Software Nerd

Wednesday, May 28, 2008

State government's cheating the Feds

The FIRM blog spoke about state governments colluding with hospitals to make the Feds pay more for healthcare. This reminded me of my own encounter with Fed "matching" funds.

I was working on a state software project (forgive me father, for I have sinned!). The Feds wanted the states to computerized one functional area and hook up to some Fed systems. States would benefit from computerization, but the Feds were pushing the project. So, the Feds agreed to pay part of the cost, in "matching funds".

The Fed would pay 75% of the cost if the state kept project-costs in check, according to certain criteria. One such condition: the states had to use an existing state system as a starting point (about 10 states were already computerized). The Feds figured that would save a lot of money.

West Virginia played more or less by the rules. They brought in my employer, who had developed another state's system, and had us tailor it. Then, another state brought us in, but told us they wanted to develop from scratch. However, they still wanted the full Fed matching money. Their project managers were pretty explicit. They told us that we had been selected so we could bring in all our documentation and put it on the shelves, and that was the sense in which they would be starting from an existing system. Sure, they were "re-using our previous knowledge", but that was not what was intended by the Feds.

During the course of the project there were some cost-escalations, and the managers never considered the whole cost. All they looked at was their 25% share. This is hardly surprising -- it is tough enough getting managers in private companies to look beyond their own departments, and consider corporate objectives. A typical state-government manager is a poor steward for Federal money.



  • This goes both ways of course. Observe any number of Homeland Security initiatives which the Feds are trying to get states to pay for. "RealID" comes to mind.

    By Blogger Monica, at 3:51 PM  

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