06 June 2002 | David Arminas
California has moved to ensure all public-sector contracts go through a bidding process after a failed IT deal turned into a political scandal.
A no-bid contract between the state purchasers and database software giant Oracle hit the headlines when state auditors said the taxpayers had paid $41 million too much for a new IT system for its 270,000 staff.
Auditors said that the $95 million system had still not been used by employees a year after it was installed and that savings had been hugely overestimated.
Gray Davis, California's governor, said the executive order outlawing no-bid contracts applied to schemes over $100,000.
He will also prevent consultants hired to advise the state on technology contracts from bidding on those same contracts.
Davis became embroiled in scandal when it was discovered that once the Oracle deal was concluded, an Oracle lobbyist handed a $25,000 contribution to Davis's director of e-government for the governor's forthcoming re-election campaign.
Davis has since returned the $25,000 and sacked the e-government head. He also sacked the head of the IT department and the director of the department of general services, which approved the contract.
Oracle claimed that the deal was good value for money for the state, but has offered to return its fees to the state.
State officials are now investigating why warning signals from some IT staff were not taken seriously.