November 28, 2006 12:48 ET

Texas DIR Awards IBM a Contract for State Data Center Services That Offers Significant Benefits to the State

AUSTIN, TX -- (MARKET WIRE) -- November 28, 2006 -- A newly signed agreement between the Texas Department of Information Resources and IBM (NYSE: IBM) delivers expanded services and lower costs for data center services. The seven-year contract is valued at $863 million with three optional one-year extensions. After taking all new and retained costs into account this will save Texas $25 million in 2008-2009 and $159 million over the base contract period. The contract leverages the buying power of the state to modernize the technology infrastructure, enhance information security and disaster recovery capabilities, and provide flexibility to meet changing business requirements.

"I'm committed to making Texas the leader in technology advances while ensuring our citizens receive the best value for their tax dollars. Data center consolidation accomplishes both and is just good business," said Texas Governor Rick Perry.

"This contract replaces and expands an existing contract for data center services that has been in effect since 1996. It is an important ingredient in our commitment to the shared technology infrastructure envisioned in House Bill 1516 that I authored last session," said State Representative Carl Isett.

"This agreement leverages our existing assets at the state data center in San Angelo and ensures continued physical and technical upgrades will be made to that facility," said State Senator Robert Duncan, HB 1516 sponsor.

The contract includes over 20 percent historically underutilized business (HUB) participation, performance metrics, extensive reporting, and collaborative governance with participation by all 27 agencies. With the new agreement come increased security levels for assets and information not currently seen in state government. As part of the agreement, IBM, working through sub-contractor Unisys, will establish a new data center in Austin.

The contract also addresses career opportunities for state employees who currently perform data center services. Specifically, each affected employee will receive a job offer from IBM or one of three subcontractors -- Unisys, Xerox or Pitney Bowes -- with at least a 5 percent increase over their current salaries. No relocation will be required.

"Eighteen months ago we established specific milestones to complete by this year-end. I am proud that we met all the milestones and now have a solid contract in place with meaningful performance requirements," said William Transier, DIR Board Chair.

"We designed this process to be highly inclusive. Hundreds of employees at all levels of government worked together on the scope, the request for offer, and the evaluation on this contract to ensure it meets the needs of each agency," said Larry Olson, Chief Technology Officer for the State of Texas. "I want to publicly acknowledge the hard work and the deep commitment to this project that we received from staff in all 27 agencies."

"This initiative demonstrates the State of Texas' commitment to the strategic use of Information Technology across its government agencies," said David Liederbach, General Manager, IBM Global Technology Services, Public Sector. "Ultimately, the taxpayer benefits from more effective technology spending. IBM will help the state deliver the latest technology capabilities to a broader group of Texas agencies to ensure consistent access to information, improved disaster recovery and data security, and most importantly, better overall service to its citizens."

This contract follows industry best practices and was developed with support from Technology Partners International, Inc. (TPI) and Mayer, Brown, Rowe & Maw LLP, two premier outsourcing advisory firms.

The contract becomes effective immediately, providing sufficient time for a smooth transition of staff and services before the current contract expires on August 31, 2007.

The Texas Department of Information Resources (DIR) promotes a shared vision for Texas that maximizes the value of the State's technology investment by identifying common areas of interest, using technology to advance agency missions, and preserving flexibility to innovate. Visit DIR at

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