Grand IT Budget for the Empire State

Well-Funded Initiatives Put Contractors in a New York State of Mind

How Much Do You Want?

The New York Office for Technology expects to receive $89.4 million through the state's general fund for fiscal 2001-02. From this appropriation, $55.9 million will go to maintain staffing levels and support agency information technology initiatives, and the remaining $33.5 million will go to priority initiatives, such as e-government.

Projects are funded from either the general fund or the internal service fund. The internal service fund represents major business units that the technology office operates on behalf of agencies for which it bills them, said Tom Duffy, the office's deputy commissioner for administration. The general fund, on the other hand, comes primarily from taxes, he said.

Major funding recommendations are:
? $97.4 million from the internal service fund to operate the consolidated data center.
? $11.3 million from the general fund to renovate space to house the data center.
? $20.6 million from the internal service fund for the New York Intranet.
? $8.5 million from the general fund to improve the security of state computer systems, conduct technology training and develop a geographic information system.
? $19 million from the internal service fund to develop computer systems to be used by various agencies and statewide enterprise projects.

New York shares a great deal in common with other states when it comes to information technology.

The state wants to use the Internet to improve services, consolidate data operations and facilitate information sharing among agencies. It wants its IT systems to be secure for transactions and exchanging information.

But what most other states lack is New York's IT budget, which is better than $1.6 billion annually, according to some estimates. Only California spends more on IT.

Gov. George Pataki has been praised by analysts and industry officials for his leadership in the areas of advanced information technology solutions, telecommunications infrastructure and cost savings through data center consolidation.

In the last few years, the Pataki administration has funded the infrastructure necessary for electronic commerce, electronic government and enterprise solutions by establishing an electronic communications network, known as NyeNet, and by consolidating 19 data centers into one megafacility.

New York is not only standardizing data center and network operations but also other essential technologies, such as geographic information systems and public key infrastructure, according to Jim Costa, client director for government services in the Northeast region, IBM Corp., Armonk, N.Y.

"The state has organized itself in a way that makes sense," Costa said, referring to the state's improved technology infrastructure. This lays the groundwork for the development and implementation of online services.

The New York Office for Technology, led by chairman James Natoli, is responsible for coordinating online services with the 31 state agencies. The technology office established a list of 75 key services from more than 500 suggested by agencies and departments last year, said Will Pelgrin, the technology office's executive deputy commissioner.

So far, it has brought 20 of those services online, although it already has about 200 services available online, Pelgrin said.

The state is scheduled to award two key projects in September, Pelgrin said. One is a public key infrastructure project that would support privacy and security across state government, and another is a help-desk initiative that will initially support the data center, statewide network and human services network, and eventually other agencies.

"We anticipate a lot of agencies will use it," he said.

Pelgrin declined to release an estimated contract value of the projects while bids are under evaluation.

The technology office also will issue requests for proposals for a new state Web site and for e-procurement before the end of the fiscal year, Pelgrin said.

Although the office is working on a draft RFP for e-procurement that covers the entire project, the state will not bid the whole project at one time, Pelgrin said. Instead, the state will go forward first with parts, such as vendor registration, reverse auctioning and online catalogs. KPMG Consulting Inc., McLean, Va., is assisting the state with its e-commerce plan, company officials said.

The vendors bidding for the help-desk project are CGI Group Inc., Montreal; IBM; Lockheed Martin IMS, now part of Affiliated Computer Services Inc., Dallas; Qwest Communications International Inc., Denver; and Verizon Inc., New York, state officials said. At press time, the PKI bids had not yet been opened.

Two other key agency projects this fiscal year include an integrated revenue enterprise for the New York State Department of Taxation and an integrated payroll system upgrade for the New York State Office of the State Comptroller, industry officials said.

Integrators and other technology companies serious about doing business with New York are likely to have substantial resources devoted to the state, including an Albany office, a client services director and key project support staff, industry officials said.

"In a study we conducted earlier this summer, our clients consistently rated New York as one of the top three states that they seek state and local business in," said Meredith Luttner, manager of state and local database services for market research firm Input Inc., Chantilly, Va.

