The State of Texas is once again turning up the heat on IBM to fix what it says is a long list of deficiencies with an $863 million data center consolidation contract.

IBM, however, quickly responded in a published statement, saying it had fulfilled its obligations under the contract and that it had worked in good faith with the state to try to resolve the issue.

Earlier this year, the state’s Department of Information Resources (DIR) reached an agreement in principle with IBM to hammer out a new framework to get the huge consolidation project back on track. However, after months of negotiations, the state has pulled the plug on the discussions.

The department issued IBM a “Notice to Cure” on July 16, giving the company 30 days to undertake action that will result in “immediate and substantial performance improvements.”

“IBM promised an investment in people, processes, and technology to bring the benefits of data center consolidation to the State of Texas,” DIR Executive Director Karen Robinson said in a statement. “We have had continual problems with basic service delivery and IBM has failed to deliver on their promises.”

At the heart of the dispute is a seven-year agreement, signed in 2006, that contracted IBM to consolidate the state’s 31 data centers into two facilities. The state had hoped to achieve about $178 million in savings as a result of the project.

The project was to be completed by December 2009, but instead the state claims less than 12% of participating agencies’ servers have been consolidated and the work has resulted in “harm to state agencies, exposure to unnecessary risks, and failure to achieve the objectives set and agreed to by IBM.”

Jeff Tieszen, an IBM spokesman, maintains that company fulfilled its obligations under the contract. "IBM has worked in cooperation and good faith with DIR to provide benefits and improvements to all citizens of Texas," he said, adding that the DIR’s actions were “unnecessary and unjustified.”


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