Texas to rebid IBM's data center contract

State contends Big Blue failed to fix persistent problems, but company disagrees.

Texas will begin looking for new companies to finish the data center consolidation work that IBM Corp. was hired to do almost four years ago, state officials said Tuesday.

Though IBM's day-to-day obligations under the $863 million contract have not changed, the state is now taking the lead on the project, said Thomas Johnson, spokesman for the state's Department of Information Resources.

"DIR has taken full control over the contract and will proceed to rebid all of the services within the contract," Johnson said.

The move probably signals the end of the seven-year contract between IBM and Texas to merge the data centers of 28 state agencies into two streamlined and secure facilities. The consolidation was supposed to be completed by December 2009 but is still only 12 percent complete.

Karen Robinson , the Information Resources Department's executive director, said in a letter to IBM that it was not in the best interest of the state to end the contract at this point.

The state, however, maintains the right to terminate the contract for cause in the future, according to the letter.

Each side appears to be readying its case to deflect blame in case they end up in court.

A month ago, the state warned IBM about several contractual violations and "chronic failures" with the project, which is far behind schedule and has been plagued by equipment failures, service complaints and other problems.

The 30-day deadline for fixing those problems has now come and gone. Johnson said that "was their last chance to have the contract as it was, and they failed."

IBM spokesman Jeff Tieszen said the company disagrees with the state's accusations of contract violations and the contention that IBM could be terminated for cause.

Tieszen added that IBM is "hoping to continue a constructive dialogue."

But the relationship is clearly strained after seven months of negotiations aimed at salvaging the partnership collapsed at the end of June. The project was touted as a way to save money and improve operations and security by housing the agencies' servers and mainframes together in state-of-the-art facilities.

IBM ran into problems from the very beginning, slowing progress and fueling frustration among the agencies. IBM has laid responsibility for the persistent problems at the feet of the participating state agencies, in particular, the Department of Information Resources.

"Ceding control of their individual (information technology) environments in favor of a centralized, common system was (and continues to be) unpopular with the constituent agencies, and without strong leadership from DIR, those agencies not only failed to cooperate, but in many cases actively resisted the project," IBM wrote in a letter last week.

IBM also criticized the state for the aging and sorry state of its technology, which the company says has stymied its ability to meet the terms of the contract. A study done for the state before the contract found that 60 percent of the equipment in the agencies' data centers had exceeded its recommended working life.

DIR denies that it is at fault and said IBM did not provide an acceptable turnaround plan for the project after receiving the warning in July.

The solutions offered by the company were "little more than a reiteration of inconsistent and incomplete ideas that IBM had previously expressed," Robinson wrote.

IBM had been put on notice previously that it was not holding up its end of the contract.

Gov. Rick Perry suspended work on the project in 2008 after a server crash at the state attorney general's office exposed the project's spotty data backup systems.

Unlike in 2008, when IBM received a similar warning, the state is following through on its tough talk.

kalexander@statesman.com; 445-3618