Contract turmoil entangles Florida

Florida State Technology Office

Project: Leverage and Improve Technology Services

Term: 7 years

Estimated value: $80 million

RFP release: December 2002

Proposals submitted: January

Award date: Originally scheduled for May

Summary: The state technology office has issued a requirement to leverage and improve information technology services. The services covered under the requirement include e-government and e-business; enterprise resource planning; network and telecommunications services; outsourcing of network management, platform and data center operations, desktop services and seat management, applications operations and management, business operations and process outsourcing, base operations and facilities management; IT security; software products; systems integration; research and development.

Bidders: BearingPoint Inc., Affiliated Computer Services Inc., Accenture Ltd., NIC Inc., WorldCom Inc.

"This [proposal] is all about improving the technology services we deliver and doing so more cost effectively. We need innovative solutions from the private sector to free up state dollars for critical priorities." ? Kimberly Bahrami, Florida CIO

State seeks to mollify unhappy contractors, save outsourcing deal

Florida technology officials are scrambling to keep on track a major outsourcing project facing complaints from losing bidders and questions from lawmakers concerned whether the state is getting its money's worth.

The seven-year outsourcing program, worth an estimated $80 million, would turn over key aspects of Florida's technology operations, such as seat management and network and telecom services, to a private contractor. After winnowing down the field to five competitors, state officials in February selected BearingPoint Inc. of McLean, Va., for the project.

But when several of the other finalists threatened to protest the selection, the state retracted the award in March, according to analysts and industry officials.

"People raised their eyebrows when the bidders [threatened to protest]," said Florida Sen. Jim King, R-Jacksonville, state senate president.

The losing bidders complained that the Florida State Technology Office had selected BearingPoint without allowing a full competition among the finalists, according to industry sources who asked to remain anonymous. The state, they said, did not follow accepted contract negotiation standards that call for debriefings and allow for revised bids by finalists.

The other finalists were Accenture Ltd., Hamilton, Bermuda; Affiliated Computer Services Inc., Dallas; NIC Inc., Overland Park, Kan.; and WorldCom Inc., Ashburn, Va. Neither BearingPoint nor the other finalists would comment on the contract.

After withdrawing the award from BearingPoint, the state technology office resumed discussions with all the finalists in an effort to satisfy all parties, sources said.

At press time, sources said the state was trying to work out a deal that would give all the finalists a piece of the outsourcing project. According to the plan under discussion, the state would divvy up the project into an assortment of prime contracts and subcontracts, and allow the contractors an opportunity to negotiate individual prices and scopes of work, they said.

The state is expected to issue a notice of award May 22, the day after Washington Technology goes to press. Since the contract award was originally scheduled for May, an award on this date could bring the program roughly on track.

Despite repeated requests from Washington Technology, the Florida State Technology Office declined to comment.

Florida is one of several states looking to outsource parts of their IT infrastructure to cut costs and improve operations. These states face an uphill battle, however, in trying to convince lawmakers, governors and taxpayers that the road to savings and efficiency runs through outsourcing.

A similar effort four years ago to outsource a large chunk of Connecticut's government IT was derailed when Electronic Data Systems Corp. of Plano, Texas, backed out of the deal because it didn't like the state's terms. In February, a communications outsourcing project in Georgia was canceled when a new governor took office.

The Florida contract would outsource several technology operations, including e-government, enterprise resource planning, network and telecom services, seat management, business process outsourcing, applications maintenance and support, computer security, software products and systems integration.

King and several other state lawmakers are questioning how the state plans to turn over its central technology facility to the prime contractor. Under the outsourcing plan, the contractor would not be required to pay for the facility, known as the Shared Resource Center. Instead, Florida would give the facility to the contractor in exchange for services.

"If they are not paying for it, and it is just being given in exchange for services -- and these are facilities and equipment that Florida citizens have already paid for through their taxes -- then I would like to know why we aren't receiving money for it," King said.

Florida consolidated its IT operations into centralized services in 2001 through a bill passed by the state legislature and signed into law by Gov. Jeb Bush. The law gave the state technology office primary responsibility for planning, budgeting, acquisition, development, implementation, use and management of IT within Florida.

The goal was to create a central authority that could cut costs and reduce duplicative efforts by coordinating IT activities among state agencies.

Kim Bahrami, Florida's chief information officer, said earlier this year that the outsourcing project's goal is to reduce taxpayer costs.

"This [proposal] is all about improving the technology services we deliver, and doing so more cost effectively. We need innovative solutions from the private sector to free up state dollars for critical priorities, such as domestic security, child welfare and education," she said.

Tom Davies, senior vice president for consulting firm Current Analysis Inc., Sterling, Va., said states are under pressure to get optimum return from the money spent on IT. Outsourcing enables a state to centralize authority, reduce costs and improve performance, he said.

"The states don't have the luxury of time to study the problem to death," he said. "They need to move, and move quickly, in order to balance budgets and get results."

King said that since Bahrami took over as state CIO in 2001, she has shown herself to be a diligent steward of the state's technology investment, but she can only do so much by herself.

"Part of the problem is we have a technology office that has been put in a bastard-child position," King said. "Sometimes it gets great support ... and is embraced by the governor, and sometimes it isn't. They operate never knowing whether they have allies." *

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

About the Author

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

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