By Nick Cahill, Courthouse News Service

SACRAMENTO (CN) — California dumped nearly $28 million into a deteriorating disabled-veterans health care system and the failing program has yet to comply with state and federal regulations, according to an audit (pdf) released Thursday.

The cutting report says the California Department of Veterans Affairs ignored complaints regarding a new computer filing system from its own employees for years and lacked oversight over contractors.

It claims the department approved payments for services it couldn't verify were actually completed and that despite funneling $27.9 million into the project, the renovated system currently does not meet the needs of disabled veterans.

"Due to poor planning and inadequate project oversight, CalVet spent nearly $28 million and has not achieved a key project objective — a fully integrated system of care that improved efficiency, quality and consistency of care to veterans," the audit states.

The audit focused on the department's eight veterans homes that provide rehabilitative and residential care to more than 2,300 California veterans, and a new information technology project initially proposed in 2006.

The department hoped the "Enterprise-Wide Veterans Home Information System" would improve veterans' care quality and efficiency by streamlining medical records and eliminating paper records. The program's initial estimated completion date was 2010 and it sought to automate medication subscriptions and prevent unnecessary procedures and paperwork.

A horde of planning and contract issues plagued the project from the start and the last of the eight facilities finally began using the new system in June 2013. Problems with the belated program began almost immediately.

"The system was not fully implemented and used at all of the homes because of certain functionality problems staff experienced with the system," the 57-page report states.

Under the new program, tasks such as filling prescriptions and checking in new residents took twice as long as the old routine, according to the audit.

"Staff also reported that some system functions would regularly freeze or lock up during use. In one extreme instance, the entire system was down for more than a week at the end of August and beginning of September 2013," said State Auditor Elaine Howle.

While department staff reported problems with the system immediately after its implementation, management sat on the complaints and didn't begin addressing the issues for nearly 18 months. The department was forced to freeze the filing system and initiate a timely resolution dispute with the contractor that led to a $350,000 settlement.

Howle says the department couldn't prove that the settlement with the contractor was in the "state's best interest" and that the contractor was paid for work and training it never actually provided.

Unable to figure out a fix to the failing program, the department has been using the problematic software but hopes to have a replacement program identified by September.

Howle recommends that the department develop a formal process that defines the oversight responsibilities of project managers. She also says the department must document its bidding and oversight processes with contractors and better train its receivables department to ensure that contractors are being paid for work they actually perform.

The department said in a response letter that it "could have moved more quickly or acted with greater urgency" and that it "generally" agrees with Howle's recommendations.

The department's secretary says it is under new leadership and that it hopes to implement a new system sometime in 2017.

To Learn More:

California Department of Veterans Affairs: The State Paid Nearly $28 Million for a Flawed System That Fails to Meet the Needs of Its Veterans Homes (California State Auditor) (pdf)

VA Spent $717 Million for Useless Post-Traumatic Stress Drug (by David Wallechinsky, AllGov)

Appeals Court Blasts VA for Mental Health “Incompetence” (by Noel Brinkerhoff, AllGov)