The North Dakota Legislature's proposed budget for the next two years includes $3.91 million for a troubled computer replacement project that already has cost more than $3 million without producing any usable software.

Earlier this month, the Legislative Council declined to pay a $303,516 bill from the initiative's software developer, PTC Corp., of Needham, Mass. The bill was submitted for wrap-up work after the company notified the council it was dropping the project.

Since the company was hired in January 2006, it has been paid almost $2.4 million to develop new software to run the Legislature's operations, records show. The Legislature now uses software that is more than 30 years old.

Rep. Al Carlson, R-Fargo, chairs the Legislative Council, which handles the Legislature's business between sessions. Carlson was elected this month as the new House Republican majority leader.

PTC's latest bill requested payment "for partial completion of milestones and does not constitute a deliverable that holds any value," Carlson said in a Nov. 13 letter to Michael Palmer, a PTC vice president.

Palmer did not respond to telephone messages left for comment. Jim Smith, director of the Legislative Council, said the company has not notified him that it intends to sue to force payment of the bill.

Palmer earlier attributed the company's decision to stop work on the software overhaul to a "contentious work environment" and a "lack of clarity concerning who within North Dakota is prepared to make decisions about the project."

Rep. Bob Skarphol, R-Tioga, who is one of the Legislature's technology experts, said legislative oversight of the project has been less strict than the scrutiny it gave large software projects in the North Dakota's university system, Department of Human Services and other agencies.

"We were less demanding of ourselves, and our staffs, than we were of state agencies and their staffs," Skarphol said. "I would think that in the future, we will do a much better job at defining what it is that we need."

The project involves writing new computer software for general drafting legislation, keeping track of agency budgets, scheduling and general information management. The Legislature wants to move its operations from a state mainframe computer to a server that is less costly to operate.

During the last four years, the Legislature has spent $3.3 million on computer hardware, software development and consulting services for the project, including $2.4 million to PTC Corp.; almost $300,000 for new hardware; $590,000 for a project manager, who has been replaced; and $41,000 for services provided by the state Information Technology Department.

The Legislature's spending plan for the 2009-11 budget period includes $3.91 million for the project. Lawmakers could also tap $2.2 million in the current two-year budget that has not been spent.

Smith said the Information Technology Department, which manages computer hardware and software use in most of state government, will be studying whether it can take on the Legislature's project rather than have lawmakers search for another outside company.

"Once ITD goes through this study process, that will kind of indicate whether they feel they've got the ability to do the project," Smith said. "We don't know how that is going to shake out yet."