California's state controller's office says a $371 million overhaul of the government payroll system is heading for collapse.

The Los Angeles Times says the controller's chief administrative officer wrote the contractor in October demanding fixes.

Jim Lombard told SAP Public Services that the updated system can't process payroll for even a portion of the 240,000 state employees and that it's in danger of collapsing.

The system upgrade is five years overdue and has nearly tripled in costs since lawmakers authorized it in 2005. Lombard says it failed tests this year, issuing paychecks to the wrong workers or for the wrong amounts.

An SAP spokesman, Andy Kendzie, says the payroll project is complicated and there have been what he calls challenges. But Kendzie says the company is committed to success.