County Officials Remain Mum on Details of Xerox Cost Overruns

As taxpayer costs continue to spiral on a massive outsourced technology project, Orange County officials have yet to provide a cost breakdown requested months ago by the county’s largest employees union.

County executives say the contractor, Xerox Corp., is responsible for months-long delays in its work to upgrade the county’s phone and computer networks, with the project estimated to go more than $13 million over budget.

Negotiations with Xerox over the extra costs have been ongoing for months, officials say, adding that they will hold the company accountable.

But officials have been elusive when pressed for details.

The anticipation of overruns dates back to at least September, when a quarterly update from the county’s IT director pointed to a high likelihood of cost overruns.

That prompted a Sept. 17 letter from the Orange County Employees Association that cited examples of county staff having to fix problems created by Xerox and requested a list of all costs related to the contract and who will pay for them.

(Click here to read the letter.)

More than eight months later, the county still hasn’t responded to OCEA’s letter or its subsequent requests, including for performance reports on Xerox that are normally routine, according to the union.

“As of today we still have had no response to any of these questions,” OCEA Assistant General Manager Jennifer Muir told county supervisors at their regular board meeting Tuesday.

She spoke as supervisors prepared to accept two quarterly updates on IT projects that are supposed to explain the risks and progress on major projects.  The updates left out Xerox, saying negotiations were still underway.

“It’s now been nearly eight months since the board has been publicly updated regarding the status of one of the largest IT projects in the county’s history,” Muir said.

The continued lack of a cost breakdown raises questions, she added.

“Is it that the county doesn’t know what those costs are still?  Or that you’re still putting them together? Or that, you know, you don’t want the public to know about them? Or that there’s something else happening behind the scenes that we should know about?”

Board members did not respond to Muir and unanimously approved the update without discussion.  Supervisors Lisa Bartlett, Shawn Nelson, Andrew Do and Michelle Steel were present, while Chairman Todd Spitzer was absent.

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 landline 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.

Xerox’s failings include providing incorrect information about electricity requirements for their equipment and running behind schedule on their transition plan, according to the county’s IT executives.

Those problems have led to extra costs like extending existing maintenance contracts for equipment that was supposed to have been replaced, officials say.

Additionally, county workers often have to step in to do critical work when Xerox employees don’t show up or are inexperienced, according to the union.

“This issue is clearly still going on.  It’s our members who are sort of hanging in the balance to sweep up the mess…that Xerox has made,” Muir told supervisors Tuesday.

Before the contract was approved in 2013, union leaders and line-level county IT workers told 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.

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

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 Supervisor Shawn Nelson noted that county staff had successfully implemented the technology at departments with 800 to 1,000 people.

On Tuesday, Muir reiterated the union’s call for county employees to do the work instead of Xerox.

“We remain ready to help,” Muir said.  “I think now is the time to really begin exploring how to bring that work back in-house, to the members who have really been doing it and cleaning up…the mess that’s already been caused.”

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

  • octaxpayer

    Interesting how the IT Management, which really means CEO/IT, Project management office, IT director and the CIO Christina K. who at the time was responsible to ensure the contract met the County requirements is the same people now blaming the vendors. A RFP went out all the design requirements
    were submitted. Other agencies including CEO/IT lower management warned the IT director and PMO office that the details were not thought out properly and as usual the facts distorted and BOS relying on these County officials to do the right thing have failed again. Why do you let these same management team keep lying and making bad decisions on tax payer dollars? Make them accountable.

  • talkinghead

    Also the contract is actually for 3 years. Years 4 and 5 are at the discretion of the BoS to extend the contract with Xerox/Atos.

  • Philmore

    Am I the only one STUNNED that an Employee Union Rep has to be the one (and THANK YOU for doing so!) to expose contract DEFECTS that apparently ESCAPED the notice of those NEGOTIATING the contract, and those VOTING on it? Dare I even ASK if PENALTIES or REMEDIES for performance shortfall that now “must be negotiated” exist in the ORIGINAL CONTRACT? If NOT, WHAT was the “performance ” rating given to the 2 oblivious groups above? Are they still employed? Is a working sense of SMELL an impediment to living in OC?

  • talkinghead

    Man if you only knew how bad it is. And don’t forget, Atos owns the contract now.

  • Paul Lucas

    Secrecy is not transparency