Texas Says it Will Re-Bid $863M IBM Contract

The Texas' Department of Information Resources said today it will rebid elements of an $863 million contract to consolidate the state's data centers, citing differences with lead contractor IBM. The state and IBM 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.

The huge project was launched in 2007 but has been plagued by delays and equipment failures. Early this year the two sides agreed to restructure the agreement, but last month the stats Department of Information Resources (DIR) directed IBM to cure problems with the project.

In a letter to IBM, 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 practice, this appears to give the state to opportunity to choose different subcontractors, while IBM continues to provide many of the services in the contract.

IBM spokesman Jeff Tieszen told the Austin Statesman that the company disagrees with the state’s "accusations of material contract breaches or DIR’s ability to terminate the contract for cause" and said IBM is "hoping to continue a constructive dialogue."

See coverage by the Dallas News, Austin America-Statesman and Texas Tribune for more updates.