State stands behind MyFlorida

Though scathing auditor's report faults the outsourcing project

New center at their service

Florida Gov. Jeb Bush (R) has established a new brain trust to guide the state's outsourcing efforts.

By executive order March 11, Bush created the Center for Efficient Government in the Florida Department of Management Services. Its mission is to evaluate the state's outsourcing efforts, identify opportunities for additional initiatives and oversee future projects.

William Simon, secretary of the Florida Department of Management Services, said the center was created primarily to address the lack of coordination among agencies, which became apparent as the state proceeded with outsourcing in different areas.

Realizing that Florida was accumulating several lessons learned from outsourcing projects in different agencies, the governor and his top advisers established a central repository to create standard processes and procedures for outsourcing, Simon said.

"The center was put in place as a collection point for the things we were learning, as well as to establish standard processes to pull off smoother transitions from the state providing services to vendors providing services," he said.

Like other states, Florida has struggled with finding the funds to adopt new technologies and at the same time get state employees training in the latest technologies, Simon said. For this reason, technology is a prime candidate for outsourcing to the private

sector.

Not everything the state turns over to the private sector is IT related. Over the past five years, the state has transferred to contractors 138 programs or services ranging from food-service delivery and state prison operations to toll collections and business processes, according to the Department of Management Services.

The center will take steps to ensure fair procurements where services would be outsourced, establish standard rules and procedures to implement procurement statutes and offer guidance on managing the outsourcing contracts in place, Simon said.

When fully staffed, the center will have about a dozen project managers and procurement attorneys, he said.

Florida officials are assuring contractors that they do not intend to dismantle the MyFlorida Alliance outsourcing program, despite the abrupt cancellation of a major piece of that program last month.

Florida terminated an $86.7 million help desk contract with Accenture Ltd. following a state auditor's report charging that the state had entered into the MyFlorida Alliance without fair and open competition or proper justification for the outsourcing plan.

The termination heightened fears that Florida officials also would cancel two other major pieces of the statewide outsourcing program: a $46.7 million contract with Accenture for statewide application management services, and a $126 million contract with BearingPoint Inc. for statewide data center operations.

Simone Marstiller, Florida's chief information officer, said the state would move forward with those two portions, or "exhibits," of the MyFlorida Alliance.

"We may need to shore up things here and there, but those exhibits are not problematic," Marstiller said. "For those exhibits, we are making sure that our terms, deliverables, timelines and pricing are the best we can get for the state."

The Florida State Technology Office signed the MyFlorida Alliance contract Aug. 13, 2003, with Accenture of Hamilton, Bermuda, and BearingPoint of McLean, Va. Statements of work detailing specific services, pricing, schedules and other details were to be negotiated as exhibits to the main contract.

Shortly thereafter, the State Technology Office negotiated the terms of help desk and applications management exhibits with Accenture, as well as the data center operations and consolidation exhibit with BearingPoint.

But in a report released in July, State Auditor General William Monroe said the State Technology Office, under former CIO Kim Bahrami, failed to document its decision to outsource and did not properly evaluate the bids. The agency also failed to establish detailed contract provisions to protect state resources, Monroe said.

BearingPoint hired Bahrami July 12 as a managing director with the company's federal health care practice.

In the wake of the audit, the State Technology Office Aug. 18 canceled the seven-year Enterprise Technology Services Desk contract with Accenture.

"The way the service offering was structured, it really wasn't doing for the agencies what we intended it to do," Marstiller said.

Rumors have circulated that the state's new Center for Efficient Government, established by Gov. Jeb Bush (R) in March, had instigated termination of the help desk agreement. The charter for the Florida Department of Management Services center is to evaluate Florida's outsourcing efforts, identify additional opportunities and oversee future projects.

However, Marstiller said that her office made the decision to cancel Accenture's help desk contract.

"That was the State Technology Office's decision," she said. "Not to say that we didn't discuss our decision with the legislature, but, at the end of the day, the decision was ours."

Marstiller said state officials "turned this thing every which way we possibly could" before deciding to cancel the deal. "I reached the conclusion -- and Accenture understands and concurs -- that, at this time, the best thing for Florida to do is terminate the exhibit," she said.

Seven state agencies were using the help desk when it was terminated, said Carla Gaskin, a State Technology Office spokeswoman. They are the State Technology Office, Fish and Wildlife Commission, and departments of Business and Professional Regulation, Community Affairs, Elder Affairs, Lottery, and Management Services.

Accenture took the news with a stiff upper lip.

"The agencies' needs were evolving in a different direction," said David Wilkins, a partner with Accenture's Florida government practice.

"We are in the client services business, and if our client needs to go in a different direction, we are supportive of their doing that."

In keeping with the contract terms, the company was given 90 days notice of termination, during which time help desk services will revert to the state. The amount the company will be paid will be determined when the process is completed, Wilkins said.

Meanwhile, both Accenture and BearingPoint continue to perform on the other major pieces of MyFlorida Alliance.

In the first year of the seven-year contracts, Accenture was paid $2.2 million for applications management services, and BearingPoint received $5.4 million for data center operations, according to the MyFlorida Alliance office.

It is in the nature of contracts for data center operations often to require updating, but BearingPoint doesn't expect Florida to make substantive changes to its contract, said Tanya Jackson, a managing director with BearingPoint and the company's MyFlorida Alliance project leader.

William Simon, secretary of the Florida Department of Management Services, said the Center for Efficient Government reviewed the exhibits under the MyFlorida Alliance and reached many of the same conclusions as the state auditor.

To address these shortcomings, the new center will help the State Technology Office prepare the business cases for additional projects scheduled for award under the MyFlorida Alliance, he said. The projects are enterprise portal, security awareness, licensing court document e-filing, desktop management and local area network administration.

John Kost, managing vice president for worldwide public sector research at the market research firm Gartner Inc. in Stamford, Conn., said governments that outsource IT services often fail to create an effective process for fixing the problems that invariably arise.

To address this need, the Center for Efficient Government will provide guidelines not only on how to conduct fair procurements and implement procurement statutes, but also on how to manage outsourced contracts, Simon said.

None of this will necessarily make the outsourcing road Florida is traveling any easier in the near term.

Because Florida is on the leading edge of IT outsourcing, its contracts will remain subject to second-guessing and scrutiny, Kost said.

"The Florida leadership may not get everything exactly right every time, but it should be given credit for innovation and leadership on behalf of its constituents," he said.

Staff Writer William Welsh can be reached at wwelsh@postnewsweektech.com.

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