The $863m price tag is only for the seven-year base period, according to DIR spokesperson Rachael Biggs. The contract also includes three one-year options, valued at $79m, $78m, and then $77m for the final year, bringing the potential value of the contract to nearly $1.1bn.
The selection process came down to the IBM team and a Northrop Grumman-led team that included Affiliated Computer Services Inc and Accenture Ltd. Northrop, which has been making a serious move into the state and local outsourcing market lately, currently provides Texas with about 30% of services covered under the new contract, Biggs said. The remaining 70% are performed in-house by the agencies themselves.
But these previous contracts expire on August 31, 2007. The new IBM deal, meanwhile, kicks in immediately to allow for a transition of staff and services, according to a DIR release yesterday.
The new contract hands over the agencies’ print services to Xerox and mail duties to Pitney Bowes. IBM and Unisys will build a new data center in Austin, Texas. All state-employed data center workers will be offered a position at one of these four companies, with at least a 5% increase over their current salaries. But none of these workers will be required to move to a different location, the DIR said.
Texas expects the deal to save it some $159m over the initial seven-year contract term.
