100 Years Of IBM: 25 Historic Milestones

Officials at the city-owned utility company that provides power and other services to Austin blasted IBM for its performance on a contract under which Big Blue is managing electrical, water, and waste disposal billing for more than 400,000 residents of the Texas capital.

"We have not been pleased, and we have communicated that unhappiness to them," a spokesman for Austin Energy said Tuesday. Ever since IBM took over the city's utilities billing, residents have been receiving inaccurate bills or no bills at all, and access to Austin Energy's online payments system has also been spotty, according to the spokesperson.

"It has not just been one problem, it's been a wide range and variety of problems," the spokesman said. In one case, a business that owed Austin Energy $3,000 was charged $300,000.

IBM's deal to provide Austin Energy with billing services was struck in October, 2009. Under the 8-year, $55 million pact, the tech services giant is building a system that is supposed to be "capable of providing a single point of contact for customers through multiple communications channels for utility-based products and services," according to an IBM announcement at the time.

[ State and local givernments are trying to modernize their IT. Read State, Local Governments Face Cloud Imperative. ]

The system comprises Oracle databases running atop IBM's Websphere middleware and Tivoli management tools. It's meant to be an integral part of a smart grid that Austin Energy is building that, among other things, should allow residents to more accurately monitor their energy usage to help them save money.

But city officials say it's not working as promised. "Some residents have received inaccurate bills that overstated charges, or they missed bills altogether. In other cases the bills didn't show solar readings, or residents could not get their paperless bills," said the spokesman for Austin Energy. As a result, Austin Energy is withholding $3.8 million in payments currently owed to IBM.

The spokesman said Austin has also had problems with an inventory management system that IBM set up for the city.

"Given what has occurred, anything we do in the future with IBM or any other vendor will have a contract written in a way that will have consequences, and I'm not saying there weren't some provisions that relate to that," said the utility's spokesman. "But our feeling now is that you need a contract that speaks to lack of performance more strongly."

The spokesman said Austin Energy still hopes to resolve the problems amicably with IBM. IBM officials did not immediately respond to a request for comment.

The situation recalls similar problems that IBM had with a contract to manage the welfare enrollment and payments systems for the state of Indiana. Under that deal, IBM was to have modernized and maintained the various IT systems that support programs run by Indiana's Family and Social Services Administration.

The state, however, said IBM mismanaged the job, resulting in numerous errors. IBM and Indiana have countersued each other for millions of dollars over the failed contract, and the case could go to trial this month. Last week, Indiana's Supreme Court ruled that Governor Mitch Daniels did not have to testify.

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