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Florida Agrees to Pay $7 Million to Avoid Lawsuit

By: Associated Press Email
By: Associated Press Email

TALLAHASSEE, Fla. (AP) -- Florida is offering to pay a business technology company $7 million to avoid a potentially costly lawsuit.

The administration of Gov. Rick Scott agreed in late December to pay the money to a subsidiary of Xerox. The company signed a seven-year contract to consolidate email accounts throughout state government.

Last year state, legislators cut off funding for the project. House Republicans said they were concerned that the savings associated with the project would not materialize.

But Xerox State and Local Solutions warned state officials last August that the company had already spent roughly $30 million on the project and it was prepared to sue to recover its investment.

A company spokeswoman said this week that Xerox agreed to the settlement to continue a "constructive working relationship" with the state.


THE CAPITAL, TALLAHASSEE, July 24, 2012

David Royse, The News Service of Florida

Xerox Corp. is desperately trying to revive a plan to provide Florida with a unified email system for all state employees, hoping to salvage a $70 million deal that was scuttled by lawmakers this spring.

Lawmakers did not fund the project in this year's budget, although some agencies have already moved to the new system and Xerox has spent millions of dollars in upfront costs. The company hopes to get the joint Legislative Budget Commission to change the budget to allow for a scaled-back version of the plan, but the LBC has not scheduled a meeting.

Legislators passed a measure a few years ago requiring that various state agencies, which now use myriad email platforms, move to the same system by 2013.

In June of last year, the state signed a roughly $10 million-a-year contract with Affiliated Computer Services, a Xerox subsidiary, to provide a new Microsoft Exchange 2010 email system that would, according to the company save the state money.

How much the state would actually save and whether the project would be finished when promised, however, have been sticking points. Public comments from the state agency in charge of implementing the new system have moved around on the final savings figure --- and a key lawmaker says she isn't confident in any of the figures. The same lawmaker has expressed concern that the project couldn't be finished in the time promised under the initial contract.

The state's former technology chief who was in charge of implementing the contract told lawmakers late last year that the company would provide and run the system for about $13 million less over the life of the seven-year deal than what state agencies would cumulatively pay for the 30 separate employee email systems currently in use.

Xerox also has paid the upfront costs of getting the whole thing set up. The company has dropped about $30 million into the project, moving several agencies over to the new system, which already has about 5,000 users across the government.

The new system also was intended to solve another looming issue for the state, a new federal requirement for government email systems dealing with criminal justice information that was going to force the state's agencies to upgrade anyway.

But even as the company was trumpeting the new deal last summer, there were beginning to be some rumblings from lawmakers foreshadowing a problem with the project. At a meeting of the Legislative Budget Commission last June, Rep. Denise Grimsley, who shares the panel's chairmanship with Senate counterpart JD Alexander, laid into then-state Chief Information Officer David Taylor when the contract came up for approval.

"I'm very frustrated with the way this whole process has been managed," Grimsley said, charging that Taylor's office – which ran the project – had given lawmakers conflicting numbers on how much the system would save taxpayers and wasn't responsive to her questions.

"We kept getting different numbers from [the agency], and we would try to back into the numbers and weren't able to do so," Grimsley said later that day. "….Where are they getting these numbers from?"

But the LBC, which approves mid-year changes to the budget, okayed the proposal that day, leading observers to assume everything was fine. The contract was signed five days later.

And it didn't seem like there were any imminent reversals as this year's legislative session approached, as Taylor and the new email system started showing up in trade publications that cover tech in the public sector. In one such piece, in January in "Government Technology," there was no hint of a problem, as Taylor even talked about possibilities for expanding beyond the state agencies.

"We expect cities and counties to join within the next couple of years," Taylor was quoted as saying in that piece. "The contract also was written so other states can join."

So it caught backers of the project off guard when the state budget emerged in the waning days of the legislative session with no money for the project. The final touches of the budget – including whether it would have the email consolidation – were worked out by Grimsley, the House budget chairwoman, and Alexander, the Senate budget chairman.

In fact, the project's demise was sufficiently unforeseen that Taylor was quoted by another publication, "Government Computer News," in March saying the state was "ramping up to velocity migration" of emails to the new system. By the time the piece actually got into print, the budget was sitting on Gov. Rick Scott's desk – without money for the email system.

Taylor's whole office, the Agency for Enterprise Information Technology, was also stripped of its funding. Taylor is now at the Department of Children and Families.

Grimsley, who remains as chair of the LBC, said she still has concerns about the project, particularly what she sees as a lack of hard cost estimates. She's not completely ruling out some sort of solution, though.

"I'm open to looking at some alternative proposals," Grimsley, R-Sebring, said last week.

But it sounds like she's not looking for a simple fix. "They need to go back and start from the beginning and submit a new proposal to us," Grimsley said.

Grimsley contends that the company hasn't given her enough assurance it would be able to complete the work on time, and she still doesn't have confidence in the ultimate cost estimates.

In a presentation given by Taylor's office to lawmakers in November on the project, the projected savings for the state was given as $12.6 million.

Now, Xerox is furiously working to save the project.

Xerox spokesman Ken Ericson said the company has sought to sweeten the deal, though he declined to say exactly what concessions Xerox is offering to try to get the project moving.

"We've been working closely with the state and have added additional value to the contract," Ericson said. "We're very focused on a positive resolution, we don't expect this project to die."

Behind the scenes, Xerox representatives are working to get the issue back before the same Legislative Budget Commission that approved the project last year. But as of this week, the commission doesn't have any meetings scheduled to deal with the issue.

Ericson noted that eight agencies have already moved to the new system, and it wouldn't make sense for those agencies to have to switch back.

Besides, the law still calls for a unified system, Ericson said.

"The state has its law in place to implement a single system by 2013," he said. "We want to be there to help them."


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