With project cost already over $100M, taking MNLARS private could be expensive

Frustrated lawmakers directed the Minnesota Department of Public Safety earlier this year to get information from private vendors on the feasibility of developing a system to replace the Minnesota Licensing and Registration System, which had its faulty launch last summer.

The directive was part of a bill passed last session to provide $9.6 million in emergency funding for MNLARS repairs.

Three firms — Business Information Systems (BIS), Celtic Systems and FAST Enterprises — submitted preliminary proposals for replacing MNLARS.

A Department of Public Safety report to the Legislature on the three responses shows that turning MNLARS over to private contractors would significantly boost a price tag that is already topping $100 million after a decade of work.

BIS estimated an annual price tag of $4.55 million. That's the same amount the company receives each year from the state of Tennessee under a contract that pays it 70 cents per transaction. Celtic Systems estimated the Minnesota project would take up to three years at a cost of up to $30 million, along with annual maintenance and support of up to $2 million.

The estimate from FAST Enterprises, was up to $38 million up front and up to $5.5 million a year for maintenance. It would take 18 months to complete. FAST is already working on the state's Real ID compliance.

Sen. Scott Newman, R-Hutchinson, the chair of the Senate transportation committee, said he was interested in options.

"I want to know whether or not the private sector could put together this system for us, do it faster and cheaper and have it work the way it's supposed to work," Newman said.

Republican Rep. Paul Torkelson, the chair of the House Transportation Committee, said he too wanted to know what the private sector could do. So far, he's been disappointed with the performance of DPS and Minnesota IT Services.

"It's important that we have a system that works. Progress on the current system has been very slow. We're over a year past the rollout date, and they're still struggling to supply some functions within this system," he said.

Torkelson wasn't surprised that the preliminary look shows a big price tag.

"It's not going to be free," he said. "Depending on how much you want them to do and how much you expect them to do, there are varying levels of costs."

Newman too was not concerned by the preliminary information. He said it could turn out to be a better deal.

Another lawmaker is skeptical.

"My question of course is, does it make sense to change horses at this point in time?" asked Sen. Scott Dibble, DFL-Minneapolis. The three proposals are interesting, Dibble said, but he's not convinced that an outside vendor is needed. The system has gone through several upgrades since its rollout, remaining glitches are being resolved, he said.

"A lot of money has already been spent. So, are we just going to back things up, reverse course, slow things down, spend a ton more money? I think those are the fundamental questions we need to ask."

Despite ongoing repairs to MNLARS, deputy registrars, car dealers and others continue to lodge complaints about its performance. During the 2018 session, Minnesota lawmakers passed an additional $13.7 million allocation for MNLARS, which was lost when Gov. Mark Dayton vetoed a massive budget and policy bill.

Dibble noted that the state already had an outside vendor, Hewlett Packard, working on the early development of MNLARS, and it didn't go well.

"They had to be fired and thrown out," he said. "That's when the project was brought in-house because we were burned so bad by those private services."