State Agencies Say $863M IBM Deal Not Paying Off

Austin, TX –
State officials gave IBM an $863 million contact to consolidate data operations in 27 stage agencies. But the project has been marred with problems.

Now IBM faces the possibility of losing the contract if the company doesn't fix the issues.

The contract was supposed to save the state $178 million over seven years. Instead, the project has saved far less and frustrated state agencies with problems.

At the Texas Department of Transportation, officials say IBM employees have no urgency when it comes to department business. And problems that used to take state employees less than an hour to fix now take as long as a week.

In a sent letter this month to the governor's office, IBM says it overreached by assuming responsibility for existing technological conditions that are inadequate, inconsistent and not sustainable.

Many agencies in Texas have requested additional money for the 2010-11 budget on top of their current allocations to pay for rising costs under the data center contract.