Why Your Governor is Lighting Your Tax Money on Fire

February 23, 2023

From Waldo Jaquith:

It’s happens at least once in every gubernatorial administration: presented with a disastrous, multi-year, failing software project that’s preventing an agency from accomplishing its mission, the governor awards a big contract to a big vendor, maybe even the vendor that’s the source of the problem. Some major culprits are unemployment insurance, enterprise resource planning, Medicaid, child welfare, and payroll—all load-bearing systems for their agencies. Solving these failures by signing another big contract nearly always makes things worse. So why do governors do this?

Why It Matters

Outsourcing technology projects to vendors creates a classic principle-agent problem. Not every vendor is bad and not every outsourced project goes wrong, but many will cost more than if government did things in-house. Failed software projects impact trust in government and make life worse for residents.

Go Deeper

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This work by Matt Zagaja is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License.