State auditor: Vermont needs clearer baselines and better oversight for major IT projects

Montpelier — Deputy State Auditor Tim Ash told the House Energy and Digital Infrastructure Committee on Feb. 5 that Vermont’s management and public reporting of large state IT projects are inconsistent and often fail to show original baselines for cost and schedule, masking overruns and delays.

Ash, presenting the auditor’s review of six major projects, said the audit found “cost and schedule” increases across most projects and that ADS’s public dashboard and IT activity reporting used revised estimates rather than original baselines. "The transmission of information to the public from ADS about the status of these projects... was cryptic," he said.

The audit examined six projects including a Department for Children and Families (DCF) childcare payments system, two projects described as DII/enterprise interoperability work, a liquor and lottery licensing modernization, and two other agency modernization efforts. Ash cited examples the committee could quickly compare: a DMV core system listed with an estimated cost in the tens of millions and one DCF project whose original estimated completion and cost (about $3.6 million initially) had been pushed out and increased markedly in later reports.

Why it matters: these IT projects collectively represent funding in the millions to tens of millions of dollars, and legislators rely on summary reporting to prioritize oversight. The auditor told the committee that without original baseline cost and schedule in public reports, committee members cannot tell whether a project is truly on time or has simply revised its target date and budget to appear on track.

Key findings and concerns raised in the hearing: - Most of the audited projects exceeded their original cost and schedule estimates; several were substantially delayed. One high‑profile Secretary of State business‑portal effort spent vendor funds without delivering an operational system and required retooling, Ash said. - ADS’s public dashboard and IT activity reports show current estimated completion dates and revised costs but generally do not display the original baseline estimate, which makes year‑to‑year comparisons obscure. - The audit found inconsistent inclusion of agency internal costs (for example, agency staff time spent on implementation) in project cost calculations. Ash said one DCF implementation had nearly $500,000 in staff time recorded to that point, with agency projections approaching $1 million by project end. - Invoices in at least one instance were paid for deliverables that had not been completed, and retainage (funds withheld until final delivery) had been released in at least one case, reducing leverage to ensure full delivery. - Performance measures were often missing or too vague. Several projects lacked clear, measurable success criteria (for example, a target percent reduction in paperwork) that would allow the public or the legislature to judge whether a project achieved its intended benefits.

Recommendations Ash highlighted to the committee and legislature: - Require ADS to include original baseline cost and original estimated completion date alongside any later revisions in all outward‑facing dashboards and IT activity reporting so changes are transparent. - Require submission and review of an ABC (activity/business case) form that consistently captures the full expected costs, including agency staff time, before projects receive approval or funding release. - Ask agencies to provide measurable performance metrics tied to project goals (for example, specified reductions in processing time or paperwork) and to include appropriate timelines for assessing public‑facing results after go‑live. - Establish thresholds for heightened legislative oversight (e.g., dollar thresholds or single‑vendor risk) that trigger quarterly written reports or additional review by JFO or contracted IT experts. - Improve contract management: ensure invoices are paid only for delivered milestones and retainage is used to secure final performance.

Ash told the committee the audit team followed professional audit standards and that ADS had been generally cooperative but had not committed to implementing all recommendations. "They effectively said, we're not going to commit to doing the things you've recommended... in part because the legislature hasn't required us to," Ash said, noting the auditor’s office recommended statutory or legislative direction to enforce better public reporting.

Committee members asked about practical oversight steps, including whether JFO’s contracted experts (referred to in the hearing as "Lisa" from JFO) could be used to vet cost estimates on projects that raise concern and whether the committee should require periodic reporting for projects above a set threshold. Ash said those are practical paths forward and pointed to precedents such as the Agency of Transportation’s annual reporting to the legislature as an example of a structured, recurring disclosure model.

No formal committee votes or directives were recorded during this presentation; the session consisted of the auditor’s briefing and members’ questions. Ash said the auditor’s office publishes the full audit report and that the committee could use the recommendations to draft statutory changes or reporting requirements if it chooses.

Ending: Ash suggested the committee determine thresholds for projects that merit ongoing reporting and consider asking ADS to adopt the auditor’s recommendations for baseline disclosure. The auditor’s office posted the complete audit and recommended actions on its website; committee members indicated interest in following up on whether ADS or the legislature will adopt the recommendations.