Sprawling super agency tasked with technology and services needs overhaul, findings report

Oklahoma’s super agency that handles information technology, budgeting, employee management and state office buildings has little budget transparency of its own and needs to do a better job of responding to agencies it provides services, a legislative watchdog report concluded.

The Legislative Office for Fiscal Transparency said its investigation of the Office of Management and Enterprise Services found that the agency’s annual appropriations have tripled in the past five years, reaching $164 million in fiscal year 2024. During the same time, the agency’s fee income , which comes from other government agencies, rose to $52.4 million, a 285% increase. The office presented its report to lawmakers at a hearing Wednesday.

Some of the increased spending came in the wake of the COVID-19 pandemic, which exposed an older technology infrastructure that wasn’t built for thousands of government employees working from home. But the LOFT report said a lack of long-term planning for statewide technology needs and an increased reliance on contractors and outside consultants also pushed spending higher.

Lawmakers created the agency more than a decade ago to streamline IT purchases and increase efficiency in state spending on general administrative services. But that promise has only been partially fulfilled, the legislative report found. It examined more than 20 policy recommendations to the Legislature, including splitting OMES’ statewide finance department into a separate agency to increase accountability.

“OMES is a huge agency with a huge budget,” said Sen. Chuck Hall, R-Perry, who also chairs a special Senate oversight committee on OMES. “They handle a lot of services on behalf of the state of Oklahoma and its citizens. We can always be a better service provider, and the LOFT report reflects that there are gaps and gaps.”

The report found that agencies have little recourse when the Office of Management and Enterprise Services increases its fees for services and have little flexibility to control their own shared services costs. For example, OMES told more than two dozen state agencies that they will see rent increases of up to 20% this year. It was to catch up on several years of deferred maintenance, but it applied to agencies no matter how old their buildings were.

Jerry Moore, OMES’ deputy director and chief transformation officer, said the agency continues to evaluate the projected rent increases. But there is an estimated $280 million in deferred maintenance costs for state-owned buildings, he said. Insurance and utility costs have also increased.

The report highlighted delayed payments by OMES to its suppliers. The state auditor issued a report in 2020 with the same concerns, but OMES has not improved much since then. The authors of the regulatory report took a random sample of invoices and found that 62% went beyond the legal limit of 45 days.

Senate Floor Leader Greg McCortney, R-Ada, said he was able to explain to his constituents that a government agency could not perform a basic function like paying its bills on time.

“How on earth can I defend the continuation of what we’re doing here?” McCourtney said.

In response, OMES officials said some of those late payments were due to it having trouble collecting fees owed by agencies that used the services.

“We’re stuck paying these technology bills at these agencies, and they can disagree about how it didn’t go to their satisfaction when they signed the statement of work,” said John Suter, OMES executive director and state chief operating officer. officer. “It’s frustrating to me.”

The report said OMES spending from federal pandemic aid had left the agency exposed to ongoing operating costs from what were described as one-time purchases at the time. It highlighted $100 million going to a backup data center in Texas. Much of that cost went to cloud-based systems, which now require an additional $18.6 million in annual costs.

The state also paid the same vendor, NTT Data, $8.6 million a year for desktop support services. But service times were so bad OMES canceled the contract this year and took the services back in-house. Lawmakers gave the agency an additional $15.8 million in appropriations to resume those functions.

“Both the new cybersecurity enhancements and the data centers were purchased with CARES money that covered the recurring revenue for the first few years, but did not account for how those recurring fees would be covered afterward,” the report said.

Late. Julia Kirt, D-Oklahoma City, said the LOFT report confirms concerns many have had for years about consolidation.

“Ultimately, it is the majority of the Legislature’s responsibility to provide long-term strategic planning so that LOFT’s recommendations are enacted and provide adequate resources to ensure that citizens receive the services they need,” Kirt said in a news release.

In an interview after the hearing, Suter said his agency was agnostic about how the Legislature wants to provide funding for information technology, and he was open to other ideas about the agency’s structure.

“If people need to report to different people, if we need to be funded in different ways, either in all grants or in a hybrid model like we exist now, that’s OK,” Suter said. “It gives us a lot of flexibility once the Legislature looks at all the options.”

Paul Monies has been a reporter with Oklahoma Watch since 2017, covering state agencies and public health. Contact him at (571) 319-3289 or [email protected]. Follow him on Twitter @pmonies.