State Tech Czar Resigns Over Oracle Deal

SACRAMENTO -- Department of Information Technology Director Elias Cortez, who helped push the state’s ill-fated $95-million computer software contract with Oracle Corp., resigned Monday, a month after Gov. Gray Davis suspended him with pay from his $120,000-a-year post.

Cortez is the fourth Davis administration official involved in the Oracle deal or matters related to government use of computers who has been forced to resign in recent weeks. Davis suspended Cortez last month amid reports that employees of his department had shredded documents.

State Justice Department authorities are continuing to investigate the shredding and other matters related to the Oracle deal, which was awarded in May 2001 without competitive bids and has become the focus of legislative and law enforcement scrutiny.

Davis press secretary Steven Maviglio explained the delay in Cortez’s forced resignation by saying, “We wanted to hear his testimony and now we’ve heard it .... This is part of the governor’s continuing effort to clean house.”

Several questions remain unanswered about the state’s decision to enter into the contract. However, Cortez took the lead in pushing the deal and was among its biggest boosters, administration officials have testified. Several officials said they relied on the Department of Information Technology to provide technical analysis and offer assurances that there would be demand for Oracle software.

While the contract was touted as a way for the state to save more than $100 million on software purchases, an audit in April concluded that it could cost the state $41 million more than if there had been no agreement.

Oracle executives contend that the contract will save the state money. But Oracle and its partner, Northrop Grumman subsidiary Logicon, continue negotiating with the state to rescind the contract.

“I’m surprised it took so long,” said Assemblyman Dean Florez (D-Shafter), chairman of the Joint Legislative Audit Committee, adding that Cortez offered conflicting and contradictory testimony.

Cortez appeared three times before the legislative committee investigating the Oracle contract, and is not expected to reappear. In his final appearance two weeks ago, Cortez said he had been cut out of the final decision on the software-licensing contract. He also told lawmakers that he felt “abandoned” by the administration, and had no source of income other than his state job.

Cortez also charged that a rival in the administration made a comment to a Silicon Valley executive whose firm had donated to former Republican gubernatorial candidate Richard Riordan that the donor viewed as threatening.

That official, Arun Baheti, denied any such threat. Baheti nonetheless resigned as Davis’ director of e-government after it was revealed that Baheti accepted a $25,000 donation on Davis’ behalf from an Oracle lobbyist, shortly after the state agreed to the deal.

In a resignation letter that he closed with the words, “Your loyal servant,” Cortez defended himself and his department, saying, “I am proud to have delivered on my commitment to no major failed I.T. projects under our oversight.”

Referring to consideration being given to plans to dismantle the Department of Information Technology, Cortez said: “I cannot find it in me to be an active participant nor would I advise you or this administration to dismantle such a pertinent program.”