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Tuesday, May 7, 2002

The Joint Legislative Audit Committee opened a hearing late Monday afternoon to get to the bottom of the deal, which the state auditor's office has estimated could cost taxpayers $41 million and was seemingly pushed through the state bureaucracy with little scrutiny.

Barbara Fraga-Decker, a former deputy director of the California's Department of Information Technology, told the committee that department officials appeared to be eager to get the agreement approved "to leverage California's size in order to do some kind of contract."

Republican candidate Bill Simon has used the flap to chide incumbent Gray Davis about his oversight skills, bringing a warning from one Democrat committee member to keep the focus of the hearing on the state information department and not on the political headlines.

'Embedded Corruption ... Endemic in This State'

"Because our attention is on politics, we miss the more serious issue of embedded corruption, which I think is endemic in this state," said state Sen. Steve Peace.

Peace said that the growing controversy over the Oracle agreement reminded him of past debacles in Sacramento that he said originated within the bureaucracy but quickly degenerated into partisan squabbles.

"It's institutional, and it is serious," said Peace, who came under fire during California's recent energy crunch because of his role in drafting the state's electricity deregulation plan.

"The professional bureaucrats/criminals hide, while the partisan shots are traded back and forth."

The Department of Information Technology's $95 million licensing agreement with Oracle for database software, signed last year, was based on a discount that was supposed to have saved the state as much as $111 million in licensing payments over 10 years.

The auditor's office, however, concluded in a report issued last month that the deal could actually wind up costing the state $41 million because demand for the software among state agencies has failed to materialize.

The auditor's report also determined that the deal, brokered by consulting company Logicon, appeared to have been rushed through approval without the appropriate amount of due diligence at the urging of the consultants who claimed time was of the essence.

The controversy last week led Davis to order California Highway Patrol to secure information technology department documents relating to the agreement in response to reports that some documents were being shredded.

Logicon has denied any wrongdoing. A vice president with Logicon's parent company, Northrop Grumman Information Technology, told the San Jose Mercury News over the weekend that the company was willing to help the state void the agreement. Copyright 2002 by United Press International.

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