its $84 million contract with global information technology company Wipro.

The contract was suspended in September after reviews by state officials and a consulting firm raised concerns about the pace of work on the project.

State officials had been reluctant to end the contract, because doing so would force the state to start over.

Van Patton said no decisions have been made about what to do next. He said state officials are talking with the federal Centers for Medicare and Medicaid Services about the best way forward.

In the meantime, he said the state will continue using its N-FOCUS system to enroll Medicaid participants, including those made eligible last month by a voter-approved initiative.

“This action will in no way, shape, form or fashion affect the timeline on expansion,” he said.

Nebraska undertook the Medicaid project to meet the federal Affordable Care Act requirements for modernizing Medicaid systems. The system was to be used in determining whether people are eligible for Nebraska’s Medicaid program and getting them enrolled.

Ninety percent of the cost was covered by the federal government. Nebraska paid $6 million of the nearly $60 million spent on the contract.

Ed Toner, Nebraska’s chief information officer and the interim Department of Administrative Services director, discussed the second project. He said he has called a halt to what is known as the Oracle Fusion project after it ran into major snags.

The effort was to have consolidated systems that handle human resources, benefit management, employee recruitment, payroll, financial functions and budget planning.

Addressing the problems that cropped up would have delayed the $12 million project’s completion, added to its complexity and risk, as well as pushed up its cost, Toner said. The state has spent $6 million on Oracle Fusion so far.

After reviewing the situation, he opted instead to upgrade the state’s existing payroll and invoicing system, called Enterprise One. He said the upgrade could be done for less than $900,000, would be supported through 2030 and would not require new training or recoding.

He said no change is needed to the systems now used for the human resources and personnel functions.

The Oracle Fusion project was launched by Byron Diamond, the former Administrative services director. Gov. Pete Ricketts fired Diamond Nov. 1 for failing to act against the Oracle Fusion project manager, who had created a hostile work environment.

The governor’s spokesman, Taylor Gage, rejected attempts to link the two projects or to find common problems between them. But he said state officials would look at each and try to learn from their experiences.

Matt Litt, an HHS spokesman, said that agency has been working to strengthen its contract management procedures.

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Martha Stoddard keeps legislators honest from The World-Herald's Lincoln bureau, where she covers news from the State Capitol. Follow her on Twitter @StoddardOWH. Phone: 402-473-9583.

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