Friday, July 16, 2010
By ROBERT T. GARRETT
The Dallas Morning News
Texas' Department of Information Resources may end IBM technology contract
AUSTIN – Texas' Department of Information Resources plans to tell IBM today that it could begin a legal process to end the company's $863 million technology contract if long-requested fixes aren't made in 30 days, two officials confirmed Thursday.
The department is unhappy with IBM's work on an expanded outsourcing of state computer services, despite improvement plans that followed a Dallas Morning News investigation into a record-destroying server crash in the Texas attorney general's office that jeopardized a Medicaid investigation.
Today, the department plans to give IBM a broader "notice to cure" than the first such notice, sent in November 2008, the two officials said. Both are familiar with the situation and spoke only on condition of anonymity, saying they are not authorized to talk publicly about the matter.
IBM spokesman Jeff Tieszen said the company and the department "continue to work together as partners to move the project forward for the benefit of the state and its citizens."
One of the officials with knowledge of the situations said the department has clashed with the company over how much work is covered under the original seven-year contract and which work should trigger additional payments to IBM.
Asked in May if IBM had demanded more money, department spokesman Thomas Johnson said that was part of negotiations that the department would not comment on.
On Thursday, Johnson did not respond to phone and e-mail messages.
The state, to avoid a potential lawsuit, can't predict that the 30-day period will end with the contract being terminated.
The threatened cancellation comes almost exactly two years after a server crash in the Tyler office of the Medicaid fraud division of Attorney General Greg Abbott set off alarms.
While state information technology officers had grumbled for many months about IBM's performance, no firm action against the company was taken until The Dallas Morning News reported in fall 2008 that 81 criminal cases and eight months of work by the East Texas Medicaid fraud unit were jeopardized because critical documents hadn't been backed up. The newspaper also highlighted concerns that IBM wasn't backing up critical computer data at other major state agencies.
Gov. Rick Perry immediately suspended the transfer of state records to the IBM data management program, saying network breakdowns and problems with server backups had put more than 20 state agencies in danger.
A week later, the department sent IBM the first legal notice ordering it to fix various deficiencies within 30 days or risk legal action.
A 2005 law forced more state agencies to join a data center consolidation effort, which the state began in the 1990s. The department took new bids on the contract, and the previous vendor, Northrop Grumman Corp., lost to IBM.
The state expected to save $159 million over seven years by merging facilities that house agency server and mainframe computers, and expanding state clout in purchasing IT equipment. Operations and security were also expected to be enhanced. IBM has said it greatly improved security and performance, although state officials at times have given the vendor poor marks in report card-like evaluations.