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The Joint Oversight Committee on Investment in Information Technology Improvement met on August 30th to discuss federal ARPA funds availability and requirements for IT modernization, as well as to hear invited testimony from state agencies on IT project requests. A video archive is available here.

This report is intended to give you an overview and highlight of the discussions on the various topics taken up. It is not a verbatim transcript of the discussions but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.

 

Opening Remarks

  • Chair Rep. Capriglione – Looking at IT projects across the state where extra funding can be appropriated; agencies are working with antiquated systems & difficult for IT to compete with other projects
  • Chair Capriglione – Appreciative of the creation of the committee & federal funding available
  • West – Long overdue, will be looking into eligibility requests for the federal funds and possibilities
  • Chair Capriglione – Will be taking up rules, then hearing from agencies, no public testimony
  • Committee adopts joint operating procedures distributed previously

 

Invited Testimony

Amanda Crawford, DIR

Brady Vaughn, DIR

  • Many of the projects are request for IT security, legacy systems are cybersecurity risks & cannot discuss items in detail in open meeting, but can individually
  • HB 4018 created this committee and special fund outside of GR to improve and modernize state agency IT resources; cannot be used to replace agency funds for operating & maintaining
  • Can be consistent with money appropriated by state, federal funds, donations, and interest, etc.
  • Legislature appropriated $200M of ARPA funds into the fund, DIR began working with Committee to begin developing list of eligible projects, initially began with projects on the Prioritization of Cybersecurity and Legacy Systems Projects report (PCLS) not funded by the legislature in the 87th
  • PCLS is due to LBB in Oct. each even number year, LBB ranks and scores, report is used to inform appropriations during session
  • Also included Texas.gov projects in the initial list, as well as projects that could’ve used federal CRF funds
  • DIR identified priority projects & is compiling a list
  • Ernst & Young is reviewing to ensure projects meet strict ARPA fund requests
  • Committee is a novel idea in state government, other states are interested
  • Chair Capriglione – Appreciates DIR’s work on this
  • Rep. Walle – Only $200m in federal funds, based on need how much the total ask is?
    • Crawford, DIR – Currently 78 projects @$338m total, delta is $138m and significant
  • Rep. Walle – Will leave some behind, will need to set criteria & DIR will help?
    • Yes, bill charges DIR with being a support; have a vested interest in the issue
    • Impact to agency, state, Texans, data security, etc. will be considered
    • Have been encouraging agencies to put projects within LARs and requesting funds that way as well
  • Rep. Walle – Will hear from TDLR & TABC shortly, big agencies with a lot of data like HHSC, do you have an idea of what type of projects they’ve requested and how it compares to small agencies?
    • On size, ask from the bigger agencies will like
    • Vaughn, DIR- Many are application modernization, will be larger requests due to size
  • Rep. Walle – Is TEA one of those with a lot of data?
    • Crawford – Yes; amount of data held can be a prioritization metric
    • Not all is data and system build-out, some are one-time purchasing tools
  • Rep. Walle – Some things could go into the cloud?
    • That would be the goal for those projects that are capable
  • Rep. Walle – Significant, but given $200M likely need some more resources to cover agencies like DMV that hold a lot of data
    • Texans care about data, regardless of size of agency; trying to be mindful of this
  • Rep. Walle – Right, could be TDLR with electrician licenses or something
  • Sen. Paxton – You mentioned that all the 78 projects qualify and there is an audit process?
    • Yes, had Ernst & Young go through list and confirm
    • Vaughn – All projects technically qualify with mission & goal, some things would need to be remediated like ensuring costs weren’t incurred before allowed date, etc.
    • There are also ongoing costs on some projects & will need to be evaluated
  • Sen. Paxton – Appreciates foresight in doing this; any analysis that coordinates these projects with the modernization plans due from agencies?
    • Crawford – Agencies are still working on the plans, would suspect agencies will include these projects in these plans and DIR would ask why they weren’t in those plans
  • Sen. Paxton – Would be good to see that these projects fit into those plans
  • Sen. West – $338M need versus $200M allocated, so about $138M difference; are there other modernization funds we can utilize or consider?
    • Vaughn – This is the only one that hasn’t been allocated at this time; if other federal funds come in could be another source
  • Sen. West – Thinking about state funds
    • Crawford – Not aware of another special fund prior to appropriations process next session
  • Sen. West – Question is how much we can fund these projects as part of LARs, etc., given the surplus
  • Chair Capriglione – Through the typical legislative process we would be able to fund other unqualified projects or unexpected needs, whatever Committee does in this analysis will be helpful in the appropriations process as well
  • Sen. West – Even if we don’t fund all projects now, will be ample opportunity to consider others
    • Agencies also consider timelines and availability of funds; funds expire
    • Projects may not be at the top of modernization list, but could be those ready to utilize the federal funds before they expire
  • Chari Capriglione – Good point, under normal appropriations process, FY doesn’t really start until next Sept. but have an opportunity to get these projects going much earlier
  • Rep. Shaheen – Shortfall of dollars for the projects, will need help determining which of these will be most efficient at optimizing agency work, e.g. moving manual data entry to automatic that reduces staffing needs, those prioritizing state budget benefits or FTE efficiency
    • DIR can work on some ideas on the value proposition; would also suggest adding creating efficiencies for Texans utilizing these services
  • Rep. Shaheen – Would be happy to craft a draft with you
  • Chari Capriglione – Agree on the savings considerations, also cybersecurity is a consideration

