Jonetta Rose Barras and Bill Myers, The Examiner
2008-05-05 07:00:00.0
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WASHINGTON -

The District of Columbia’s $120 million computerized tax system has cost the public untold millions of dollars in uncollected revenue, fails nearly half the time and has left the city open to corruption, an audit commissioned by the city has found.

D.C. originally agreed to pay Accenture LLP $63 million to build the automated tax system. But in more than a decade, costs have nearly doubled even though Accenture has fulfilled less than half of the contract’s requirements, auditors found in a report obtained by The Examiner.

Though written in the bland language of accountants working for the two firms contracted to do the report, the Wendell Group and Advanced Concepts & Technologies Inc., the 110-page audit is blistering.

It describes a finance office where the computer system routinely fails and wastes millions of dollars per year by forcing bureaucrats to create duplicate reports by hand.

“The overriding characterization of the system implementation is that of failure,” Wendell and Advanced Concept auditors wrote. “Accenture has provided a poorly designed tax accounting system and mismanaged this poor design.”

Accenture officials couldn’t be reached for comment.

Though Accenture deserves most of the blame for the debacle, “both parties are culpable,” the auditors wrote.

The D.C. finance office is blasted for continually buying software upgrades from Accenture even though there was no apparent reason for them.

The auditors also note that during the design of the system, the tax office’s real estate section — which accounts for about one-third of the District’s revenues — “did not participate nor contribute.”

“The results were fully predictable,” the auditors wrote. “Critical business needs of the organization were left unaddressed and are not fully understood at this time.”

The audit was commissioned by the head of the city’s tax office before federal authorities charged two low-level bureaucrats, Harriette Walters and Diane Gustus, with ripping off the public of up to $40 million through a series of phony property tax refunds. It is believed to be the largest public corruption scandal in the city’s history.

The report is another blow to Chief Financial Officer Natwar Gandhi. Gandhi was in charge of the tax office when the Accenture contract was signed and has retained the company.

A high-level source within the finance office said officials discussed suing Accenture when the tax scandal became public. The thought was abandoned after Wendell and Advanced handed up their audit, the source said, because the finance office is given a large share of the blame.

The source spoke on condition of anonymity because of the sensitivity of the discussions.

Gandhi’s spokesman didn’t respond to requests for comment.

Despite all the problems with the system, the finance office continued to buy “upgrades” and products from Accenture for nearly a decade — and often without a clear reason for doing so.

“To date the excessive payout has yet to provide for the completion of the original requirements,” the auditors wrote.

The auditors suggest forcing Accenture to create a top-of-the-line system, rather than paying hundreds of millions more dollars on a new vendor.

Got a tip on the finance office? Call Bill Myers at 202-459-4956 or e-mail him at bmyers@dcexaminer.com.