ALBANY — They called it the Excelsior Pass. The first-in-the-nation app would provide a “secure and streamlined” way for people to attend live events and restaurants without digging out their vaccine card.
It would be built by IBM, and it would cost $2.5 million.
Gov. Andrew M. Cuomo pitched it in March 2021 as a key to reopening New York’s economy amid the damage wrought by the COVID-19 pandemic, a tool that would bring New York “one step closer to reaching a new normal.” Nine months later — after Cuomo’s resignation — Gov. Kathy Hochul celebrated the technology’s “transformative impact on our economy.”
In October 2021, Sandra L. Beattie, then deputy director of the state Division of the Budget, called it an example of successful government-run technologies in an informational “blueprint” on the app that New York was touting to other states: “When the public sector shirks its duty to innovate and modernize, citizens are the ones who lose out,” she said.
The state decided early on to outsource the work on the app. While that aspect of the project didn’t change, the stated cost to taxpayers definitely did, and quickly: In June 2021, the New York Times noted that the pass would actually cost $17 million; a follow-up report two months later indicated that price tag had grown to as much as $27 million.
More than two years after Cuomo’s initial announcement, the payments to private companies for the app have multiplied well beyond that figure, even as the waning of the pandemic means the Excelsior Pass is rarely if ever used — and opens the related question of how many booster shots are needed to be “up to date” according to the app. The current cost is $64 million, a previously unreported sum that includes funds paid to IBM as well as to two consultants on the project, Boston Consulting Group and Deloitte, according to records obtained by the Times Union.
The work by Boston Consulting Group and Deloitte was just one element of $200 million that flowed from New York to those firms that is now the subject of a state state inspector general’s investigation. As the nation’s COVID emergency fades from the front page, the spending renews the debate about New York’s ongoing use of contracts that were amended without public oversight during the pandemic.
“Those are the dangers of emergency orders and no-bid contracts and a lack of checks and balances,” said Bill Hammond, senior fellow for health policy at the Empire Center for Public Policy, a fiscally conservative think tank. “Those are all dangerous situations, but they grew out of a true crisis that warranted waiving some of those rules, at least for a time.”
The state says roughly 11.5 million New Yorkers have used the Excelsior Pass, which would amount to a cost of about $5.60 per app-using citizen. The state has paid Deloitte and Boston Consulting Group nearly $28 million to work on the app, according to records obtained by the Times Union. State officials have paid an additional $36 million to IBM for its work on the pass.
“While the pandemic-driven need for ready access to vaccine records has subsided, the app continues to offer New Yorkers a safe and secure mobile application that brings state-issued digital passes, licenses and records directly to their fingertips,” state Department of Health spokesman Cort Ruddy said in a statement.
The state continues to pay IBM $200,000 a month for data storage services related to the Excelsior Pass. In addition, in March the state spent $2.2 million for “application development” of the Excelsior Pass.
In the October 2021 blueprint package, Rajiv Rao, the former chief technology officer with the state Office of Information Technology Services, said “a collaborative team across New York state has worked day and night to develop the nation’s first COVID-19 vaccination and negative test pass solution.”
Rao worked on the project with the budget division’s Beattie, who pushed for Deloitte to become the system integrator, according to a person familiar with the matter. Beattie worked for Deloitte roughly 16 years ago; her spokesman recently told the Times Union that no one who worked on the company’s pandemic-era projects in New York overlapped with her employment at the firm.
Beattie was forced out of her job earlier this year; Rao took a leave of absence and then resigned. Neither have been accused of wrongdoing related to the inspector general’s ongoing investigation or any other matter.
“We are eager for the Office of the Inspector General to complete its investigation,” Hochul spokeswoman Hazel Crampton-Hays said in a statement Friday.
Hochul recently signed legislation to restore oversight of the state comptroller’s office in reviewing contracts, a layer of advance review that was lost during the pandemic.