 

Christina Kaiser, TDLR

  • Seeking funds to develop a modern licensing system for all TDLR licenses
  • Joint request with DIR is in two parts, 1) building licensing platform and 2) covering costs @$7.9M; both parts needed to complete the project
  • Will seek funding through appropriations if not approved, including this as an Exceptional Item in the LAR
  • Provides an overview of TDLR licenses and operations; additional responsibilities began accelerating in 2015 through program transfers from DSHS, DPS, etc.
  • 34% increase in licensed population since 2015, 24 programs have been transferred to TDLR in a short timeframe
  • Sunset staff recognized negative impact of rapid growth in 2019
  • TDLR licenses use different system depending on the license, staff need to use different systems often and negatively impacts efficiency
  • Many out of date and not modern in security and workflow
  • Difficult to extract data from the systems, typically need manual extraction and isn’t consistent across the different systems
  • Having difficulty hiring new staff that is familiar with these systems
  • Hired a vendor to assist with modernization, but underestimated size & complexity of consolidating 9 systems into 1, underestimated cost & didn’t take advantage of resources to properly estimate this
  • Started with the idea to build custom system, but realized an off-the-shelf product would be better
  • Saw delays with the vendor, ultimately did not renew contract and will be returning 2022 appropriated funds intended to be used for that purpose

 

