IBM bows out of Georgia outsourcing race

Georgia's groundbreaking telecommunications outsourcing project has suffered another major setback as one of the two teams vying for the 10-year, $1.8 billion opportunity withdrew its bid less than two months after submitting it.

IBM Corp. of Armonk, N.Y. notified the Georgia Technology Authority last week that the company was canceling its bid, said John Nyland, IBM's vice president of public sector Americas.

The state is now discussing options including moving forward with one bidder or canceling the project and outsourcing parts of the state's telecommunications operation separately, said Michael Clark, spokesman for GTA, the agency running the competition.

Officials at GTA will consult with governor-elect Sonny Perdue to determine a course of action, Clark said. Perdue will be sworn in Jan. 13.

IBM was leading the "Envision Georgia" team that also included Sprint Corp., Resource Network International Inc. and Enterasys Inc.

The development leaves only the "Connect Georgia" team, led by Electronic Data Systems Corp. of Plano, Texas, bidding on the contract. The EDS-led team includes AT&T Corp., Bell South Telecommunications Inc. Cingular Wireless Inc., Cisco Systems Inc., Information Management Systems Inc. and Science Applications International Corp.

The changing nature of the solicitation led IBM to withdraw its bid, Nyland said.

Sources familiar with the solicitation said the state made last-minute changes to the terms and conditions such as establishing so-called uncapped performance measures whereby there was no limit on how much the vendor would have to expend to meet a service level agreement.

The latest setback follows the state's cancellation of bids submitted in July 2002 by EDS and WorldCom of Clinton, Miss., over concerns about the latter's financial condition. EDS and IBM submitted bids on a new request for proposal Nov. 15. The contract was tentatively scheduled for award in April.

(Updated Jan. 7, 2003, 11:43 a.m.)