The Costly Fiasco of Minnesota’s Licensing and Registration System

The state needs another $43 million to fix the system

People fill a DMV office in Minnesota
Photo: ZUMA Press Inc/Alamy Stock Photo
Residents wait for their turn at a DMV office in Minnesota.

How long should a state take to develop an information system to manage its vehicle and driver services’ transactions? For Minnesota, the wish is that it is only going to be the 11 years it is now scheduled to take.

The Minnesota’s Licensing and Registration System (MNLARS) project was initiated in 2008 when the Minnesota Legislature recognized that the current system that went live in 1982 was on its last legs. There was a slim hope that MNLARS would be operational by 2012 [pdf], but, alas, it was not. In fact, it took until April 2012 for the Minnesota Department of Public Safety’s Driver and Vehicle Services (DVS) to just reach a contractual agreement with Hewlett-Packard to begin developing MNLARS at an agreed cost of $41 million.

MNLARS was to be implemented in four releases, with the first release scheduled for the summer of 2013. Releases would follow annually, until the final MNLARS release in 2016. Unfortunately, that date was soon at risk of slipping, too.

An April 2014 state audit [pdf] into MNLARS indicated that there was trouble fermenting between HP and the state leadership team. Some of the issues the audit identified were incompatible goals and visions, failure to act as one project team, unclear project communications and role expectations, as well as the existence of a culture of distrust between project teams and team members. If those issues weren’t enough, there was also a perception that HP was driving the project, not the state leadership team.

The difficulties were severe enough that the DVS decided to terminate its contract with HP later that year, citing as its reasons for termination the company’s inability to meet schedules and its poor quality of work [pdf]. In fact, HP was handed its termination notice in July 2014, before the first release was even finished. Though this release began in March 2014, it wasn’t completed until September 2014. Even then, it required many months of bug fixes. HP did walk away with $16 million for its efforts, however.

The DVS decided that Minnesota’s state IT Services (MNIT) would take over the project in HP’s stead. At first, the DVS and MNIT thought MNLARS could still be completed by 2016, but this soon proved unrealistic.

A revised plan [pdf] was developed in late 2014 into early 2015 which again called for multiple releases, but with the final MNLARS release now rescheduled for 2018. The first release of the new plan was set for October 2016 and was a “read-only” version of MNLARS.

This release would create the basic infrastructure for the MNLARS system and allow some government and private entities to search for motor vehicle information. Next was a highly-anticipated early 2017 release that would finally permit the state licensing offices to process standard vehicle titles, vehicle registrations, and registration renewals, among other functions.

The DVS indicated in early 2015 that the funds spent to date on MNLARS totaled $37 million, with the cost of the revised project plan pushing the final total to $93 million. While some state legislators were unhappy about the escalating cost of MNLARS, the DVS assured them that the “project is in a good place.”

The read-only version of MNLARS was released as planned in October 2016, but the next release slipped from March to July 2017 in part because of delays in training licensing offices on how to use the system, a 2017 state audit [pdf] reported. The DVS was still confident, however, that it and MNIT could roll out the remainder of MNLARS before the end of 2018 as planned.

That confidence was undermined within weeks of the MNLARS July release however. Almost immediately, the state’s 174 licensing offices were reporting frustrating glitches with the system, including annoying outages. The problems with MNLARS were so numerous and exasperating that one newspaper put the situation this way: “Depending whom you ask, Minnesota’s new computer system to handle vehicle licenses and titles is either mostly working with glitches, or barely working with major failings.”

At first, the DVS played down the problems with MNLARS, saying they were expected with any new system. It promised that the bugs would be cleared up in a few weeks. However, as those weeks turned into months with little improvement, the public and state politicians became angrier. Finally, in September, the Commissioner of Public Safety apologized for the mess, basically admitting that the launch of MNLARS should have been delayed.

However, Minnesota’s Gov. Mark Dayton soon undercut the apology by claiming that the chorus of criticism was just noise spewed by his political opponents. It took until November before the governor admitted the obvious by making a half-hearted apology for MNLARS performance issues.

When asked by state legislators when MNLARS problems were going to be fixed, neither the governor nor DVS or MNIT could give an answer. Neither would the MNLARS project manager, who had been placed on leave as the system’s problems mounted.

It wasn’t until the end of January of this year that an answer was provided by DVS and MNIT. For an additional $43 million the current buggy MNLARS release could be fixed by the end of this July, with MNLARS’ remaining functionality launched by the end of 2019, according a newly updated project roadmap [pdf]. That funding amount didn’t include another $26 million already paid to a vendor to implement the REAL ID compliant drivers’ license system required [pdf] by 1 October of this year.

If MNLARS wasn’t given the funding, the DVS warned, MNLARS’ problems would likely stretch into 2020 or longer, and the Real ID system launch date might be missed as well.

State legislators were furious at the DVS for blind-siding them about the depth of MNLARS problems and the cost to fix them. They are even more upset now that it looks like the DVS and the governor’s office ignored internal warnings that MNLARS was heading for trouble.

The new DVS leadership promises the legislators and the public that MNLARS will be fixed if the new funding is provided, and that the project will be better managed than before. However, that is what the old leadership team promised in 2014, so state legislators are taking it with a grain of salt.

Minnesota isn’t the only state with vehicle licensing and registration system problems, however. Nevada’s Department of Motor Vehicles fired its vendor Tech Mahindra in late January some 20 months into its contract after a state audit [pdf] revealed that the modernization of the state’s new $114 million DMV system was grossly understaffed and months behind schedule, among other issues of concern. Lt. Gov. Mark Hutchison said the audit indicated a “bait and switch” was used against the state by its vendor.

Kansas still hasn’t announced when it plans to roll out its new KanLicense driver’s license system. The original plan was to launch it in December 2017 [pdf], but the go-live date has been placed on hold until the remaining software bugs can be quashed. Given that the project is nearly six years late already, waiting a bit longer to avoid a bungled launch is probably a wise move.

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