San Francisco's big backlog of bills could cost taxpayers

- Taxpayers could be forced to foot the bill for interest on thousands of contractor and vendor invoices that have gone unpaid for months because of problems with San Francisco’s new financial system.

2 Investigates first reported on the backlog of bills in mid-February, which prompted an apology from San Francisco Controller Ben Rosenfield, who promised payments would be made promptly and fixes would be done on the system.

“We want the world to work better than it is at the moment,” Rosenfield said. “We have made a lot of payments using the system so the fundamentals are working, but we’re not yet where we need to be and we are sorry for any hardship we’ve provided to some contractors.”

Up until now, 200 thousand invoices have been paid on the new system totaling $5.6 billion, however, roughly 8,000 adding up to millions of more dollars are unpaid or working through the system.

Oracle PeopleSoft was launched in July 2017 to replace over 80 systems using a single application that serves all city departments. After obtaining city records, 2 Investigates found bugs were known early on and a city presentation exposed the city knew of key defects that would not get fixed before the system went online. Additionally, it warned that city employees should be prepared to enter data by hand, a practice that has been widely used for months, according to some city employees.

One contractor sent us emails between his company and the city, which serve as proof that there were problems initially just two months after the system launched, including unpaid invoices dating back to April and May 2017. The contractor, who didn’t want to be identified, said in emails to city employees that the payment delays were “putting a severe strain on operations” and “this new system appears to be an absolute mess and a travesty all around.” 

Controller Rosenfield said system glitches or vendors or city staff not being comfortable with how PeopleSoft works has contributed to delays. Records show one month before deployment only a small percentage of employees were trained and one department was praised for only 10 percent of staff completing the training courses.

When the system launched on July 3, there were documented problems and staff was sent emails explaining parts of the system were not functional. Since then, numerous outages have been reported for maintenance, bugs or glitches, including one last Saturday where everything was down for 12 hours to make repairs and updates.

“It’s taken some time to kick the tires on the system,” Rosenfield said. “It’s taken time to get our employees comfortable using it and I’m sorry it hasn’t occurred faster but I’m comfortable that we will get there soon.”

United Contractors, an association that represents union-contractors, sent a letter in late January expressing frustration surrounding delays and claiming some contractors had gone unpaid for in excess of seven months. The letter mentioned a California law requiring municipalities pay interest if undisputed invoices are not paid within 30 days. It has raised questions and concern the taxpayers could be forced to pay the interest on the thousands of invoices that failed to meet the payment deadline.

“It’s one of the things we’re looking at,” Rosenfield explained. “I don’t have an answer to that but we take our payment requirement seriously and it’s one of the things we’re looking at.”

In the first month of the system going live, a memo shows there were more than 9,000 help tickets issued for problems but more than 7,000 were resolved in a matter of weeks. Some employees tell 2 Investigates that there are bigger issues with the system itself that are still posing problems.

Rosenfield said in mid-February he estimated most everything should be running smoothly in a couple of months.


 

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