## Is Maryland’s IT Department Stuck in the Past? A recent audit throws a spotlight on Maryland’s Information Technology department, revealing a troubling trend: failure to implement recommendations made in an earlier report. This isn’t just a bureaucratic blip – it raises serious questions about the state’s ability to keep pace in a rapidly evolving digital world. Could outdated practices be hindering crucial services and leaving Maryland vulnerable to cybersecurity threats? We’ll explore the details of the audit and what it means for the future of technology in Maryland.
UMGC’s IT Spin-Off: A Case Study in Costly Oversight
A recent audit by the Maryland Department of Legislative Services’ Office of Legislative Audits has revealed a lack of oversight in the University of Maryland Global Campus’s (UMGC) spin-off of its information technology units into independent businesses. The audit found that UMGC supported these companies with $198.1 million in sole-source contracts, which may have contributed to the failure of a $25.1 million IT project.
The HIEDA Pathway and Its Pitfalls
The University System of Maryland policy allows colleges and universities to take actions that could boost the state’s economy through High Impact Economic Development Activities (HIEDA). In 2015, UMGC spun off its Office of Analytics to create HelioCampus, providing $10 million in startup funding for the company. In 2016, UMGC created Ventures, a tax-exempt holding company for UMGC businesses, which was seeded with $15 million. A year later, UMGC spun off its IT office into AccelerEd, a subsidiary of Ventures.
The audit noted that Ventures had $215.3 million in revenues from fiscal 2017 to 2022, of which $198.1 million came from UMGC. Further, the audit said, $184 million of those service agreements were made without competitive bids and with little oversight after the fact.
UMGC’s Decision to Spin Off IT Units
UMGC’s decision to spin off its IT units into independent businesses has raised concerns about the lack of competitive bidding and oversight. The audit found that UMGC disagreed with the charge that it should “make sure IT services are provided on a competitive basis.” However, the audit noted that while state law permits the school to do business with HIEDA firms without competitive bids, “the law does not mandate exclusive use of these entities.”
The $198 Million in Sole-Source Contracts
The audit found that $198.1 million in sole-source contracts were awarded to the spun-off companies without competitive bidding. This lack of competition may have resulted in UMGC not obtaining IT services from the best qualified vendor and in the most cost-effective manner.
A $25 Million Black Hole: The Failed IT Project
The audit also found that UMGC spent $25.1 million on an IT project that was eventually abandoned. The project’s failure may be attributed to the lack of oversight and competitive bidding in the awarding of contracts to the spun-off companies.
The Breakdown of the Project
The IT project, which was supposed to provide IT services to UMGC, was awarded to one of the spun-off companies without competitive bidding. The audit found that the project was poorly managed, and the company failed to deliver the expected results.
The Auditor’s Concerns about Wasteful Spending
The auditor expressed concerns about the wasteful spending of $25.1 million on the failed IT project. The audit noted that the project’s failure highlights the need for competitive bidding and oversight in the awarding of contracts.
Lessons Learned for Public Institutions
The failed IT project and the lack of oversight in the awarding of contracts provide valuable lessons for public institutions. The importance of competitive bidding and oversight cannot be overstated, and public institutions must ensure that they obtain the best value for their money.
The $500 Million Advertising Dilemma
The audit also found that UMGC spent $500 million on advertising contracts without proper oversight. The audit noted that the advertising contracts were awarded to a group of nine companies that had prequalified to do advertising work for UMGC under two six-year master contracts totaling $500 million.
UMGC’s Advertising Strategy in a Declining Enrollment Environment
UMGC’s advertising strategy has been questioned, given the decline in enrollment. The audit found that the advertising contracts were awarded without proper oversight, and the university disagreed with the audit’s recommendation to create a system for competitively bidding advertising jobs among the prequalified companies.
The audit noted that the university’s existing procedures ensure competition, and that constantly shifting between ad agencies would lead to a loss of campaign knowledge and inefficiencies. However, the audit found that the university’s advertising strategy has not been effective in increasing enrollment.
Sen. Lam’s Concerns about Accountability and ROI
Sen. Clarence K. Lam (D-Anne Arundel and Howard), the Senate co-chair of the Joint Audit and Evaluation Committee, expressed concerns about the lack of accountability and return on investment (ROI) at the University of Maryland Global Campus (UMGC). Lam stated that after reviewing the audit, it is “our intention” to invite UMGC officials before the committee this fall.
Lam highlighted the significant amount of money spent on advertising, despite declining enrollment. “I think it’s OK if there’s some money spent and yet it didn’t produce the results that you wanted, but a half-billion dollars is a lot of money to spend on advertising,” he said. Lam emphasized the need for transparency and accountability, stating, “I think there’s some questions… that ought to be asked.”
The Audit’s Recommendation for Competitive Bidding
The audit recommended that UMGC create a system for competitively bidding advertising jobs among a group of nine companies that had prequalified to do advertising work for UMGC under two six-year master contracts totaling $500 million. However, UMGC disagreed with this recommendation, citing its existing procedures as sufficient to ensure competition.
Despite this, the audit noted that the university’s lack of competitive bidding may have restricted its ability to obtain IT services from the best-qualified vendor and in the most cost-effective manner. The audit stated, “While state law permits the school to do business with HIEDA firms without competitive bids, ‘the law does not mandate exclusive use of these entities.'”
Lessons for Higher Education
Balancing Innovation and Fiscal Responsibility
Innovative approaches and fiscal responsibility are essential for higher education institutions. However, these two goals must be balanced to ensure that institutions are not sacrificing one for the other. Transparency and accountability are crucial in this process, as institutions must be able to demonstrate that their investments are yielding desired results.
The lack of competitive bidding and oversight in the UMGC’s IT department is a cautionary tale for higher education institutions. Institutions must ensure that their IT services are provided on a competitive basis to ensure that they are getting the best value for their money.
Navigating the HIEDA Policy Framework
The High Impact Economic Development Activities (HIEDA) policy was created to allow colleges and universities to take actions that could boost the state’s economy. However, the audit highlighted the need for institutions to navigate this policy framework carefully, ensuring that they are not sacrificing accountability or ROI in the process.
Institutions must understand the intent and limitations of HIEDA and implement and monitor HIEDA activities accordingly. Compliance with the policy is also essential to ensure public trust. Institutions must be able to demonstrate that their investments in HIEDA activities are yielding desired results and are transparent in their decision-making process.
Conclusion
In the recent article by Maryland Matters, an auditor revealed that the state’s Information Technology department has yet to implement recommendations from an earlier report. The report had identified several areas of improvement, including issues with IT infrastructure, cybersecurity, and data management. Despite being presented with these findings, the department has failed to take concrete steps to address these concerns, leaving the state’s technology systems vulnerable to potential risks and inefficiencies.
The significance of this issue cannot be overstated, as it has far-reaching implications for the state’s overall operations and public trust. The lack of progress in implementing these recommendations raises questions about the department’s capacity for effective management and its commitment to using taxpayer dollars efficiently. Furthermore, the failure to address these issues may ultimately impact the state’s ability to provide critical services to its citizens. As the state continues to rely heavily on technology to deliver essential services, the need for effective IT management has never been more pressing.
The consequences of inaction will only continue to mount, and it is imperative that the department takes immediate action to address the concerns outlined in the report. The people of Maryland deserve better, and it is the responsibility of their elected officials to hold the department accountable for its performance. By prioritizing IT reform, the state can ensure that its technology systems are secure, efficient, and effective, ultimately serving the best interests of its citizens. As we move forward, it is clear that the stakes are high, and the time for action is now.