Maybe it’s time for the County to Re-think IT Outsourcing

Monkeys Spending Computer Money

Monkeys Spending Computer Money

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.

Supervisor Janet Nguyen

Supervisor Janet Nguyen

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.

screamingatcomputerWe 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.

  5 comments for “Maybe it’s time for the County to Re-think IT Outsourcing

  1. Ltpar
    July 23, 2013 at 11:21 am

    Flash message to the Board of Supervisors. These problems happen for several different reasons. First, you apparently have no one on staff who knows what they are doing with the it upgrades. Secondly staff has no leadership skill and does not have the temperment to kick the butts of any vendor who does not hold to their contract, or trys to run up the tab. This folks is a leadership issue and it starts at the top of the food chain with the Board and trickles downward. Stop being politicans and become stewards of the people’s money by holding your employees strictly accountable for bad decisions, mismanagement and incompetence and firing those who don’t cut the mustard.

  2. Dan Chmielewski
    July 23, 2013 at 5:58 pm

    actually Pat, you really don’t know much about technology contracts. Change orders are issued when the customer makes additional requests on hardware, software or training. Its entirely possible that the County asked for a number of changes after the order was accepted prompting change orders.

    If you had ever run a business, you’d know this. But then again, anyone who posts things as fact which are ususally disproven on Snopes.com isn’t very credible, right?

  3. yomama
    July 23, 2013 at 11:26 pm

    When you run government contracts from government employees you get shit. Plain and simple.

  4. MikeM128
    July 24, 2013 at 6:27 pm

    Normally I am against outsourcing in the IT world. Rarely does it save anyone money and only creates more problems than it solves. In the case of government entities the case for outsourcing could be made that is it the right idea.

    Since governments tend to be run by people that don’t understand business and don’t understand basic budgeting they usually make very poor decisions that drive up costs and deliver poor service.

    Of course if you have the pay offs that take place to win a contract that naturally happens when you involve politicians, you end up being an even bigger loser in the end.

    My opinion is that the first step to success is start running the county as if it were a for profit business where decisions can be made to improve “the business” and not improve the power of a politician.

    Outsourcing will lead to a lack of innovation and unseen fees that are not covered by the contract. The tax payer will pay more for less service. The county would be better served to find someone to lead the IT services that can produce strategic plans that create standards and processes designed to be more efficient and cost effective leveraging current technology.

    Having a real effective head of IT can also help steer the county around the pitfalls of greedy consultants that only care about billable hours. One must be very aware of their tactics. Lawyers are hated and dance the line of being crooked in billing, but consultants don’t have the risk of being disbarred so they will really take you to the cleaners.

    Unfortunately in this case it will just be another decision that harms the taxpayer and disrupts the lives of county employees.

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