No Defense Tactic Can Hide This Ugly Software Scandal

SACRAMENTO

One sure sign that a governor’s staff is scared and cowering is when it delays an important announcement until late on a Friday afternoon.

This is straight out of every press secretary’s tattered playbook, under defense tactics: Wait until Capitol reporters have left for the weekend--well past their deadlines--then release the embarrassing news. Minimize the negative coverage.

It seldom works, of course. Alarm bells go off. Annoyed reporters and editors scramble and run the story. Then on Monday, they dig deeper.

That’s what happened late last Friday as Gov. Gray Davis’ software scandal continued to unfold. The governor announced the forced resignation of General Services Director Barry Keene, a likable former Senate leader.

Davis mixed in some positive news, of sorts, designed to illustrate his leadership: He asked Atty. Gen. Bill Lockyer to launch a criminal investigation. Actually, the AG already had done that.

The governor also invited Lockyer’s recommendations on how to prevent a similar scandal in the future. In truth, both Davis and former Gov. Pete Wilson vetoed bills that might have averted this embarrassing, costly episode.

The bills, by Sen. Steve Peace (D-El Cajon), would have extended to computer technology purchases the same conflict-of-interest safeguards that apply to other state contracting. A company that helped develop bidding criteria could not itself bid on the contract. Davis’ 1999 veto message said this would “restrict needed flexibility.”

Now Sen. Debra Bowen (D-Marina del Rey) is pushing similar legislation. And its prospects have suddenly improved.

To back up, these are the sordid basics--mostly uncovered by state Auditor Elaine M. Howle, but also by some newspapers, especially the San Jose Mercury News:

* The state signed a six-year, $95-million database software contract with Oracle Corp. The pitch was volume discounts. Oracle--and its reseller, Logicon Inc.--claimed the state would save $16 million. But even using their assumptions, Howle found, the volume deal will cost the state $41 million more than if it had never happened.

* The sellers contended the state would save $111 million, in all, if it picked up an additional four-year option. To the contrary, Howle said, it would mean a total extra state cost of $6 million.

* Moreover, the assumptions are all wrong, the auditor reported. The state agreed to purchase 270,000 software licenses. But that’s far more than the number of state employees, and tens of thousands don’t even use computers.

* The Department of Information Technology, which initiated the contract, surveyed 127 agencies and found only five that were interested in the new software. Eleven months after the contract signing, there still are no takers. DOIT never shared this disinterest with other administration decision-makers.

* Logicon was hired by the state as a consultant on the proposed purchase. It developed data, projected savings and pitched the contract. Turns out, Logicon stands to make $28 million in a side deal with Oracle.

* There’s more: Sen. Richard Polanco (D-Los Angeles) is a friend of DOIT Director Elias Cortez, and Polanco helped pitch the deal to Finance Director Tim Gage. Polanco’s son works for Oracle. As the deal was cooking, the son attended a meeting of the state’s software advisory committee representing Oracle.

* The proposal sailed smoothly into the governor’s office, where it was approved, in concept, by Cabinet Secretary Susan Kennedy after being OKd by Keene, Gage and other administration honchos. Logicon helped write the green-light memo, which asserted that “significant benefits seem obvious.” Approval was conditioned on further study by the Finance Department.

* But the contract was signed that day--last May 31--by Keene. Gage says he thought there’d still be study time because the agreement contained a 30-day escape clause. It did not. Indeed, lawyers only had a few hours to review it. Oracle insisted this was a now-or-never deal--a onetime offer that would disappear the next day because it needed to impress Wall Street right then with a huge contract.

This is genuine scandal, not just Republican spin. Whether it’s a scandal involving criminality, we’ll learn later. Already we know it’s a scandal of incompetence.

Assemblyman Dean Florez (D-Shafter), chairman of the Joint Audit Committee, is seeking permission from legislative leaders to conduct a major investigation. So far, Speaker Herb Wesson (D-Culver City) is reluctant.

Davis should move fast and dump Director Cortez. Might as well dump that entire, useless technology department.

Announce it Friday or Monday, makes no difference. This scandal cannot be minimized.