Credit: Darrow Montgomery/File

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When D.C. first announced plans to modernize its antiquated unemployment insurance system, Adrian Fenty was mayor, Barack Obama lived in the White House, and LL was too young to legally drink.

That was in June 2010, and at that time, the D.C. Department of Employment Services (DOES) estimated it would cost about $11 million to upgrade the system, which features components that date to the 1970s. The goal was to upgrade both arms that make up the unemployment insurance system: tax collection and benefits.

“Due to the outdated technology currently in use (Mainframe), implementations of new requirements (laws) are complex, intense, and time consuming to deploy in a consistent timely manner to ensure claimants receive added or new benefits as quickly as possible,” according to the justification spelled out in the Fiscal Year 2011 capital budget plan. “In this environment, the systems are highly fractured silos requiring highly price [sic] contractors to maintain them.”

That language (or something very similar to it) is included in every capital budget plan since 2012, though the estimated cost increased to $46 million in the FY 2020 plan.

A review of budget reports, contracts, and DOES’ responses to oversight questions from the D.C. Council reveals few concrete answers as to what upgrades have been completed and what caused such significant delays. Answers to those two questions are critical as the global COVID-19 pandemic has led nearly 38,000 District residents to apply for unemployment benefits, and complaints about the creaky system abound.

In February 2019, for example, DOES said modernization of the benefits system began in the summer and winter of 2018. The agency aimed to complete some work in July 2019 and the rest in December 2021, its leaders told the Council’s Committee on Labor and Workforce Development, chaired by At-Large Councilmember Elissa Silverman.

During DOES’ budget oversight hearing in April 2019, Director Unique Morris-Hughes, who took the reins of the agency in 2018 and is the department’s third director under the Bowser administration, said so far the agency spent only $7 million of a budgeted $45 million on the unemployment benefits modernization project. 

“There’ve been a lot of different iterations on strategy and what direction we were gonna go,” Morris-Hughes told Silverman during the oversight hearing. “And so I think because of all the stops and starts there has not been a significant amount of work that’s been done across the board with modernization efforts.”

Later in the hearing, Silverman zeroed in on a five-year contract with On Point Technologies worth up to $23 million for “IT maintenance and support services” for the unemployment benefits system.

The contract with the Illinois-based tech company, originally signed in 2014, was amended several times, including in 2017, with 10 pages of additional requirements that On Point would deliver free of charge. At the very top of that list was transferring the District’s current system to On Point’s platform, known as OPTimum, which is flexible, configurable, accessible, scalable, maintainable, and cloud-enabled, according to the company’s website.

Morris-Hughes said during the April 2019 budget hearing that “progress with development has slowed down a little bit,” and said she did not expect On Point to finish the work before the end of the fiscal year, then five months away.

On Point’s five-year contract expired in August of 2019, and in November 2019, the District signed a new nine-month contract worth $5 million with the company.

When DOES leaders responded to oversight questions in February 2020, they said the bulk of the upgrades to the unemployment benefits system wouldn’t start until the spring of 2020. The agency expected the work to wrap up by the winter of 2022.

On Point founder Michael Lorsbach tells LL via email that it would be “inappropriate for me to respond to any inquiries about a DC government contract.”

DOES did not respond to LL’s questions by press time.

The labor committee’s FY 2020 budget report, dated May 1, 2019, was not optimistic about the quality of the work.

“Shifting timelines, changing budgets, a lack of a detailed spending plan, contradictory information and little progress to date do little to reassure the committee that the capital project will be completed soon or done well,” the report says.

“It’s still unclear to us what’s been done,” Silverman tells LL this week. “DOES put all kinds of additional work that went beyond the scope of the contract, and that seems to us to be a major modernization provision, and it’s still unclear to us whether that work was done by the contractor, and if it was completed, why the agency hasn’t implemented it.”

***

Jeremy Riley is either going to receive about $375 per week (a significant drop from his typical wage), or he’s going to get nothing.

Riley, who was laid off from his job as a cook at the Mount Pleasant bistro Ellē two weeks ago, says he got an online notification telling him that his claim was received, but the payable amount is $0. He also got a letter in the mail saying he will receive a weekly check.

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“I’m not sure if I’m getting paid for the first week because … there’s usually a one-week waiting period, or if I’m even going to get paid at all,” he says. “Calling them is impossible. There’s people who sit on hold for five, six hours.”

