Conn. governor drops plan for IT outsourcing

Conn. governor drops plan for IT outsourcing

By Claire E. House

GCN Staff

Finding the financial risk of a statewide systems outsourcing proj-ect unacceptable, Connecticut Gov. John Rowland has torpedoed the plan and state officials have halted negotiations with would-be contractor Electronic Data Systems Corp.

The closely watched and controversial seven-year, $1 billion plan would have been the first information technology outsourcing setup of its magnitude among state and local governments.

Connecticut chief information officer Rock Regan on June 28 notified Rowland that the six-month-long negotiations with the vendor had reached an impasse, mainly over pricing methodologies. The following day, Rowland called a halt to the plan he had initiated three years ago.

The contract negotiations had been successful in most areas, Regan said, including project scope and implementation schedule.

'We were negotiating as late as last night,' EDS spokesman Stephen Person said the day of the announcement.

But the two parties could not agree on what services would be included in the base price of the contract nor on how the team would handle overruns of predicted costs, unforeseen additional charges and penalties for contract termination or poor performance, Regan said.

'We wanted to have some reassurance that the predicted productivity was going to be, in fact, a significant commitment'that we wouldn't significantly go above any pricing bands that they set in the event that they were in error,' Regan said.

Before and during the under-wraps negotiations, the state faced opposition from the Connecticut State Employees Association labor union, many General Assembly members and state comptroller Nancy Wyman, who in mid-June called for the governor to abandon the plan.

Internal decision

The groups had 'no effect at all on the decision'none whatsoever,' Regan said. As to the labor concerns, the plan's human resources issues were agreed upon by the Information Technology Department (DOIT) and EDS.

CSEA is pleased with the outcome, and the administration's first move should be to sit down with the workers and develop a blueprint for improving state systems, spokesman Rick Melita said. He acknowledged that outsourcing is sometimes necessary but said it should be used only to supplement in-house expertise.

'By all means, bring in consultants to train state employees, transfer the knowledge to state employees and then leave,' he said, adding that front-line workers should always be consulted about systems plans affecting them.

DOIT learned a lot from the process, including the strengths and weaknesses of the current state IT setup, and it plans to develop an oversight management, centralization, standardization and accountability plan that will likely incorporate outsourcing on a smaller scale, Regan said.

'We want to bring in companies, and EDS could certainly be one of them,' he said.

The two parties maintain an amicable relationship, Person said. EDS respects the state's decision, and the company looks forward to working with Connecticut on future projects, he said.

Watchers of state and local government IT outsourcing can now focus their attention on San Diego County, Calif. The county is evaluating bids to outsource its IT operations and is expected to name a vendor by October, county spokesman Joe Tash said.

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