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Inmates in the yard at the Northern Nevada Correctional Center in Carson City on May 19, 2017. Photo by David Calvert

There’s a silver lining after Nevada decided to cut its losses and prematurely scrap a massive contract to improve the DMV’s computing systems — Nevada prisons will likely get a bargain-basement technology upgrade out of it.

The Nevada Board of Examiners, which includes Gov. Brian Sandoval, Attorney General Adam Laxalt and Secretary of State Barbara Cegavske, voted unanimously on Tuesday to approve $158,000 so the Nevada Department of Corrections could buy DMV equipment valued at several million dollars. The equipment will help prisons create “redundancy” so they’re not crippled if there’s a network outage.

“You are getting a loaded Cadillac for the price of a used Volkswagen,” Sandoval told prisons officials.

While the DMV and prisons are both state agencies, the prisons agency had to pay for the equipment because it is supported by general funds, while the DMV is supported by an outside account known as the highway fund.

The equipment — some of which is still in the box — is expected to be up and running for the Nevada Department of Corrections by next summer. The expenditure needs to be approved by the lawmakers on the Interim Finance Committee and is dependent on other pieces of the technological puzzle falling into place, including expanded bandwidth.

“I’m extremely excited about this opportunity,” said prisons Deputy Director John Borrowman. “We’ve had tremendous issues with outages and this would go a long way to avoid those things in the future and maintain our constant operations.”

Borrowman said that with IT operations concentrated in Carson City, and with the department increasingly using telecommunications systems that depend on a network, network outages leave the rest of the far-flung prisons in technological “silos.” Although correctional officers can still make their rounds, and the prison knows who it’s supposed to have in its custody, an outage can prevent prisons from emailing each other, calling outside the building on a phone, and accessing a future systemwide scheduling and timecard management system.

Outages can also limit access to security cameras and telemedicine, a key vehicle for ensuring access to medical care at remote sites such as Ely State Prison. A variety of other agencies also depend on information from the prisons that would be inaccessible in an outage.

“Having this ability to maintain full operations when one single place goes down, is very important,” Borrowman said. “It’s something we’ve always had an interest in doing but we haven’t had the resources.”

But the deal for the prisons comes out of a big setback for the DMV in its $114 million effort to upgrade its antiquated computer system. Funds for the project derive from a $1 “technology fee” assessed on every DMV transaction.

State auditors released a report in January 2018 revealing several months of delays and shortfalls in the first year of a $75 million contract with technology company Tech Mahindra. Among the problems cited were understaffing and documents with subpar use of the English language. Lt. Gov. Mark Hutchison asked the department at a public meeting to drop the contract, which he described as a “big bait and switch.”

The state had expended $17 million on the contract by the time the deal was terminated. Of that, the state took a loss of about $12 million, and another $4.7 million of spending is considered "salvageable" and will be usable by a future contractor for the modernization project.

"We are also still working to sell back some of the remaining equipment, although of course the return value isn’t as much as the paid value," said DMV spokeswoman Alex Smith.

The Board of Examiners approved a settlement on Tuesday in which Nevada and Tech Mahindra release each other from all claims. The company had said Nevada owed it $7.5 million, but the state disputed all those claims. The settlement means the deal won’t be the subject of potentially costly and prolonged litigation.

“This is a very favorable settlement for the DMV and the people of the state of Nevada,” said DMV Director Terri Albertson.

She said the agency is now working on a request for proposals for a new contractor that can help the DMV modernize its system.

"We are dedicated to ensuring the success of this effort and are taking extreme precautions to make sure there are no further issues," Smith said.

Updated at 5:40 p.m. on Aug. 15, 2018 to add additional quotes and details about the financial implications of ending the Tech Mahindra contract.

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