In 2015, the state Department of Labor and Industries began work to modernize the decades-old technology used to manage medical claims from workers injured on the job.
But despite spending $31 million — with another $18 million requested in the upcoming two-year budget — the project has yet to roll out any new technology and is at least $240 million and nine years from completion.
"We've just been pouring money into this black hole," said state Rep. Travis Couture , R- Allyn , ranking minority member on the budget-writing appropriations committee, of the project, which is still listed, awkwardly, in the "planning" phase on the state's IT dashboard.
Labor and Industries officials say new funding is needed to "continue moving this critical project forward" and address the roughly 100 systems, some more than 40 years old, that handle 100,000 new injury claims and $2.6 billion in payments a year.
"It's inefficient, expensive, and risky to keep relying on the current system," said L&I spokesperson Matt Ross in an email Wednesday.
Overhaul Goes Overtime
After 10 years and $31 million, an upgrade for Washington's workers' compensation system remains in the "planning" phase.
Source: Washington State Department of Labor and Industries , Washington Technology Solutions ( WaTech ) ( Mark Nowlin / The Seattle Times )
L&I said the slow progress stems from a "multiyear delay" caused by the pandemic, as well as a midproject pivot to a strategy that was seen as less risky for the agency.
But the delays also reflect chronic internal problems, according to numerous assessments by outside experts, agency insiders and the state's technology oversight office.
Collectively, those assessments portray a troubled enterprise marked by slow decisions, disputes over strategy, repeated analyses and studies, as well as unusually high turnover. Since 2019, the project has lost at least six project directors, with one leaving after just three months.
In an email last summer to lawmakers and media outlets, a group of L&I employees went so far as to accuse agency leadership and other state officials of "gross mismanagement of state funds" and of submitting a budget request "based completely on lies, deception, and false promises."
L&I officials insist they've addressed earlier problems, but some lawmakers remain skeptical about more funding amid a budget crisis.
As Couture, himself a former program manager at Lockheed Martin , puts it, "At some point, you got to know when to cut bait."
In The Red
L&I isn't the only state agency to face questions about its IT.
More than a decade ago, Washington began a broad effort to modernize antiquated systems running everything from state finances and unemployment checks to driver's license renewals and state university operations.
But the initiative hasn't gone as planned.
The $350 million new financial system at the University of Washington , launched in 2023, was a year late and $71 million over budget and played havoc with grants, research and vendor payments.
At the state office of financial management, the first phase of an even larger upgrade for state financial systems that was expected to "go live" in 2022, at a cost of $144 million, now may be delayed until January 2027 , at more than twice that cost.
The state's IT dashboard lists 70 ongoing projects at 33 agencies, with a total estimated cost of $2.5 billion. Of those, seven — including the OFM project — representing 53% of the total expected cost, are considered to be at significant risk and in need of "immediate attention," according to WaTech , the state office overseeing IT strategy.
Washington has had "such a profound system failure" in its IT initiatives, said former state Sen. Reuven Carlyle , who chaired the technology committee before leaving the Legislature in 2023. "Total, complete, absolute nuclear meltdown failure ... on virtually every large IT project."
Like all these modernizations, L&I's was never going to be easy. Its legacy systems are among the state's oldest and must be upgraded or replaced without interrupting vital government services.
The pandemic slowed everything while also worsening an IT labor shortage, pushing up costs for most big state modernization projects.
Still, the L&I project stands out for its stark lack of tangible progress despite years of work, heavy spending and a steady drumbeat of warnings and sternly worded memos from state officials and outside "quality assurance" contractors.
In 2020, Carlyle said, the workers' comp project was one of several paused by lawmakers and WaTech's predecessor, the office of the chief information officer, following reports and whistleblower complaints about ballooning budgets, blown deadlines, rising consultant fees and few project "deliverables."
In 2021, the state CIO concluded that L&I lacked the "foundational governance structures, processes and practices" to manage such a large and complex project and stepped up its oversight of the upgrade, according to an agency memo.
