San Diego County and the vendor expected to be selected sometime this month to handle the jurisdiction's IT and telecommunications projects have history on their sides. The county's decision to award a contract worth between $500 million and $700 million over 10 years is one of the largest of its kind in the country, but it certainly isn't the first.
It involves the consolidation of eight data centers into one, converting 127 county local area networks into a single virtual network pushing technology to the desktop (as opposed to the current system, which makes use of dumb terminals) and far greater use of online governance.
The contract ushers in a new era of digital governance for San Diego County, a sort of one-stop shop for everything from license renewals to zoning regulations and parking-fine payments. The new system will eliminate much of the "wrong-door" traffic generated in the world of analog governance, while making full use of multimedia technologies, from voice to video to e-mail. The integration of fragmented infrastructures into a single state-of-the-art system based on standardization of hardware and software enables a substantial reengineering of government.
"Our goal is to serve more of our customers online instead of in line," San Diego County Chief Administrative Officer Lawrence Prior wrote in a letter endorsing the project to the county Board of Supervisors.
San Diego's decision to outsource reinforces a well-established trend in both the public and private sectors. Last year, private-sector corporations -- including some high-tech groups such as Sun Microsystems and Lucent Technologies -- outsourced more than $33 billion in IT services. The corresponding figure for state and local governments was $2 billion.
Public-sector outsourcing contracts range from the very large, such as in the city of Indianapolis, to the small, such as in the Southern California cities of Irvine, Riverside and Fullerton. Not that there is anything particularly new about public-sector outsourcing: Neighbor Orange County outsourced its data center and telecommunications network in 1972, but it was only in recent years that the trend has caught on in a big way.
Keeping the trend going was in the minds of Connecticut officials until late June, when Gov. Jim Rowland halted the state's $1 billion, seven-year plan to outsource its entire computer system. State CIO Gregg "Rock" Regan recommended that Rowland pull the plug on the deal, which had taken four years and $3 million to develop and negotiate, because the state and vendor Electronic Data Systems Corp. (EDS) were unable to reach an agreement on pricing of specific services and the total cost of the contract, which was surging to $1.5 billion.
"The state reached its limit on the risk that it could assume under this contract," Regan said. "EDS' methodology on pricing assumed a number of productivity improvements over time and we weren't comfortable with the adjustments that would be made if, in fact, they didn't meet their commitment on productivity. The fact is, our price could have increased over the seven-year contract, so we simply asked for some protections on price in the event they were unable to meet their pricing commitment."
EDS' communications director on the project, Stephen Person, blamed the state employees' union for the deal's collapse. "Originally, all [state IT] employees were going to go to EDS. If a union is in place that is hostile to the idea of outsourcing, it becomes difficult to predict what savings and improvement you can do. [Also,] we didn't know how many employees would choose to stay with the union or come over to EDS."
San Diego County's contract is less than the Connecticut deal but just as sweeping in its scope. It's no coincidence that the finalists in the Connecticut sweepstakes -- EDS, IBM and Computer Science Corporation (CSC) in partnership with SAIC -- are the same finalists out west. All three