Michigan officials and Deloitte defend UIA modernization plan as lawmakers press for $20 million

David Parent, managing principal for Deloitte in Michigan, told the House Appropriations Subcommittee on General Government on May 20 that the state's unemployment insurance modernization project has shown "significant improvement" and is "tracking on schedule" for an employer-system go-live in December and a claimant-system go-live next spring. Parent said testing pass rates are currently about 97% for the December release and about 88% for the release slated for May.

Lawmakers pressed Parent and state officials on why the project has been delayed, who bears responsibility and what the supplemental $20,000,000 request will fund. Parent acknowledged three core drivers of the problems: governance shortfalls, unclear scope in procurement and contracting, and shortcomings in some of the technology initially delivered. He said Deloitte has accepted responsibility for technology-related issues, described steps the firm and the state have taken to address them, and asserted the project is now on a better trajectory.

Laura Clark, chief information officer for the Department of Technology, Management and Budget (DTMB), described a three-tier governance structure now in place: a project steering committee of senior leaders (meets every other week and includes IV&V), a project leadership group for tactical oversight, and a project status group that meets weekly for operational work. Clark said a corrective action plan was issued to Deloitte on Dec. 12, 2023, and Deloitte responded Dec. 21, 2023; subsequent contract change negotiations tightened testing exit criteria.

Brett Gleason, chief operating officer at the Unemployment Insurance Agency (UIA), told the committee the state conducted a competitive procurement supported by Gartner and selected Deloitte as the best-value provider. He said the state negotiated more than $7.5 million in contract credits after earlier underperformance and that Deloitte has responded to oversight and added resources.

Lawmakers repeatedly asked about the supplemental $20,000,000 IT funding request. Gleason and Clark said that money is meant to cover operational costs, third-party vendor contracts and infrastructure expenses that accrued because the legacy system (referred to in testimony as "Midas") must be maintained for longer than planned after a 14-month delay. Both officials stressed the additional funds are intended for state operational needs and other vendors, not additional payments to Deloitte; Parent testified his firm had no role in setting the $20,000,000 figure and would not receive additional contract funds tied to that request.

Committee members also raised IV&V reports (independent verification and validation) dating from mid-2023 that repeatedly flagged problems, including a cited August 2023 finding that only two state staffers were assigned full time to the project. Parent said Deloitte now reviews IV&V drafts and has been given the opportunity to comment in the last month or two; he said earlier practices left less opportunity for vendor input. Clark said IV&V findings are incorporated into governance discussions and that recent IV&V metrics show the project trending positively.

On accountability, several lawmakers sought a precise split of responsibility between state staff and contractor work. Both Parent and Clark declined to assign a percentage breakdown. Parent said some failures were Deloitte's responsibility (particularly technology shortcomings), and both state officials said multiple parties share culpability and have since worked to clarify roles and decision rights.

Committee members pressed for vendor demos and more transparency. Parent said Deloitte is open to providing demonstrations and noted other parties including the IV&V vendor are involved; he said scheduling a public demo would be a state decision. Representatives also questioned whether remote-work patterns and communication practices contributed to delays; Parent described Michigan as mid-range on remote-work policies and emphasized the project's recent changes to increase in-person meetings and 1-on-1 communications.

Gleeson and Clark provided broader context for cost and timing: they cited Gartner benchmarks that large UI implementations commonly span four to six years and can reach up to $80 million, and they estimated roughly $5 million a year in ongoing savings once the modernized system is operating. The subcommittee did not take a vote on the supplemental funding request during the meeting.

The subcommittee concluded after questions and closed the hearing without a committee vote on the supplemental appropriation; the chair adjourned the meeting.