The agency also adopted a new strategy. Instead of moving everything to a single software platform for around $283 million as initially envisioned, L&I would pursue a more conservative hybrid multisystem strategy. Cost estimates rose to $309 million.
Not Leaning In
Even after the pause, however, assessments by the state CIO and the project's quality assurance contractor continued to highlight significant management issues.
A 2022 state CIO memo found agency leadership unmotivated. Most of the "leadership team is not energized by this work" and "is not leaning in (to) provide support or remove roadblocks."
"Team members are polite; little is said during meetings," the memo continued. "When challenging (or) difficult statements are made, team members largely ignore them rather than pushing back or voicing a difference of opinion."
Assessments also found that agency leadership hadn't fully embraced the new technology strategy and seemed unable to coalesce around a single vision for the project.
Crucially, the agency wasn't giving the project's director sufficient support to make key decisions on strategy, budget or staffing, which ultimately contributed to a succession of directors exiting the project.
In 2023, project cost estimates increased to $362 million, but project assessments throughout the year documented many of the same problems.
By that point, the project had churned through at least five project directors since 2019 — a turnover rate that, one assessment noted, was "statistically high" by industry standards and "does not bode well for the long-term success of the project."
Current and former employees say the project also suffered from mounting tensions between L&I and WaTech , which has grown steadily more hands-on and demanding.
One consequence is that the agency has grown so risk-averse that tough IT decisions are routinely delayed in favor of additional planning.
As recently as last October, a report by the quality assurance contractor urged "a comprehensive project reset focused on reaching Executive Leadership alignment on the Project's path forward."
"'Reset' was code for pausing the project, again, because after all these years, they still haven't settled on one actual modernization strategy," said an L&I employee who asked to remain anonymous to avoid retaliation.
As with other state IT projects, much of that continued analysis has been done by consultants.
State records show that between 2020 and 2030, Deloitte Consulting , the state's second biggest IT vendor by dollar value, is on track to receive $15.8 million via L&I contracts, according to a November report by the state Department of Enterprise Services , though it's not clear if all that work relates to workers' comp modernization.
Some agency employees say the figure could ultimately be more than three times higher.
A Long Way to Go
L&I has reported some progress in recent months. Late last year, the agency brought on what appears to be its seventh project director.
It also says it has a "road map" and, despite some internal disagreement, is "moving forward ... one step at a time." It plans to roll out the project's first two phases by mid-2027 and recently cut the overall cost estimate to $292 million.
A WaTech spokesperson said it "supports the path L&I is currently on."
Still, it will not be a short path.
The road map shows the project wrapping up in 2034. L&I has yet to select the new technology it plans to use.
Last summer, L&I asked for nearly $40 million for the project in the next budget cycle but saw that number halved to $18 million by then-Gov. Jay Inslee .
And while recent quality assurance assessments note some improvements, the latest, from February, still puts the project at high risk for schedule, governance and overall health.
But for now, the L&I's workers' comp upgrade still has enough political support to move ahead.
In December, Gov. Bob Ferguson reappointed L&I Director Joel Sacks to his fourth term, and according to several lawmakers and project insiders, Sacks continues to enjoy good relations with legislative leaders.
While some skeptics in the Legislature, such as Couture, think it makes sense to slow funding until L&I has a more solid plan, leaders in the Democratic-controlled House and Senate say the upgrade is critical and support the requested $18 million.
Sen. Derek Stanford , D- Bothell , vice chair on the Senate Ways and Means Committee , thinks the upgrade "got off to a bad start" but is back on track.
He acknowledged, however, that the 10-year-old upgrade was still essentially in opening rounds. The requested funds, he notes, aren't for buying any new technology, but "about getting the planning in place."
Ferguson's office demurred when asked if the governor had confidence in the project, despite its checkered past.
The governor "has inherited some real challenges in the state, including a $16 billion budget shortfall, and this specific project," said spokesperson Brionna Aho . "He is working with our agencies and state leaders to solve them."
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