IBM beats Northrop to bag $863 million Texas contract

Mumbai: International Business Machines Corporation (IBM), the world's largest computer ser beat out rival Northrop Grumman Corporation to win an $863 million, seven-year information technology work contract for the state of Texas, government officials said.

Under the contract, IBM would manage data centers for more than 24 state agencies, consolidating their operations through a project that will save the state an estimated $159 million over the contract period.

IBM will handle the work with three subcontractors — Pitney Bowes Inc, Unisys Corporation and Xerox Corporation.

Northrop, the rival bidder and No 3 US defense contractor, had teamed up with Accenture and Affiliated Computer Services as it is looking to diversify away from traditional military hardware and boost revenue by performing computer services for government agencies.

The contract, which goes into effect immediately, expands the scope of a decade-old outsourcing contract between Northrop and the state of Texas. The Northrop contract expires in August next. This would allow a transition of staff and services, according to a revenue department release.

Under the new contract, Xerox will handle the state agencies' print services while Pitney Bowes will handle mail services. 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 five per cent increase over their current salaries. But none of these workers will be required to move to a different location, the release said.