County IT Director Appointed Amid Cost Overrun Concerns

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Amidst months-long delays and millions in potential cost overruns for critical technology upgrades, the county’s acting IT director has been appointed to the post permanently.

The appointment of Christina Koslosky as the county’s Chief Information Officer is drawing praise from official corridors but scorn from the county’s main union that represents most of the county’s IT workers.

“Christina has my full confidence in her proven abilities, expertise and agility to address our existing IT challenges as we tackle some complex and dynamic projects, wrote county CEO Mike Giancola in a Dec. 3 memo to county supervisors.

“She has been a tremendous asset to the CEO executive team,” Giancola wrote.

County Supervisor John Moorlach also supports Koslosky.

“I think Christina is very competent and will do a great job for the county,” said Moorlach.

However, the county’s main employees union sees things differently, pointing to Koslosky’s presiding over a critical project that the county itself warns is likely to go over $13 million over budget.

“This is a program that’s drowning in six feet of water,” said Nick Berardino, general manager of the Orange County Employees Association, referring to the Xerox-contracted project to upgrade and operate the county’s phone and computer networks.

“To appoint the executive that has overseen contracts costing taxpayers millions and millions in cost overruns to the chief [technology] executive not only reflects badly on the county, but puts into question the judgement of the current CEO. It’s absolutely disgusting.”

Koslosky, meanwhile, said Friday that the county will be reducing its payments to Xerox, but wouldn’t say by how much.

“We have had some areas where they have not met performance, and there will be a deduction,” Koslosky told Voice of OC last Friday.

That lack of performance by Xerox has led to several problems for the county, she said.

Some key county offices – like for the Health Care Agency – are moving locations, and the delays caused by Xerox mean that new buildings will have to be connected to an old phone system – only to be converted to the newer system at a later date, Koslosky said.

The county is also now obligated to extend other technology contracts that relied on Xerox finishing its work, Koslosky added.

“These costs were due to a delay on” Xerox’s part, she said. “I don’t expect that I should have to pick up the cost if the delay is at your cost.”

Xerox has also not provided a final schedule for its project and some new equipment purchases are being delayed, Koslosky said.

“It’s just, quite frankly, a lot more work than we had hoped for,” Koslosky said.

The county will hold Xerox accountable, she added.

“The contracts are very clear” about roles and responsibilities for Xerox and the county, Koslosky said.

The county government has a long trail of cost overruns and schedule delays on such outsourced IT contracts.

In one of the most stark examples, a previous chief technology officer, Reza Khayyami, was charged in 2006 with taking bribes from a software contractor.

Many of the department’s issues were supposed to be fixed by a 2006 task force. But that panel waited years to begin reviewing the very problem that prompted its creation — the delivery of a $6-million mainframe system before county supervisors had a chance to approve it.

The county also filed a lawsuit last year alleging that IT vendor Tata Consultancy Services misled and defrauded the county into spending millions of public dollars on property tax software that failed.

Satish Ajmani, another former IT director, retired in 2010 after a series of scathing audits from the county performance auditor found problems with the management of IT contractors.

One 2009 report identified more than $45 million in no-bid IT contracts. A 2010 follow-up audit found fault with an $800,000 strategic IT plan because it fell short of guiding policy makers effectively.

And this spring, the county’s technology chief, Mahesh Patel, suddenly announced his retirement, which came as a surprise to Moorlach.

Meanwhile, the county’s technology contractors have become major political donors to county supervisors, who approve large county IT contracts.

In Xerox’s case, the firm and its lobbyists have steered considerable sums to county supervisors, often times in a less than obvious way.

A quick survey of campaign finance data found more than $12,000 in contributions between mid-2010 and mid-2012, though much of additional funding is obscured through intermediaries.

Now, with Xerox one year into a five-year contract, county managers say the project’s problematic and expensive delays were caused by the firm.

According to a September report by Koslosky’s office, Xerox gave incorrect information on power demands for its new equipment, causing a four-month delay in installing them. The project is also at a high risk of cost overruns that exceed $13 million, according to the report.

Union leaders sent Koslosky a letter in September asking how the county will hold Xerox accountable. Berardino said the county still hasn’t specified how much of the overrun will be covered by taxpayers versus Xerox.

“They continue to play hide-the-ball, and it’s obvious they don’t want the public to know that the CEO-IT department continues to be a floating shipwreck,” said Berardino.

Asked about Berardino’s characterization, Koslosky replied: “Nick’s free to express his opinion. I’ve heard him use that phrase quite frequently.”

County officials say they’re negotiating with Xerox on the exact amount of compensation from the firm.

Under its five-year contract, Xerox is set to run the networks for nearly all of the county government’s 17,000 desktop computers and 17,125 land line phones, and update phones to voice-over-IP technology.

The networks are critical to the effective functioning of the county government, which is responsible for numerous law enforcement, public health and infrastructure services for Orange County’s 3.1 million residents.

Union leaders say Xerox has failed to adequately staff the project, leading to county workers taking care of Xerox’s work.

“County employees are having to bail out the contractor, who’s making money hand over fist, laughing all the way to the bank with pockets chock full of taxpayer dollars,” said Berardino.

Xerox has yet to comment publicly on the allegations against their firm.

Before the contract was approved last September, union leaders and line-level county IT workers told county supervisors that part of the contract’s work could be handled with existing staff and warned of significant problems in the contract’s terms.

“We stood before the board of supervisors in public testimony and predicted exactly what has happened. And the only one who didn’t ignore us was [supervisors’ Chairman] Shawn Nelson,” said Berardino, noting that Nelson was the sole vote against the contract.

Asked about the union’s warnings, Moorlach said county IT staff did what they could to understand the concerns.

“It was my understanding that it [was] followed up on” by county staff, he said.

Most of the supervisors in office at the time of the contract approval – Todd Spitzer, Pat Bates, Janet Nguyen, Shawn Nelson – didn’t return messages seeking comment, nor did newly sworn-in Supervisor Lisa Bartlett.

Before coming to the county in 2008, Koslosky worked for 17 years working at the Santa Ana-based tech giant Ingram Micro.

She started at the county as director of finance and contracts in the central IT department, eventually becoming the second-in-command in Feb. 2012.

After the top IT director Mahesh Patel retired in the spring, Koslosky served as the interim, before her appointment as the permanent chief information officer this week.

You can reach Nick Gerda at ngerda@gmail.com, and follow him on Twitter: @nicholasgerda.

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