A seven year IBM outsourcing deal worth $85 million has been ruled illegal by a New York State Supreme Court Justice.
IBM was last month awarded a contract to run the majority of Westchester County?s computer operations by county executive Andrew O?Rourke. The deal resulted in around 50% of the county?s 109 IT staff losing their jobs. But union leaders filed a lawsuit arguing that only the full board of county legislators were entitled to make decisions that resulted in the creation or elimination of jobs in the county.
Justice Nicholas Colabella ruled on Wednesday that the award had not gone through the proper channels and was invalid. O?Rourke?s office has seven days to appeal the decision. In the meantime, an IBM spokesman said the company intended to continue its work until at least 3 February.
Outsourcing public service contracts is not as widespread a practice in the US as it is in the UK and there is general scepticism as to its effectiveness in budget cutting. It is alleged that in this case, two separate reports on the outsourcing proposals failed to prove that money would be saved, although O?Rourke claims it will save the county $23 million over the lifetime of the contract.
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