John Fowler, TDLR

  • Provides overview of recent IT actions, began conversations with DIR in early 2022 to modernize systems that could be extended to other licensing and regulation entities
  • For TDLR, moving manual processes to digital is critical to growing success
  • DIR partnership is an opportunity to procure licensing system, Salesforce is used by other agencies and states
  • Began working with DIR and Deloitte on price and timeline, in July discussed what could be consolidated, security, scalability, disaster planning, etc.
  • Project is essentially shovel-ready, could start working within 6-8 weeks when funded
  • Total timeline is roughly 33 months of total timeline duration with phased implementation
  • Will improve efficiency, provide consistent & secure environment, protect data, and meet Sunset needs
  • Shaheen – Glad you’re not building your own system; struck by the length of the project, taking 33 months because you’re taking 9 systems into 1
    • Yes, would be part of that, roughly 10-12 months rolling a major part of this
  • Shaheen – So you’re going to implement Salesforce and move 9 systems into Salesforce over 33 months?
    • That is the intention
  • Shaheen – Deloitte would do this?
    • Would utilize an existing datacenter contract that Deloitte holds
  • Shaheen – Anyone going to help you with changing internal processes? Change is massive and jobs will change
    • Have been including these into our conversations, included $2.9M for change management
  • Shaheen – Change management is a little different, would like to follow up
  • Shaheen – How many employees work with the 9 systems?
    • Funded for 500+ FTEs
    • Kaiser, TDLR – 70 employees in licensing, but people across the agency need to access these
  • Shaheen – This is my point, 500 people whose jobs will change
  • West – TDLR system will be an anchor at DIR?
    • This is our understanding from discussions about proposal; would be the first agency where the platform will serve our licensing needs & system would be extensible for other licensing agencies
  • West – So the same system would be configurable for other state agencies?
    • Fowler, TDLR – Yes, wouldn’t need to build from scratch, would be able to implement their licensing rules into this system
  • West – So it would be a Salesforce landlord with different tenants?
    • Reasonable view; would also provide benefits for integrating with CPAs, etc.
  • Walle – Enterprise licensing platform summary, low end is $5.3M, high end is $8M; how do we come up with these numbers?
    • Process exists at the datacenter, Deloitte reviews tickets for project ideas that come in
    • TDLR has been investing in making a statement of work and RFO, had the analysis from the previous attempt
    • Deloitte reviews & discusses the ticket, assesses size & complexity and then they build out a range of costs for the solution
  • Walle – And this is because they are the sole vendor for this action item?
    • In this instance that is their role at the datacenter
  • Walle – So you’re going to farm out Salesforce to the vendor and they come back with the scope of work?
    • Deloitte looked at needs, recommended Salesforce as the best solution
  • Walle – Do we have an option of getting a second opinion?
    • Yes, you can explore other options; TDLR has done this in developing the previous RFO & had conversations with Gartner
  • Hall – Where is the cybersecurity aspect?
    • One of the advantages of utilizing an existing platform is that security is built into it
  • Chair Capriglione – Agrees on security aspect, part of modernizing is hopefully being more secure
  • Chair Capriglione – We not only modernize equipment, but also want to have a system that can accommodate future needs; concerned that some of the TDLR processes are paper-based, risky and inefficient
  • Chair Capriglione – Can you go back to some things you’ve learned in the previous attempt & how much it cost to learn those lessons
    • Kaiser – Appropriations we received were $3.8M over the biennium, paid $1.2M to the vendor, vendor had delivery delays & both parties concluded that it couldn’t be completed within the needed timeframe
    • Very focused in the beginning on custom system due to TDLR’s uniqueness, haven’t taken time to sit and assess commonalities across TDLR’s licenses
    • Maintenance of existing programs never gave TDLR the space to thoughtfully evaluate functions
    • TDLR did an AAR on lessons learned
    • Also learned to use Independent Verification and Validation better to ensure contract is progressing as it should; have contract management staff but an IVV person may have identified issues earlier
    • Also saw issues with getting programmers up to speed, tried to use agile methodology and it was a bad fit without experience
    • Fowler – 3 things: 1) hire a partner with domain expertise, 2) seek appropriate level of funding, and 3) don’t try to build a custom system
  • Paxton – Important to pay attention to agency mission statement, we look to DIR to be able to bring in IVV personnel, etc., to ask questions we don’t know to ask
  • West – We paid $1.2M for a project plan, what happened to the plan? Are we using any aspect?
    • Kaiser – Deliverable included charter, design docs, etc.
    • When we ended that contract, considered using these items with a new vendor but weren’t optimistic that it would be useful
  • West – So it’s in storage?
    • Yes, essentially
  • Chair Capriglione – Calls DIR to speak on process when agency brings an idea to DIR

 

Amanda Crawford, DIR

Dale Richardson, DIR

  • Shared Tech Program & DCS, revolve around having competitively procured contracts available from vendors for agencies to use; agencies put a ticket it in, gets analyzed and a solution is offered
  • Can also go through cooperative contracts or requests
  • Agencies bring an idea, vendor provides a rough cost estimate, cost is then built out with change management, etc. & then goes to approval for a project that gets implemented
  • Funds are drawn from Shared Tech services budgets
  • Can go through cooperative contracts, $5M and under must go through this, $5-$10M can do this instead of an RFO, vendors would then look at statement of work, submit bids, etc.
  • Walle – DIR has existing contracts you can do this work with?
    • Yes, to help accelerate projects
    • Pricing is set on maximum, agencies can always negotiate lower; not always based on lower dollar amount, more of an evaluation of best value & cost is a consideration
  • Walle – So we’re using DIR’s size to leverage?
    • Yes, have buying power of the state to get a good deal on the negotiations
  • Walle – TDLR provided a range of low and high funding for the project, so this is the variation in vendor assessing the price?
    • Richardson – Yes, would guess this part of the project hasn’t been fully fleshed out so there is a range
  • Walle – Can we split funding through the $200M ARPA and LAR appropriations, etc.?
    • Crawford – Would need to look at the project, some could
    • Richardson – When we did the legacy system study, DIR saw all the different licensing systems needed; considering new tech called code branching that configures a smaller portion of the overall code needed instead of building bespoke licensing apps
  • West – So we’re talking about shared systems and custom systems? Senate worked with DIR to come up with efficiencies several years ago, what is the opinion on shared systems or different systems are better; from the vendor standpoint it’s the latter, taxpayer it’s the former
    • Crawford – Yes, shared infrastructure helps efficiency and resources
  • West – Shared systems could also assist with training
  • West and DIR discuss how shared contracts take advantage of shared knowledge on security, processes, etc.
  • West – How will a shared system help us get more efficiency out of a licensing system?
    • Richardson – Texans will be able to use one system instead of multiple
    • Also will help with training, etc. by dealing with one system
  • West – Asks about system vulnerability
    • DIR has built systems with several layers of protection

