Amid dispute, Calif. CIO resigns

California Gov. Gray Davis last week accepted the resignation CIO Elias Cortez, the latest casualty in the state's controversy over a software contract with Oracle Corp.

Davis had suspended Cortez May 2.

In his June 10 resignation letter, Cortez said he was 'proud to have delivered on my commitment to 'no major failed IT projects under our oversight,' which has been evidenced by our top national ranking of No. 6 amongst our state peers from a low ranking of No. 46 when we inherited this program.'

Cortez advised the administration not to dismantle the IT Department, as some lawmakers have recommended.

California's Joint Legislative Audit Committee held hearings about the contract last week. Witnesses included state auditor Elaine Howle; Larry Kreig, former chief counsel for the California State and Consumer Services Agency; and Kevin Fitzgerald, Oracle's senior vice president for the public sector.

Over the past few weeks, a senior Oracle official and a California lawmaker have swapped barbs concerning the disputed $95 million software contract.

Investigation questioned

In a letter to Assemblyman Dean Florez, chairman of the Legislative Audit Committee, Oracle questioned the Legislature's handling of an investigation into the licensing deal, which the company negotiated with California in May of last year.

Oracle officials said that on May 31 they hand-delivered the letter, which called the committee's actions punitive and driven by a desire to gain media attention.

In a reply to Oracle chief executive officer Larry Ellison dated June 3, Florez said he had yet to receive the letter, although he had downloaded an online version posted on the company's Web site, at www.oracle.com/california/05-31-02_Florez.doc.

'Put plainly, this is discourteous and unprofessional conduct,' Florez said. He called the Oracle letter 'a disappointing diatribe intertwined with desperate personal attacks and innuendo.'

Oracle's letter registered the company's dissatisfaction with the way the committee has overseen its inquiry into the company's enterprise license agreement with the state and the committee's reliance on the findings of a Bureau of State Audits report.

Signed by Oracle chief financial officer Jeffrey O. Henley, the letter said Oracle 'has not been given a single opportunity to defend itself against the baseless allegations in the BSA report relating to the value of the ELA.'

In his letter to Ellison, Florez called the contention 'utter nonsense.' He noted that Oracle defended itself in a May 14 San Francisco Chronicle article, 'In Defense of the Oracle Deal,' by Oracle consultant and former California state auditor Kurt Sjoberg.

Florez also defended the findings in the BSA report, calling them 'firmly rooted in meticulous documentation, analysis and data from your own company.'

In its letter, Oracle made several complaints. It balked at Florez's description of Oracle as uncooperative, saying the company has produced thousands of pages of documents as requested by the committee.

Florez responded in his letter to Ellison that 'Oracle was imbued with a spirit of cooperation ... only after being threatened with subpoenas by a unanimous vote of the Joint Legislative Rules Committee.'

Take a meeting

Oracle said the committee and the state auditor declined requests for meetings. Two days after the auditor released its report, Oracle said, it wrote to the auditor and committee explaining 'a specific material error' in the report about the value of the contract's projected benefits. Oracle said the auditor did not answer the letter and refused to meet with the company. Florez also denied numerous meeting requests, Oracle said.

'It is unheard of'perhaps unprecedented'that the subject of an audit report is not given a single opportunity to engage in a thoughtful discussion about the report,' the Oracle letter said.

During initial hearings with state officials, the company noted, Florez 'unjustly accused Oracle of many things and [has] permitted the hearing record to be filled with reams of undocumented innuendo and speculation.'

The company also questioned the committee's refusal to let the five Oracle sales staff members provide an opening statement when they testify.

'The most notoriously unfair legislative investigations in the history of our country, such as the House Un-American Activities Committee or its Senate counterparts, allowed its witnesses to make opening statements,' the letter said.

Florez said: 'I believe it is outrageous that Mr. Henley compares JLAC unfavorably to the House Un-American Activities Committee. This kind of overheated rhetoric only lends credence to charges of unethical conduct by Oracle's sales representatives.'

Oracle noted too that the committee would not let the sales staff talk about the value of the agreement.

The company also questioned the committee decision to not examine the Oracle-requested review by the former state auditor. Sjoburg's review contradicted the BSA report and identified possible savings to the state from the software agreement.

About the Author

Trudy Walsh is a senior writer for GCN.

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