The roughly 38,000 out-of-work employees who applied for District unemployment benefits since March 13 already outpace the 31,677 new claims filed in all of FY 2017 and the 29,283 new claims in FY 2018. The D.C. Council anticipated the surge and passed emergency legislation earlier this month that waived some of the typical restrictions on unemployment benefits, including the requirement that applicants actively search for work.

As DOES scrambles to update its computer system to reflect the changes, applicants are getting rejection notices when they say they’re not looking for a job. DOES says claims will not be denied or delayed if a person isn’t looking for work, and Mayor Muriel Bowser says applicants should continue to answer honestly. But some claims processors are giving the exact opposite advice, Riley and other laid off hospitality workers tell LL.

A screenshot of an email from the District government to one applicant, who shared it with LL, says “While certifying your weekly claims, please say yes to the question no. 4 (work search).”

“If you say ‘NO,’ to that question,” the email continues, “system will create issue [sic] on your claim and it may delay your benefits further.”

Bowser said during a media briefing on Monday that DOES hopes to update the unemployment benefits computer system to reflect changes in the law within a week. She expects the update will stop automated messages that contradict DOES’ guidance.

In the meantime, D.C. is hosting webinars to help applicants through the process. Riley says he sat through a session earlier this week, and when it came to the searching-for-work question, the instructor was as clear as mud. “He said ‘I can’t tell you what to put on the form, but if you want it might not hurt to start to become familiar with our system, and put in that you submitted your resume to one or two places,’” Riley says.

DOES hosts four free webinar sessions a day, but they’re currently “sold out” through April 6. To top it off, the application system is optimized for Microsoft’s discontinued browser, Internet Explorer, and doesn’t cooperate with mobile devices. Bowser’s suggestion is to apply from a desktop or laptop computer and to use the out-of-date browser anyway.

For years, Internet Explorer has tormented users and exposed them to security vulnerabilities. Even a Microsoft employee advised against using it as a default on a company blog. Microsoft finally threw in the towel in 2016 in favor of its new browser, Edge.

These problems could likely have been addressed if D.C.’s unemployment insurance system were updated. In 2019 and 2020 answers to oversight questions from the Committee of Labor and Workforce Development, DOES included a long list of intended improvements, including “increased configurability of the system to reduce updates that require a developer” and “new infrastructure mobility facilitating customers and support resources the ability to work from any device, including mobile phones and tablets.”

Despite the issues, LL remains ever so slightly optimistic. At least the unemployment system hasn’t crashed, as other systems across the nation have. But that’s little comfort for out-of-work hospitality employees, independent contractors, and any other nonessential workers who wait for the kinks to get worked out. Rent came due for many of them on April 1.

***

Enough about unemployment benefits. LL’s readers might be wondering about the modernization of the other half of the system—the unemployment taxes.

It’s been a bumpy road. After reissuing a request for proposals in October 2018, the Office of Contracting and Procurement (OCP) gave the $13 million project to the Minnesota-based company Sagitec Solutions, LLC in October 2019. After a local, competing company’s protest of the award was dismissed—a dispute that featured some he-said-she-said accusations of contract steering—it looked as though the modernization would move forward. At least it did until mid-February, when At-Large Councilmember Robert White started asking questions about the way OCP awarded the contract.

OCP awarded Sagitec what’s known as a “letter contract,” which allows the company to begin working on specific portions of the contract right away while negotiations continue. Sagitec would get paid no more than $1 million, according to the letter contract, because anything over that amount requires Council approval.

If OCP knew the total contract was worth well over $1 million, and would require the Council’s OK, White asked OCP director George Schutter, why award the letter contract? What was the emergency?

Schutter responded by reciting the executive branch’s authority to enter into contracts under $1 million and assuring White that “it’s not uncommon that you would begin work with the letter contract.”

Unsatisfied, White suggested, in what sounded to LL like a thinly veiled threat, that eventually the Council is going to “buck back” against what he said is a clear attempt to force councilmembers into a spot where they must approve a contract or risk losing time and money already spent.

“What you’re asking the city to approve, [and] you may disagree technically, but it is a retroactive contract,” White said. 

“I think this contract is gonna cause some serious concern because of the way it proceeded,” he added later. “And the District will, on this contract and/or future contracts, lose money and time because at a certain point, which is probably about now, the Council is gonna say we’re not doin’ this anymore.”

About two weeks later, the District paid Sagitec a total of $912,210 in two payments. The whole contract still has not been sent to the Council for approval, and the letter contract is not posted to OCP’s online database.

If there’s a lesson here, it’s that LL is clearly in the wrong industry. A lot of money is sloshing around the unemployment IT world, and he is missing out.