 

Rheda Moseley, TABC

  • In year 3 of 4-6-year project to move from paper to digital licensing system; at end of sunset process, moving down from 78 to 36 licenses
  • Started working on new digitized way of managing license applications, updating website through cooperative contracts, used RFP process for licensing regulation and enforcement
  • AIMS is “cradle to grave” licensing regulation and enforcement system; executed December 1, 2019
  • Started requirements and businesses processes 6-8 months before funding deadline of Sept 1, 2019, when they got funding and moved forward with implementation of 3 of 4 contracts
  • LAR for 2019 was set up in phases with goal to complete in 4 years, at most 6
  • At 65-70% completion with system including licensing piece and part of excise tax and port entry with POS
  • Internal training for staff in summer 2021 with staged rollout; for industry of over 5,000 entities that have more than one license
  • 12-month onboarding process completed in July of this year; 70% of staff onboarded
  • Excise tax revenue coming in for licensing fees
  • Money they were appropriated was half of what they asked for so used funds from phase 2 and stretched it as long as they could; will run out of money on Feb 28, 2023
  • Will lose all their contractors if they lose funding
  • Cybersecurity: have access to FBI systems and must abide by law enforcement rules, adhering to compliance requirements for these entities
  • Chair Capriglione – What do you mean by end-of-life issues?
    • Some agencies never upgraded cybersecurity systems so had security issues
    • Vendors provided some support but were only able to patch issues because systems were built in early 2000s and were at the end of their life
  • Chair Capriglione – What was system like before pandemic and how is it different now?
    • Were paper-based system so team had to do a lot of data entry, including of checks, average 35-90 day wait for application approvals
    • Once AIMS was put into place, were able to process applications in 26 days because no data entry required
    • Product registration down 72%, roughly 5 days for approval now
    • 4,500 administrative changes in the system logged, freeing staff up to do other important work
  • Hall – What do you do to ensure you stay focused on what’s essential to accurately assess qualification for licensure, ensuring system efficiency?
    • Had additional questions initially about what to include in process; see what’s statutorily required and DIR
    • Reviewed by staff through multiple phases and items eliminated each time
  • Chair Capriglione – Best way to collect data is not to collect it to begin with; Did you use IV&V at all?
    • No, too expensive but AIMS went over $5M in funding so hired firm to do program management which provided reports on a bi-monthly basis

 

Hope Osbourne, Texas 2036

  • Texas 2036 recommendations for IT modernization and cybersecurity
  • $200M invested in TIM fund last session
  • 5-year IT modernization plan will go over the struggles the agency faces in cybersecurity
  • Budget for next session presents opportunity to invest more in TIM fund
  • 84th and 85th sessions dealt with deferred maintenance but only lasted for 2 sessions so work on this still needs to be done; This committee should continually monitor these needs
  • Ad-hoc approach to how to use these funds previously but many projects take more than 2 years and need more sustainable funding
  • Encourages committee to think creatively about this process; consider future planning for Dept of Family Services, which is no longer federally compliant, so overhaul of system needed
  • Support continued investment into TIM funds
  • Written testimony includes report by Baker Institute and Rice

 

Closing Remarks

  • Chair Capriglione – Next steps are look at proposals and talk with agencies
  • Any questions on projects should be sent to agencies directly, DIR, or committee members