Crampton-Hays noted the state is currently looking into whether the app can be “harnessed for additional, expanded purposes, in line with the governor’s commitment to eliminating bureaucratic hurdles, simplifying processes and utilizing new technology to improve the way New Yorkers access services and benefits from state agencies.”
Cuomo’s spokesman Richard Azzopardi said the app was intended to also include broader capabilities than just validating a COVID-19 vaccination. He said the app was a critical tool at the time that also protected people’s medical and personal information.
“The work required to build the secure database that housed this critical personal information was not possible using the existing expertise, and like numerous other states across the country, we worked with outside consultants to make it a reality,” Azzopardi said in a statement. ” … Criticizing the project in hindsight is to have collective amnesia about the once-in-a-lifetime challenges we were up against.”
Azzopardi noted that the state’s cost to produce and maintain the app would be reimbursable by the federal government because it was related to addressing the pandemic.
Consulting the private sector
On Dec. 17, 2021, the Boston Consulting Group billed the state for nearly $10 million in costs related to its work reopening New York and on the Excelsior Pass — two interrelated state initiatives. The money spent on the Excelsior Pass, and its accompanying “wallet,” continued to flow to the consulting groups even as the peak of the pandemic passed and the need for the app plummeted.
Last October, Deloitte posted an article on its website about the development of the Excelsior Pass that does not mention the firm’s involvement. Rao and Beattie are the only people quoted.
“We didn’t know exactly what we were building,” Rao said in the post, “but we knew we all had the same goal of opening the economy back up as soon as possible.”
“Citizens had such a positive response to the app because we built something that was for New Yorkers by New Yorkers,” Beattie said.
The same month the post went up, Deloitte billed New York for $3.6 million in Excelsior Pass costs.
Deloitte declined to comment for this story. The Boston Consulting Group did not respond to requests for comment.
New York’s expanding contract with the two firms actually began before the pandemic, in September 2019. The broadly worded agreement covered work “transforming or reengineering government business models and operations.” State officials agreed to spend up to $59.5 million over the ensuing five years for the services of Boston Consulting Group and Deloitte, whichever organization was better suited for the work on specific projects.
The contract would go on to be amended during the pandemic, although tracking those changes is complicated by the fact that the state comptroller’s office lacks copies of the various iterations due to the COVID interruption in its oversight role.
“Any contract that was modified during the pandemic emergency, to the extent that contract is still being used in that way, it should definitely be reviewed and probably turned off,” said the Empire Center’s Bill Hammond.
While the scope of the contract is unclear from readily available records, the payments that flowed from it show its evolution after Hochul became governor, and the firms’ work for the budget division and the Office of Information Technology Services.
The two consulting organizations would go on to bill the state roughly 200 times over two years for roughly $200 million, according to records provided by the state comptroller’s office.
In addition to $28 million for the Excelsior Pass and related technology, the sum of the payments to the two firms includes billing for work on the state’s COVID data “dashboard” ($1.3 million); reimbursement of COVID payments from the federal government ($2.2 million); COVID-related “technology and remediation” for the state Department of Motor Vehicles ($15 million); COVID advice and “response” ($31 million); “reopening New York” ($32 million); and COVID vaccine management ($43 million).
The information the comptroller’s office could provide is limited in its descriptions of services. Elsewhere, it is impossible to decipher what work was done from the documents — such as a reference to payment for “Deliverable 6 (TA2-D) Identity.”
In its bid to earn the initial contract, the Boston Consulting Group included lengthy explanations of why it was best suited for the work.
In a page of the contract bid that is otherwise completely redacted — “trade secrets” is the stated reason — a standalone box displays a statement from Boston Consulting Group with the title, “What this means for NY.”
“Oversight functions like budget and procurement can slow down action, but they are also key levers to drive change,” it states. “We know how to assess current performance vs. best practices in order to measure and improve value-for-money.”
The redactions in Deloitte’s contract bid present similar difficulties for members of the public trying to understand what the state purchased: One page is nearly completed redacted from public view; the only thing that can be read are the titles: “What did not go well and why?” and “What did we learn and what we would do differently?”