Computer deal gags criticism

State agrees not to disparage Accenture for its performance

April M. Washington, Rocky Mountain News

Published December 30, 2005 at midnight

Text size

More Local News

Colorado has promised not to bad-mouth a company that started but did not finish building a $40.8 million computer system for the state Department of Labor, according to a settlement announced last week.

Colorado also will "express appreciation" for the company's work, according to the Dec. 20 document.

Accenture and the Department of Labor formally terminated their contract last week over claims by the state that the global technology services company was far behind schedule and that the system it was developing was fraught with bugs.

Accenture argued that the state wanted too many upgrades and changes and that the state's deadlines were unrealistic.

The Labor Department is the second state agency in the past month to part ways with Accenture. On Thursday, the secretary of state canceled a contract with Accenture to create a centralized voter database.

As a part of its agreement with the Labor Department, Accenture will refund $8.2 million to the state and the state will withhold $7 million in payments.

In addition to the nondisparagement clause, Labor Department officials agreed to express their "appreciation of Accenture's work" if others inquire about its performance, according to a copy of the agreement obtained by the Rocky Mountain News.

On Thursday, Accenture spokesman Jim McAvoy declined to elaborate on the terms of the agreement, saying the statement "speaks for itself."

McAvoy, however, defended Accenture's performance.

"Accenture believes the state's statements of appreciation for our work on the three systems is genuine and accurately reflects the situation," he said.

But some lawmakers said the terms of the settlement amount to a gag order and do not accurately reflect the company's job performance.

"I'm not interested in being gagged," said House Majority Speaker Andrew Romanoff, D-Denver. "I think it's just a way of saving face for the company. It shouldn't stop other states learning from our experience and it shouldn't stop us from doing the same."

State Sen. Deanna Hanna, D-Jefferson County, took issue with language saying the state appreciated Accenture.

"It's an outright lie," said Hanna, who has been critical of Gov. Bill Owens' administration's handling of massive computer projects. "They absolutely have not done a good job. It doesn't matter what we do or say. That company is going to make out like a bandit."

In response to the criticism, the governor's office has acknowledged the state needs greater oversight of large-scale computer projects.

Henry Sobanet, state budget director, has said the governor's office plans to seek legislation in the upcoming session to establish the Office of Innovation and Technology as a regulatory body to help oversee ongoing and future computer conversions.

But Rick Grice, executive director of the Department of Labor, called the department's agreement an acceptable compromise, contending that it gives the state $15 million that otherwise would have gone to Accenture - money that can be used to salvage the project.

It also saves the state tens of thousands of dollars on a drawn-out legal battle, he said.

"I'm pleased with the outcome and looking forward to a successful conclusion of our relationship with Accenture," Grice said.

The Labor Department signed the $40.8 million contract with Accenture in 2002 to create a system that would combine and streamline two separate computer systems that track unemployment taxes and benefits.

The company completed three phases of the system that are currently in use and will have been paid roughly $27 million after the state receives the $8.2 million refund. Accenture must deliver a check by Jan. 20.

As part of the agreement, Accenture also asked the state to write a letter to the News, seeking a retraction of a headline over a Dec. 7 article: "State feeling hijacked over computer update: Firm seeks another $20 million to finish the job; deal in jeopardy."

Accenture contends the headline was a "misleading characterization" of the firm's request for additional funds to complete the project. The company has said it sought additional money because the state wanted enhancements not included in the initial deal.

Grice said he sent a letter dated Dec. 24 to the News, seeking a retraction, but said "the language in the letter was dictated by Accenture."

"It's important that the record is set straight on all aspects of this matter, including how the state described the situation in the weeks leading up to this agreement," Grice wrote.

News Managing Editor Deborah Goeken declined Grice's request for a retraction.

"The use of the word 'hijack' was the reporter's description of the situation, which at that time amounted to the state saying that Accenture was in breach of contract for requesting additional money," Goeken said. "It was never presented as a direct quote from Mr. Grice. The story and headline were accurate characterizations of the state's public stance."

Romanoff denounced Accenture's attempts to get a retraction.

"They want the Rocky to pretend that story was never written," he said. "Maybe they can give us our money back as well, since we're all pretending."

The Department of Labor is the second Colorado agency to cancel a contract with Accenture.

On Thursday, Colorado Secretary of State Gigi Dennis formally canceled a $10.5 million contract with the company to create a centralized voter database, which was supposed to be in place by Jan. 1 to meet a federal deadline.

The secretary of state said the system was beset with delays and bugs.

In an earlier interview, McAvoy blamed the secretary of state's office for key delays on decisions on software and hardware and not giving Accenture access to information.

The terms of the settlement with Accenture mirror that of the Labor Department, state officials said.

Dennis, also bound by a nondisparagement clause, said in a prepared statement the decision to formally end the relationship with Accenture was a "mutual one."

As part of the agreement, Accenture will refund the state $2 million.

"The parties expressed disappointment that they could not come to terms on a revised implementation timeline," Dennis' statement said.

washingtonam@RockyMountainNews.com or 303-892-5086

Subscribe to the Rocky Mountain News