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People wait at the DMV office in Henderson on Tuesday, Jan. 2, 2018. (Jeff Scheid/The Nevada Independent)

A contractor hired for a $75 million contract upgrading the Nevada Department of Motor Vehicles’ 20-year-old computer system is running several months behind schedule, after auditors found the business grossly understaffed its Nevada operations, which the lieutenant governor called a “bait and switch.”

A state audit report requested by the DMV and released Tuesday revealed a variety of delays and shortfalls in the first year of a major $75 million contract between the DMV and technology company Tech Mahindra as part of the agency’s five-year system modernization plan. Despite the company and DMV saying many of the problems have been fixed, the audit elicited calls from state officials for the agency to consider dropping the contract entirely.

The contract comes out of funding lawmakers approved for a $114 million system upgrade in hardware and software for the department in 2015, including creation of a $1 “technology fee” assessed on all DMV transactions. The department’s current computer system runs on a mix of antiquated programming technologies including PowerBuilder and COBOL, which the department says is inefficient and clunky.

The audit stated that Tech Mahindra, which was awarded the five-year contract with the DMV in June 2016, initially promised they would provide and relocate the company’s “A-Team” of experts with years of experience in upgrading databases and other modernizations for DMVs in other states, but failed to do so in the first year of the contract.

“As of April 2017, one year into the project, the contractor has only provided six of the 25 A-Team members they proposed,” the report stated. “Of these six members, three did not start until after April 2017, a fourth was removed after two months, a fifth was removed and returned to the project several times, and a sixth assumed multiple responsibilities.”

The audit also stated that the contractor did not meet the requirements for documents and communications to be proficient in the English language, requiring the DMV to edit “not useable” documents and meeting minutes for grammar and spelling.

“Consequently, required project documentation and meeting minutes have not been completed timely,” the report stated.

Those shortcomings elicited a sharp response at the meeting from Lt. Gov. Mark Hutchison, who advised the DMV to drop the contract entirely and said the company appeared to have misled the state and engaged in a “major breach of contract.”

“It’s much better to get out sooner than later,” he said. “If they’re not performing, then somebody needs to make that decision quickly — get out, cut your losses, have the attorney general do what he’s going to do on a legal standpoint, and find somebody who can. I read this as a lawyer, and I say this is a big bait and switch that occured.”

Gov. Brian Sandoval also said he was concerned with “lack of performance” on the contract, and also hinted that the department should have second thoughts about moving forward with the contract.

“I hope there’s a sense of urgency, because at some point, we get to a place where we have to move on, dependent on the contents on the contract,” he said.

The report also chastised the DMV for not ensuring compliance with normal procedure and protocols, including failing within the first year of the project to amend the master plan to include contractually binding due dates for various aspects of the project.

At the meeting, DMV director Terri Albertson told the executive audit committee — composed of the state’s six constitutional officers — that Tech Mahindra had taken steps throughout 2017 to ramp up operations and correct past mistakes, including replacing a program manager, adding staff to the project and implementing a style guide for technical writing.

Still, Albertson hinted at the existence of unaddressed “issues” with the company’s performance, and said the department was still weighing whether or not to go forward with the contract.

A DMV spokeswoman didn’t return several emails seeking more information about the status of the project or if the agency will continue to contract with Tech Mahindra.

In an email, a Tech Mahindra spokesman said the company was committed to completing the project.

“The project plan, as mutually agreed upon with the Nevada DMV, is still on track and and we are committed to its success,” Tech Mahindra spokesman Michael Gelormino said in an email.

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