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By Mark Henricks
The state of Texas has finally lost patience with IBM, which has been working for four years to consolidate state agencies into a pair of data centers but is far behind schedule. After issuing several warnings to IBM over a period of more than year, the state's Department of Information Resources said Aug. 17 that it would take over administration of the contract and put its various parts up for rebid.
The centerpiece of the project, the consolidation of 28 state agencies into two data centers, was originally supposed to be complete by December 2009. That part is currently 12 percent finished, according to the Department of Information Resources. IBM has reportedly received about $500 million of the total $863 million in payments anticipated under the seven-year service contract under which the consolidation was to be performed.
IBM says that the problems with the contract come from the state. Agencies reluctant to cede control of their information to a centralized data center have dragged their feet and at times actively obstructed the process, a company spokesman said. The state's information department failed to provide the leadership necessary to convince agencies to cooperate fully, IBM said. IBM also blamed antiquated technology in place at the state agencies for delaying and complicating the consolidation process.
The development is the latest in a saga of escalating conflict between Texas and IBM that dates back more than a year. In 2008, the state's governor ordered work on the project suspended after a computer failure in the state attorney general's office revealed inadequate data backups. In July 2010, the Department of Information Resources cited IBM for "material breaches of the data center services contract in the areas of consolidation, backup and recovery, security, disaster recovery, service level attainment, and staffing, and multiple other breaches." The state also accused its contractor of "under-investment by IBM, poor performance, and continual disregard for the protective obligations" of the agreement.
As recently as May 2010, the state indicated it expected to work out the problems with IBM and have the company continue as lead contractor. However, in July the state said progress was not sufficient and gave IBM a 30-day deadline. The new announcement came 30 days later. This time, the state said IBM hadn't prepared an acceptable turnaround plan to remedy the problems.
While seemingly final, the announcement doesn't utterly end IBM's participation in the project. The state told IBM that it wasn't in its best interest to end the contract right now. However, the state does retain the right to terminate the contract for cause. IBM maintains that the fault does not belong to it and that it can continue with the project. Observers anticipated legal action by one or both sides would be required to ultimately resolve the matter.
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