Another ground-breaking article from Voice of OC dropped this morning. This one related to the increasing costs of outsourcing contracts for IT services. Today’s story focuses on the planned outsourcing of desktop IT and telephone services to Xerox. The county’s information Technology department has a long history of failing to properly manage and control exploding costs of IT contracts. The costs projected by vendors seem to never come in as proposed. In the case of the failed upgrade of the Assessor’s property tax system. The Voice of OC article reports:
One of the latest examples is a lawsuit by the county claiming that a vendor it paid millions to upgrade property tax software intentionally defrauded taxpayers.
Tata Consultancy Services made “a series of false promises and intentional misrepresentations” during the bidding process, and “made promises to complete the project on a budget and according to a timeline with which they had no intention of complying,” county lawyers allege in the suit.
“The county has suffered millions of dollars of damages as a result of defendants’ wrongful conduct, and it will continue to suffer damages for the years it will take to develop a replacement for the failed project,” they added.
Once these vendors get their foot in the door, they gain complete control of county systems. With the proposed contract being heard by the Board of Supervisors today, Xerox State and Local Solutions, Inc. is poised to gain full control over all 17,000 county desktop computers, the computer network, and all 17,125 county desktop telephones. This will result in significant layoffs of county personnel who currently provide county controlled services to maintain the county computer network and desktop computers and printers. It this contract is implemented, the County will have no control over its systems. Supervisor Janet Nguyen articulated this concern in April, “We do get ourselves into these sole-source contracts with these IT [firms] that we end up being hostage to it. And we can’t get out of it, because we spend millions and millions and we don’t have a choice.”
The Voice of OC story reports that:
Today’s vote comes after Xerox and its lobbyists steered considerable sums to all five county supervisors, often times in a less-than-obvious way.
A quick scrubbing of campaign finance data found over $12,000 in contributions between mid-2010 and mid-2012, though much of the funding is obscured through intermediaries.
For example, $5,100 of the supervisor contributions came from the Committee for Improved Public Policy – which at first glance appears to be an independent good-government advocacy group.
We have to wonder whether the costs of handing over the most critical infrastructure for the delivery of services to the people of Orange County is going to far outweigh the costs of maintaining local and internal control. The current proposal (now $134 million) on the docket for decision by the Board today has increased in costs by $26.8 million, more than 25%, since the proposal was submitted. The new price has now virtually erased the alleged cost savings that drove the initial concept.
This plan is already turning out to be a boondoggle, and the contract isn’t even finalized. The Board needs to slam on the brakes and rethink outsourcing their critical infrastructure needs. Better to keep control in-house, than lose control and be held hostage to never-ending change orders.