Google accuses California of rigging bidding process for e-mail contract

The state of California is negotiating a $60-million deal to use Microsoft Corp.'s technology to revamp the government’s 200,000-user e-mail systems — a deal that rival Google Inc. wants to stop.

Google spent months trying to compete in the contract bidding process but never formally joined the race because state officials drew up a lengthy list of requirements the company said were impossible for it to meet. Now, the Internet giant is accusing Gov. Arnold Schwarzenegger’s administration of rigging the bidding system in favor of its rival in Redmond, Wash.

“There’s no competition when only one team’s allowed to play,” Google spokesman Andrew Kovacs said. “With a level playing field, we’re confident we could provide a better product and save California taxpayers millions of dollars, which could be used to fund state services much more important than e-mail.”


The state government’s call for e-mail modernization comes at a key time for Google. The Mountain View, Calif., company, which dominates Internet searching, is challenging Microsoft’s ubiquitous Outlook e-mail system. A small but growing number of municipalities are adopting Google’s technology. Late last month, the company unveiled a new “cloud-based” product for government that garnered a key security clearance from the federal government.

So the loss of the contract could be a major blow to Google in its effort to persuade government agencies and other big computer system operators to abandon their energy-hogging, proprietary server farms for cheaper Internet-based “cloud” data repositories that can serve hundreds or thousands of users around the globe.

In general, cloud computing enables e-mail and other applications to operate on remote servers rather than on workers’ desktop machines. Such a setup can provide protection from computer crashes, more storage and energy conservation.

Google argues that its software system would generate about one-third more savings than the $6 million a year that the state says it would save by going with Microsoft’s proposal.

State officials denied Google’s allegations of bias and were disappointed the company never submitted a bid. “The state went to great lengths to ensure we had as many bidders as possible,” said Bill Maile, a spokesman for the state’s information technology office.

Microsoft, noting that the bidding process was still open, would not comment on the accusations. But the company pointed out that it has decades of experience working with “some of the largest, most complex public and private organizations around the world.”

For Google, “it’s a big battle,” said Ted Schadler, an information technology analyst at Forrester Research. “The state of California is a trendsetter in so many ways. If Google could open this up now and challenge the government to reconsider, they’ll make life a lot easier for themselves — and for other states that may be thinking about doing this.”

Breaking from tradition, though, may have been too tough a sell. Google argued its Gmail software could take care of the state’s needs, even if its software didn’t always do things the way many workers have grown used to — that is, the Microsoft way. Google’s program won’t sort e-mails alphabetically; Microsoft Outlook does. Instead, workers use a built-in search engine to locate specific messages, an approach Google believes is “more effective.”

In a series of written requests to the state, Google asked that 142 of the state’s contract requirements be changed or removed. Many of those conditions involved functions that Google’s e-mail program isn’t designed to perform.

State officials rejected 115 of Google’s 142 change requests.

The state “probably wrote [the requirements] in a way that supported the way they were used to working,” Schadler said. “When any new innovative technology shows up, the old guard is looking at it and scratching their heads.”

Such complaints may derail efforts by the Schwarzenegger administration to fast-track the conversion to a new, integrated, statewide e-mail system. If the e-mail adoption process is delayed, that would give the company the chance next year to make its case to a new governor.

California’s push to update its e-mail systems is part of a larger initiative by Schwarzenegger to overhaul its digital infrastructure. This piece would consolidate 100 aging e-mail systems strewn across scores of state agencies with hundreds of server locations.

But Maile said this wasn’t a case of officials being stuck in their ways. Instead, he said, the state’s technical team had questions about the security of Google’s cloud technology for storing sensitive tax, law enforcement and financial data and had concerns that Google might store data on servers located outside the United States.

Indeed, many government clients are nervous about joining Google’s cloud technology. Last year, the city of Los Angeles signed a deal with Google. So far, the partnership has been rocky.

The Los Angeles Police Department, which has strict rules about the way data are secured, has aired a number of complaints about the new system. And in June, Google missed a deadline to take over the 30,000-account system because of problems largely related to the LAPD security requirements.

Google executives have described those setbacks as “minor issues.” Last week, the L.A. City Council voted to continue with the Google system, pending the resolution of the security concerns.

For now, California says it’s moving forward. On June 29, the Department of General Services announced its intention to award a contract to the winning bidder, CompuCom Systems Inc., a Microsoft-affiliated information technology outsourcing company in Dallas. State officials have started negotiating the contract details with CompuCom.

The window to file a legal bid protest is now closed.