SUPERVISORS IRATE AT CONTRACT OVERRUN; $52.8 MILLION ADDED TO WELFARE COMPUTER COST.

Byline: Douglas Haberman Daily News Staff Writer

Members of the Los Angeles County Board of Supervisors are fuming over a proposed multimillion-dollar cost increase for a computer system to run the county's welfare programs.

The increase in the contract with Unisys Corp. was submitted last week to the board, which postponed a decision until today's scheduled meeting.

``It's incredible,'' Supervisor Zev Yaroslavsky said. ``This is such a huge change order.''

The county approved the contract in 1995. In June, Unisys told the county Department of Public Social Services, which runs welfare programs, and the county's chief information officer, who oversees the county's use of computers, that it needed $52.8 million more, raising the contract total to $149.6 million.

The Board of Supervisors is upset about the welfare reform-related cost increases of about $27 million. The supervisors said welfare reform was foreseeable when the contract was signed.

But they are especially mad about the $25 million that DPSS Director Lynn Bayer proposed to partially cover Unisys's increased cost of operations and to make up for changed circumstances.

Unisys representatives could not be reached for comment.

Yaroslavsky, whose district includes the San Fernando Valley, said Friday that county department heads who oversee the contract had failed to do a good enough job of looking out for taxpayers' interests.

A primary cause the company cited for the proposed increase is welfare reform.

A county staff report on the proposal cited other factors as well. For example, the county changed its banking arrangements just as the project was scheduled to enter its testing phase, which required extra work to connect the welfare program to the new banks.

Also, a plan to use the new software to access old welfare computer systems proved troublesome, so DPSS officials decided to switch to a new database.

Yaroslavsky said Unisys informed county officials in June of the need for a contract adjustment but the department heads involved kept the issue quiet until September.

``This is welfare money,'' Yaroslavsky said of the funds that would be used to boost the contract - funds primarily from the state and federal governments. ``Every dollar that we're putting in Unisys's pocket is a dollar we're not putting in a mother-with-children's pocket.''

Yaroslavsky said Bayer, Chief Information Officer Jon Fullinwider and other staffers who worked on the project could have negotiated a much tougher deal with Unisys.

At last week's supervisors meeting, Fullinwider said Unisys has actually swallowed considerable losses in implementing the system - for example by buying personal computers and networking systems not called for in the original contract.

``The loss to them is significantly larger than the $25 million,'' he said.

Bayer told the board the proposed contract change was ``the only solution we've come up with that made sense dollar-wise and product-wise.''

She said the new system must succeed in a pilot project in order for Unisys to begin getting paid. The company won't get fully paid ``until we have a final working product,'' she told the board.

Even with the increase, the cost of the Unisys contract ``is still less than what the next lowest bidder was in '95,'' she said.

In addition, the staff's report to the board says the new system will save the county enough money in two years to recoup the cost of the contract. The savings will amount to $83.6 million a year through ``a reduction in welfare payment errors, increased overpayment recoveries, increased child support collections and elimination of our current system costs,'' the staff report says.