An IT upgrade in progress for seven years at the California Department of Motor Vehicles (DMV) -- dubbed the IT Modernization project -- was canceled Jan. 31.

The $208 million, two-system project was created to upgrade legacy hardware systems for the DMV's driver's license system and vehicle registration system. While upgrades to the driver's license system are “nearly finished,” according to Christine Lally, assistant secretary for communications and legislation at the California Technology Agency, "minimal work" has been done to upgrade the vehicle registration system.

Electronic Data Systems, now owned by Hewlett-Packard (HP), was contracted to assist in the project for about $76 million, approximately $50 million of which was paid out before the agency canceled the contract on Jan. 31.

“We appreciate the work of Hewlett-Packard in helping us complete important upgrades to the state’s driver license system,” said Acting DMV Director Jean Shiomoto via email. “Minimal work has begun on the vehicle registration portion, so this is a natural breaking point for the project. We will now work with the Technology Agency to develop a new plan for finishing the last remaining part of this project.”

The scheduled deadline for the vehicle registration system upgrade was May 2013, and the vendor contract was scheduled to end in November 2013. Technology Agency officials determined that the vehicle registration system upgrade would not be finished by these deadlines.

This cancellation, Lally said, allows for the Technology Agency and DMV to "take a fresh look at planning the vehicle registration system upgrades.”

While HP is among the largest suppliers of hardware to the state of California, this cancellation represents at least the second major contract with the state that the company has lost in recent years. Formerly the contractor for the California Medicaid Management Information System, Hewlett-Packard lost a 10-year, $1.6 billion contract renewal to a Xerox subsidiary in 2010.

Since HP took over the DMV's IT Modernization project, it says it has worked with the state "to help millions of Californians experience the benefits of a modernized system," the company said. "HP values its relationship with the state of California and is committed to the success of our clients' IT modernization."

At this point, the California Technology Agency and DMV will re-evaluate how best to proceed.

Techwire.net's Bill Maile contributed to this story.

Colin Wood Colin Wood  |  Staff Writer

Colin has been writing for Government Technology since 2010. He lives in Seattle with his wife and their dog. He can be reached at cwood@govtech.com and on Google+.