Texas Governor Suspends IBM Data Center Project for Data Loss, Cost Overruns

The state halts a data center consolidation project by IBM as officials review complaints about data losses, unreliable e-mail and cost increases. IBM's seven-year, $863 million contract took effect in March 2007 after Texas legislature voted to privatize the state's data processing.

Claiming IBM is not delivering on an $863 million contract, Texas Gov. Rick Perry on Oct. 28 suspended state data transfers to IBM data management systems. IBM has already been fined $900,000 for failing to complete timely backups under the contract.

Perry's actions come after a Dallas Morning News story reported that a July server malfunction in a Tyler Medicaid fraud unit destroyed documents the Texas attorney general's office was compiling. Without backup copies of the files, a number of fraud cases were compromised.

The newspaper also reported backup problems at the Texas Department of Transportation, the Department of State Health Services and the Texas Workforce Commission.

IBM looks at data's base. Read more here.

Perry wrote to Brian Rawson, who supervises the seven-year contract with IBM for the state's Department of Information Resources, that IBM has failed to perform "the crucial backup data for more than 20 state agencies." He added that under the IBM contract, the Department of Information Resources has "failed to implement a system of checks and balances that ensures data security, jeopardizing the ability of state agencies to deliver services to their constituencies."

Rawson admitted to the newspaper that IBM is "not meeting expectations."

In 2005, the Texas legislature voted to privatize the state's data management systems. IBM beat out Northrop Grumman for the contract.

"The problems that have been painfully documented over recent months, including state agency concerns about unreliable e-mail systems, administrative cost increases and other breakdowns, have resulted in a loss of confidence in DIR's ability to provide Texas agencies with a proper level of service for technology services," Perry wrote to Rawson.

An IBM spokesman told the Dallas Morning News the company is working closely with state officials to resolve issues under the contract.

"IBM takes very seriously the issues that have been reported," he said. "We are committed to helping the state better serve its citizens through the innovative use of information technology."