Input estimates that in fiscal 2000-01, New York will put $97 million toward data center consolidation, $25 million toward e-commerce and e-government, $4 million toward GIS and $2 million toward a new state Web site.

New York will spend an estimated $1.65 billion on information technology in fiscal 2001-02, according to market research firm Federal Sources Inc. of McLean, Va.

FSI predicts New York may be facing reduced revenue associated with the economic downturn. That coupled with a large population that uses the state's social programs could dampen the executive branch's emphasis on IT spending, said Ray Bjorklund, FSI's vice president of consulting services.

In light of those factors, FSI estimates a 3 percent to 4 percent increase in New York IT spending, he said.

Although most of the leading integrators have some business in New York, their ability to compete varies depending on the specific opportunity, said Tom Davies, senior vice president of market research firm Current Analysis Inc., Sterling, Va.

"IBM by far and away is in the strongest position in New York," he said.

Big Blue has a "heavy history" of applying its infrastructure expertise to the needs of New York, particularly with data centers and network management, Costa said. IBM, together with Intermedia Communications Inc. of Tampa, Fla., built NyeNet, which was completed in June 2000.

The company pushed out from that base and is now doing e-government work and integration projects in several agency sectors, including health and human services, justice and tax and revenue, he said.

Other companies with a firm footing in New York include Computer Sciences Corp. of El Segundo, Calif., and Unisys Corp. of Blue Bell, Pa., Davies said.

CSC has worked with New York's Medicaid program since 1986, said Ellen Downey, CSC Healthcare Group's marketing communications manager. The company's most recent engagement is a six-year, $351 million Medicaid management information system contract that includes development of a new system for claims processing and reporting, she said.

But as new opportunities arise, these companies are being challenged by a number of other integrators, including American Management Systems Inc., Fairfax, Va.; Deloitte Consulting, New York; and KPMG Consulting.

KPMG Consulting, which bid on the PKI project, will be looking for opportunities to provide secure Internet and intranet applications, said Mike Walsh, KPMG Consulting's managing director for state and local government. "The state has a big appetite for intranet applications," he said.

The company is providing quality assurance, project management and Web applications for the Medicaid management contract on which CSC is the fiscal agent, Walsh said. The company also provides technology support to several other agencies, including the Office of Temporary Disability and Assistance, the Office of Court Administration and the Port Authority of New York and New Jersey.

Deloitte Consulting hopes to build on successes such as its ongoing applications support for New York's Women, Infants and Children program, which administers food stamps and other benefits. The five-year project, which began in February 1998, is worth $16.2 million, said company officials.

"[WIC] is one of our more significant assignments in the state," said Bob Campbell, Deloitte's global senior partner for the public sector. Deloitte will bid on both the integrated revenue enterprise for the New York State Department of Taxation and the payroll system upgrade for the New York State Office of the State Comptroller, Campbell said.

AMS' most visible project to date has been with the state's Web site, said Mike Nevins, AMS' vice president for business development in New York. AMS will be looking for opportunities in New York in integrated tax and revenue, human services and child support, he said.

To this end, AMS already has bid on the integrated tax project and will likely bid the e-procurement opportunity, he said.

It comes as little surprise to those familiar with New York politics that this year's state budget still had not been approved by the legislature, more than four months after it was due March 31.

"It's an old story in New York," Walsh said.

The signing of the state budget has been delayed each year for the past 17 years, said Dan Weiller, a spokesman for the New York Assembly.

Because Pataki and the legislature could not reach a compromise over the governor's $83.7 billion 2001-02 budget proposal, made in January, the legislature approved a bare-bones budget Aug. 2 and will negotiate supplemental spending bills later, Weiller said. New York's fiscal year ends March 31.

The delay has an adverse effect on technology initiatives throughout state government, according to budget observers. In the absence of a new budget, state agencies continue to operate at last year's funding levels, Weiller said.

"It creates uncertainty for [agency] IT directors," Walsh said.

About the Author

William Welsh is a freelance writer covering IT and defense technology.

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