Two weeks after Minnesota’s chief information officer apologized to a state Senate committee for the troubled rollout of a new vehicle license and registration system, officials announced a $26 million contract with an outside vendor to develop the driver services portion of that same process.

Minnesota will hire Colorado-based FAST Enterprises, which has created similar systems for 11 other states, to “provide the software, implementation services, conversion, and training for Minnesota’s driver’s license IT system,” officials said in a Nov. 28 news release.

The company has worked for the state for nearly 10 years and created GenTax, an integrated tax processing system used by the state Department of Revenue since 2008. The GenTax launch was a success, according to the press release: Each piece was “delivered on-time, on-budget and delivered high-quality services for its users.”

The state’s goal is to ensure REAL ID-compliant driver’s licenses and ID cards are available in time to meet an extended federal deadline of Oct. 10, 2018. Its announcement echoed concerns and comments voiced by lawmakers and officials during a hearing on Nov. 15, by the state Senate Committee on Transportation, Finance and Policy.

Senators heard lengthy, heartfelt testimony at that three-hour hearing from business owners involved in the sale and licensing of vehicles, who told them the July debut of the roughly $90 million Minnesota License and Registration System (MNLARS) had been poorly handled by the state, and was costing residents, the state and dealers money while holding back the sale, licensing and registration of vehicles.

Sen. Mary Kiffmeyer, R-Big Lake, asked state CIO Tom Baden what the state would do to ensure similar problems don’t occur when REAL ID compliance comes due next year.

“We have federal law to comply with,” Kiffmeyer said during the hearing. “What are you going to do to make sure that Minnesotans don’t pay the price again?”

Baden, along with Legislative Auditor James Nobles and Department of Public Safety (DPS) Commissioner Mona Dohman were among officials who acknowledged problems with the system during the hearing.

In June, following a legislative request that cited “long-standing concerns about the status of MNLARS’ development,” the Office of the Legislative Auditor (OLA) released a preliminary review of the system.

OLA found MNLARS management and security controls being developed and implemented by the DPS Driver and Vehicle Services division (DVS) and Minnesota IT Services (MNIT) “appear to be adequate” but confirmed “long delays in the development process and vague communication, particularly about timelines, have eroded confidence in the project.”

The CIO told lawmakers MNIT is changing its approach to REAL ID and indicated vendor negotiations were under way.

“Had I known what I know now, I wouldn’t have released it at the time,” he said during the hearing. “But now, we’re setting our eyes on ‘How do I make this correct?’”

Gov. Mark Dayton has also apologized for the rollout of MNLARS, which the Legislature first funded in 2008. The system completed a narrow first-phase rollout in 2014 following a failed relationship with vendor Hewlett-Packard. The project was subsequently developed in-house by MNIT and DVS.

An MNIT spokesperson said via email that Paul Meekin, DPS chief business technology officer, is on a leave of absence and unavailable. The agency said it would not have additional comment beyond officials’ remarks at the hearing, but noted MNIT and DPS are “making changes to the management structure” for MNLARS and “to the operations management approach for MNLARS” including:

Hiring Dana Bailey, chief of staff to St. Paul Mayor Chris Coleman and former advisor to the governor, as the new MNIT executive director of projects and initiatives. Her duties, the agency said, will include ensuring clear internal communications; and engaging deputy registrars — businesspeople and public officials who register vehicles — as well as auto dealers and other MNLARS users to prioritize improvements with their input. Hiring a new software development director, who is expected to start next week. The role will coordinate MNLARS development and work closely with Bailey and FAST Enterprises. Directing the DPS infrastructure team to report directly to MNIT’s enterprise service delivery structure, to streamline process, improve the transparency of daily operations and performance and ensure MNIT expertise in systems operations is being fully leveraged. In a statement provided by email, Baden said Minnesotans should know “we are committed to working around the clock to ensure that issues with the current system are resolved,” and residents will have access to REAL ID-compliant licenses by the federal deadline.

At the hearing, Baden also told senators that he has also assigned MNIT’s chief enterprise architect, Joan Redwing, to the project to provide “oversight of system development.”

But Scott Lambert, executive director of the Minnesota Auto Dealers Association, said he conservatively estimates dealers are holding more than $3.5 million in registration fees and sales taxes because registrations cannot be completed. The last time the group met with DVS, its officials indicated they were 79 days behind in titling vehicles.

In an interview, he described other issues including inventory piling up, erroneous duplicate titles created and bank loans returned to dealers because of incomplete paperwork.

Lambert said the rollout, which is segmented with some updates already having occurred and another planned for the first week in December, hasn’t added all functions yet — including the ability to process disabled and vanity license plates and expedited titles.

“This is a technological disaster, there’s no two ways about it. We’re trying not to make it an economic catastrophe,” Lambert said. “I think the after-effects are going to ripple through the business for some time.”

Lawmakers expressed disappointment during the hearing. Sen. David Osmek, R-Mound, asked whether it might be best to roll back to the older system; and Chairman Scott Newman, R-Hutchinson, questioned testimony from the CIO that the system is “turning the corner.”

Baden told the committee MNIT is focusing MNLARS improvements on three areas: performance, which he said is now “down to about a half a second;” fixing defects with “hot fixes nightly;” and functionality.

“Frankly, my entire focus here is to get the performance right, to get these defects done, to get this workable. I’ve been listening to the deputy registrars. I hear what they’re saying, and I’ve been bending over backward to make this right for them. And that’s been my focus, not rollback,” Baden said.

Nobles, who described the hearing as “very painful,” reminded senators that the state created a consolidated MNIT in an effort to exert better control over systems development.

“I think at some point, we need to do an evaluation to determine, did we get what we wanted from the consolidation. And if we were just looking at MNLARS, I think the answer would be ‘No.’ But I think we would want to look more broadly,” Nobles told the state Senate committee.