Xerox Sells Firm at Center of County’s Troubled IT Project

An embattled technology contractor that county government officials accuse of triggering months-long delays and millions in cost overruns for taxpayers has been sold off by its parent - Xerox Corporation - to a French firm.

Xerox Corporation is in charge of a massive $132 million contract to upgrade the Orange County government’s phone and computer networks, which has already run into major problems just one year into its five-year span.

County managers say the firm gave incorrect information on power demands for its new equipment, leading to a months-long delay in upgrades and contributing to a high risk of going more than $13 million over budget.

It’s unclear how much of that tab taxpayers will have to pick up.

Now, Xerox’s information technology outsourcing division is being sold to a French firm, Atos, in a deal that’s slated to close in the coming months.

The sale is already drawing fire from union officials, who have long warned about problems with the Xerox contract.

“During this time of frightening cyber security issues, turning over sensitive information about Orange County residents and business interests to a French owned IT company is extremely concerning,” said Nick Berardino, general manager of the Orange County Employees Association.

County Supervisors' Chairman Shawn Nelson, meanwhile, says the sale could spell good news for the county.

“It might be great news,” said Nelson, noting that Xerox has not been delivering on its obligations to the county.

Nelson said the county would continue to monitor the situation to ensure taxpayers have their contract rights enforced.

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 stepping in to do Xerox’s work for it.

“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,” Berardino said last month.

County officials say they’ve been negotiating with Xerox on the exact amount of compensation from the firm, though no dollar amount has been announced.

Xerox, meanwhile, has yet to comment publicly on the allegations regarding their Orange County contract.

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,” OCEA’s assistant general manager, Jennifer 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 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, and follow him on Twitter: @nicholasgerda.