IBM Blames Texas Agency for Contract Woes

IBM is disputing "inaccuracies" in statements by the Texas’ Department of Information Resources (DIR) last week that it will rebid elements of an $863 million contract to consolidate the state’s data centers.

The state and IBM, the lead contractor, have been debating the problems with the project for months, with each party citing issues with the other’s execution. The contract calls for the consolidation of data centers from 27 state agencies into two facilities.

Last week DIR executive director Karen Robinson asserted that the state had the right to terminate its master services agreement for cause, but would instead "pursue procurement" and re-bid the contract. In a response Friday, IBM took issue with Robinson's interpretation of the current state of the contract.

"IBM respectfully disagrees with DIR’s contention that IBM has breached or otherwise failed to live up to its obligations under the Master Services Agreement (MSA) and thus disagrees that DIR may terminate the MSA for cause," wrote Cynthia McLean, IBM Vice President and Global Project Executive, in a letter to Robinson.

"In fact, IBM has repeatedly and consistently gone above and beyond its contractual responsibilities in an effort to overcome DIR’s failures to perform its own obligations under the MSA," McLean wrote. "It is those DIR failures that underlie the alleged breaches you attribute to IBM and are not issues that IBM can 'cure.' "

McLean also said that DIR "has a number of alternatives, including re-procurement, to
move the Data Center Services project forward" but blamed the state for the problems with the huge project, which was launched in 2007 but has been plagued by delays and equipment failures. 

"Fundamental changes in DIR’s approach to the project, its commitment to improve its governance of the project and its management of the other agencies involved is critical to yield improved results," McLean writes. "These DIR failures and the failure of the agencies to remediate their applications continue to undermine the progress of consolidation and transformation. Moreover, the State has rejected without meaningful discussion every attempt by IBM to discuss viable options to advance service delivery to the State."

Early this year the two sides agreed to restructure the agreement, but last month the state Department of Information Resources (DIR) directed IBM to cure problems with the project.

While citing its disagreement with DIR"s management and characterization of the contract, McLean said that "should DIR decide to move forward with re-procurement of all or a portion of the services, IBM remains willing to assist DIR in that process."