The state of Georgia intends to award IBM a contract, worth up to $873 million over five to seven years, to handle a range of tech services, according to state records. Records also show that the state plans to award a related $346 million telecommunications contract to AT&T.

The state's procurement records show that the contract will be awarded under the Georgia Infrastructure Transformation (GAIT) 2010 Project, which aims to streamline and rationalize Georgia's computing and communications infrastructure.

Records show that EDS, recently acquired by Hewlett-Packard, and Northrop Grumman also bid on the contracts, but withdrew from the process.

IBM and AT&T will be tasked with consolidating IT infrastructure, securing state data, ensuring a stable operating environment, replacing aging infrastructure, ensuring "robust" disaster recovery, and ensuring "use of broad industry standards," according to state records published last week.

Cash-strapped state governments are more frequently looking to outsourcers to manage IT functions in an effort to save cash. Outsourcing also gives state agencies access to a wider pool of tech talent at a time when many government IT workers are approaching retirement age.

The contracts could still be challenged. "The notice of intent to award should not be considered as a binding commitment by the state," the records note. Large public contracts often become the subject of court challenges by the losing vendors.

A software company earlier this month filed a lawsuit against the federal government seeking to overturn the award of a $900 million defense IT contract to a group of tech and consulting contractors.

In documents filed in the U.S. Court of Federal Claims, Software Engineering Services, of Bellevue, Neb., claims the government's decision to bypass it for the contract was "irrational, prejudicial, and at odds with the law and regulation."

The contract, U.S. Strategic Command Systems and Missions Support II (USAMS II), was awarded in August to Booz Allen Hamilton, CACI International, Client/Server Software Solutions, ITT, MacAulay Brown, and Science Applications International.