Xerox Accused of Failing to Deliver on Multi-Million County Tech Contract

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Just over a year after securing approval of a whopping $132 million contract to upgrade county government phone and computer networks in Orange County, Xerox Corp. is being accused of failing to deliver.

County management and labor leaders alike are alarmed, pointing to months-long installation delays and likely cost overruns in excess of $13 million.

“I can tell you that [the county’s information technology department] met with Xerox the week of Nov. 3., that some open technical issues were resolved, but the meetings did not go as well as we would have liked,” said county spokeswoman Jean Pasco.

County workers are often having to step in to do critical work when Xerox employees don’t show up, according to the county’s main employees union.

“The project continues to be behind schedule. County employees are repeatedly required to perform work that Xerox should be performing,” said Jennifer Muir, the assistant general manager of the Orange County Employees Association, while publicly confronting county supervisors from the speaker’s dais at last week’s public meeting.

“In fact, there are times when Xerox doesn’t even show up, and county employees just have to pick up the load,” Muir said.

County management also has said that Xerox is responsible for a months-long delay in upgrading the county’s phone and computer networks.

Xerox’s project is also at high risk of going more than 10 percent – or $13 million – over budget, according to a September assessment from the county’s information technology department.

Xerox also gave incorrect information on power demands from its new equipment, according to the county report, causing a four-month delay in installing new networks.

(Click here to read the county’s risk assessment. The Xerox project is on page 7.)

Xerox spokesmen Carl Langsenkamp and Kevin Lightfoot didn’t return messages seeking comment.

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

County officials say they’re talking with Xerox on how to address these issues. But they aren’t offering the public any specifics.

Union leaders say they’ve been shut out of any talks between the county and Xerox.

“We’ve really been told at this point, ‘Nothing to see here, we’re working on it, we’ll get back to you later,” Muir told supervisors last Tuesday.

In September, union leaders pressed the county about whether taxpayers or Xerox would be paying for any increased costs and/or county staff time for the Xerox contract. They also asked whether the county had already obtained compensation from Xerox for failing in its duties.

County officials have yet to respond, according to Muir.

“These issues are very serious. It’s a mess, and it doesn’t look like it’s getting better anytime soon,” Muir told supervisors.

After Muir spoke Tuesday, county supervisors didn’t respond or ask any follow-up questions from the dais, other than to acknowledge they received the letter and would respond.

Efforts to get comment from the county’s top technology official, Christina Koslosky, have been unsuccessful. A phone connection failed after she answered Wednesday, and she didn’t return a follow-up voicemail and email seeking comment.

Pasco, the county spokeswoman, said Koslosky would be wrapped up in meetings for the rest of the day Wednesday, before the Thanksgiving holiday.

Some of the issues with Xerox have yet to be resolved, Pasco said.

“We are reviewing the revised schedule and awaiting information from them and the board will be kept apprised of those discussions,” she said.

“It is our job – meaning the county’s job – to manage the contract. And if the vendors are not performing, we will hold them accountable,” Pasco added.

Such assurances of accountability don’t jibe with what employees have been seeing on the ground, said Muir.

“Our members have very little faith that there’s a consistent enforcement of the service level agreements – meaning that there is somebody who is monitoring those and that is holding them accountable as these issues come up,” said Muir.

“Not only does that have a direct cost impact, but there are ancillary costs that accrue when the contractor decides that they don’t feel like coming for the day. That’s why we’ve been repeatedly asking for an accounting of that: how often has it happened, what are those costs, how often are you going back to Xerox to recover those costs, or are Orange County taxpayers having to pick up the bill?” Muir said.

“And unfortunately, as is the case in so many of these types of huge, multi million dollar outsourcing IT contracts, when you hand over control of this critical public service to a private corporation, you’re kind of left held hostage to rampant mistakes like this.”

Other problems, according to a letter from Muir to county supervisors, include Xerox not dedicating enough staff to the project and not creating backup systems for computer networks.

(Click here to read the union’s letter.)

At Tuesday’s board meeting, Muir also noted that a quarterly status report up for approval by supervisors on Tuesday left out an updated risk assessment of the Xerox contract – despite the previous quarterly report raising serious concerns.

“What you see in today’s risk assessment is a notation that Xerox and the county are currently meeting to discuss some of these issues. But there’s no status update as to whether these risks still exist. and I can tell you – from our employees on the front line – they do. They absolutely do.”

Cost overruns on information technology contracts have long plagued the county government, and this Xerox contract has been no exception.

After it was chosen as the preferred vendor, the company hiked its price by $11 million beyond the “final offer” that it had previously promised to honor.

When county supervisors were taken aback by the increase last July, Xerox threatened to stop running the county’s existing computer networks.

At the time, County Supervisors’ Chairman Shawn Nelson said the company was essentially trying to pressure the county into approving contract with a higher price tag.

“Nobody’s going to intimidate me. You want to take your ball and go home, pull that nonsense?” said Nelson. “I accept it for what it is. They want to play us, which is what that was.”

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

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.

“On just the initial review of the documents we discovered huge errors that could potentially cost taxpayers millions of dollars,” Muir said just before the approval, referring to issues such as missing work sites that the union claims Xerox could use to seek future price increases.

Union officials also said the voice-over-IP systems could be implemented by existing county employees, thus saving taxpayers tens of millions of dollars.

“If you’re going to take a risk here, take a risk with the men and women who have served you” and haven’t threatened you, said OCEA General Manager Nick Berardino.

The county’s technology director at the time, Mahesh Patel, said that the countywide voice-over-IP work is too large and complex for county workers to manage. But Nelson said county staff have successfully implemented the technology at departments with 800 to 1,000 people.

The contract was ultimately approved by supervisors on a 4-1 vote, with Nelson being the sole opponent.

Union officials have claimed the supervisors were influenced by tens of thousands of dollars in political contributions from Xerox, its lobbyists and their clients – a charge they adamantly deny.

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

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