Accenture And Texas Terminate Troubled Outsourcing Contract

Accenture and the state of Texas have agreed to cancel a troubled contract under which Accenture was to operate and maintain the state's welfare enrollment system.

In a statement, Accenture said it has "not been able to agree on contract changes" desired by Texas Health and Human Services Commissioner Albert Hawkins and is pulling out of the arrangement.

Texas and Accenture last year agreed to scale back the contract from $899 million to $546 million and terminate the deal in 2008 -- two years earlier than the original term -- after receiving numerous complaints about inaccuracies and residents being improperly denied benefits.

Under a revised plan disclosed earlier this week, however, Accenture and Texas officials will wind down the contract immediately. Accenture said the deal's collapse won't have a material impact on its financial results.

The outsourcer said it will work with state officials to ensure that the hand off of the system back into the hands of state technology workers goes smoothly.