Texas Outsourcing Contract Performance Defended by IBM

Last Friday, IBM sent a letter to Texas Department of Information Resources (DIR) defending its performance on the $863 million, seven-year outsourcing contract that the state awarded to IBM in 2006, says a story in the Dallas Morning News.

As you may recall, in mid-July, the DIR sent a "Notice to Cure" letter to IBM stating that the company had 10 days to complete a plan that was acceptable to the DIR for curing the material breaches and correcting other deficiencies the DIR had identified, and that IBM must cure the contract breaches within 30 days. If IBM failed to do this, the DIR implied that it would seek to terminate the contract.

The Morning Star article states that IBM decided that it wouldn't be making a formal response to the DIR's cure notice, but would seek to meet with Texas state officials to try to work out a new plan of action.

In addition, the Morning Star quotes the IBM response to DIR as saying,

"As you know, we do not agree that IBM is responsible for the problems that you outline in that letter... (but that IBM recognizes DIR) is dissatisfied with the current state of the project."

That latter bit is somewhat of an understatement, I think.

Given the very public put downs by DIR of IBM and by IBM of DIR, I sure would like to be a fly on the wall of the next DIR-IBM meeting to see how they try to kiss and make up. To be sure, the meeting will be filled with lawyers from both sides subtly and politely blaming the other, but also trying to say let bygones be bygones.

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