State

From Staff And Wire Reports

AUSTIN -- Gov. Rick Perry on Tuesday ordered a halt to any further privatizing of Texas' data management with IBM until ongoing problems with the computer system are reviewed and corrective actions are approved.

The contractor "has failed to implement a system of checks and balances that ensures data security, jeopardizing the ability of state agencies to deliver services to their constituencies," Perry wrote in a letter to Brian Rawson, the state's chief technology officer.

Perry said the problems have been "painfully documented" over several months and include state agency concerns about unreliable e-mail systems, administrative cost increases and other breakdowns.

The huge contract is not being revoked, but further privatizing should not take place until problems are addressed, said Perry spokeswoman Katherine Cesinger.

A massive computer crash destroyed thousands of the attorney general's confidential documents, and more than 10 state agencies complained about network breakdowns and server backup problems with Texas' newly expanded outsourcing of computer services, records show.

A review by The Dallas Morning News of a year's worth of state agency report cards for the vendor IBM shows several agencies' documents have been in danger.

Two dozen agencies lodged complaints about the contractor, including unexpected server and e-mail outages, corrupted files and a hacking incident revealing security breaches that weren't addressed for months.

They also point to severe staffing problems, poor response time for problems and billing and invoice inaccuracies.

"Granted, all outsourcings have their rough beginnings ... but it hasn't really gotten substantially better over time as we would expect from a world class operation" like IBM, Ed Serna, a top official at the Texas Department of Transportation, said in an interview Monday.

Also Monday, Rawson, the state's chief technology officer in charge of the IBM contract, released a letter in which he said the company "is not meeting expectations" and has been fined $900,000 for failure to complete timely backups as required by its $863 million, seven-year contract.

An IBM spokesman said the company is racing to correct the data-backup problems.

"We take all of this very seriously and we're taking the appropriate steps to resolve any issues," said company official Jeff Tieszen.

Tieszen said viewed from other angles, the contract is a success and the state is on track to save $178 million by 2013.

Last week, The News reported that a server malfunction in July destroyed nearly half of eight months' worth of documents belonging to Attorney General Greg Abbott's Medicaid fraud investigators in Tyler. The loss compromised scores of prosecutions.

Last week Jerry Strickland, communications director for the Attorney General's Office in Austin, told the Tyler Morning Telegraph that there was a server crash in July during scheduled hardware maintenance.

Once the maintenance was completed, the server failed to restart and the backup system lost data from July 2008 back to November 2007.

The Attorney General's Tyler Medicaid fraud division has lost 81 criminal cases and eight months of work, which could impede with prosecuting dishonest healthcare providers.

Strickland said they are still working through the amount of data that was initially lost and what has been recovered. He said it is a painstaking process to go through the data reconstruction and they are trying to come to a full picture of what's happened.

When asked what the lost files could mean for the prosecution of Medicaid fraud cases, Strickland said "At this time, it is premature to speculate one way or the other."

Texas was an early advocate of outsourcing state government computer work. Few other states have dismantled agencies' IT shops and completely outsourced computer services, though Virginia last year launched an equally ambitious outsourcing program.

Texas' outsourcing of data storage and upgraded technology, security and disaster recovery services was ordered by lawmakers in 2005. It built on a decade-old effort that involved outsourcing services at only a dozen agencies.

Currently, 27 state agencies are in various phases of transition to a new arrangement in which IBM manages their information technology services and equipment purchases.

In preparing budget requests, agency officials in recent months have complained that IBM is charging them more and more money -- and they'll need a combined $71 million in the next two-year budget cycle to cover unexpected technology costs and overruns.