Auditors: Agency failed in oversight of IBM contract

Auditors found significant failures by the state agency responsible for overseeing the $863 million data center consolidation project that has been plagued by delays and operational problems.

The seven-year contract with IBM Corp. calls for combining the data center operations of 27 state agencies into two streamlined and upgraded facilities.

The Department of Information Resources, which is overseeing the contract, has dropped the ball in several key areas, including providing adequate guidance to the affected agencies, according to the audit released Monday.

The agency has also neglected to verify IBM's performance data, which is used to determine if the company is complying with the contract. That data has proved to be unreliable, the auditors determined.

Auditors pointed to some of those problems as contributing factors to the slow progress of the project.

To reach the goal of having all agency data centers operating out of the consolidated facilities by December, 619 computer servers should have been moved to the facilities between January and July, according to the Department of Information Resources.

But only 75 servers had made that move as of July, the department reported.

Brian Rawson, the department executive director, said that the agency is working to address the problems auditors identified and that those improvements will strengthen the agency's contract oversight.

"The State of Texas' consolidation is one of the largest and most complex state consolidations in the nation," Rawson said in a statement. "The department's primary goal is to ensure consolidation is done right in order to achieve the intended benefits for the state."

The auditors largely avoided the best-known problem that has dogged the project: IBM's failure to provide the data backups as required by the contract.

Last year, a server crash at the office of the attorney general endangered some key information used in Medicaid fraud investigations and highlighted holes in IBM's backup systems.

Gov. Rick Perry put IBM on notice and suspended work on the consolidation until a plan was in place to prevent such a failure again.

But a few weeks ago, it did happen again — with another server at the attorney general's office — and prompted a stern warning letter to IBM from the Department of Information Resources.

Details are sparse because DIR has refused to release any information. In response to an open records request by the American-Statesman, the agency, citing security concerns, is seeking to withhold the warning letter.

The attorney general's office, also responding to a records request, said it did not object to the release of the letter but could not provide it immediately because DIR disagrees.

kalexander@statesman.com; 445-3618