IBM-Cognos to refund $13 million to Massachusetts

IBM will repay US$13 million to Massachusetts for performance management software
its subsidiary, Cognos, sold to the state in August 2007, according to an agreement
reached this week.

The deal came under scrutiny last year following allegations the procurement
process had been rushed to favor Cognos.

IBM declined to comment beyond a brief statement confirming it will give back
the money and that the state will return the software. The statement also noted
that Cognos struck the deal before IBM acquired it.

An IBM spokesman, Chris Andrews, refused to provide documentation pertaining
to the agreement, as did Governor Deval Patrick's office, which issued a similar
statement.

Massachusetts House Speaker Sal DiMasi has been at the center of a political
firestorm over the controversy, with allegations
flying over his connections to Cognos. The Boston Globe reported
that Cognos was a sponsor of a memorial golf tournament DiMasi helped organize
and that a DiMasi friend served as a lobbyist for the vendor.

DiMasi has adamantly denied any wrongdoing. His office declined to comment
on Friday.

However, a March report
by state Inspector General Gregory Sullivan's office provides a time line of
an investigation the agency conducted into the software deal.

The inspector general began scrutinizing the procurement following a tip from
a whistleblower, as well as a December request from Patrick's administration,
according to Jack McCarthy, a spokesman for Sullivan's office.

"They accomplished what we asked them to do, it appears, to get the money
back from a flawed procurement process," McCarthy said. "It's nice
to know IBM recognized the flaws in the process and did the right thing for
Massachusetts. We're also happy the Patrick administration hung tough and followed
through."

The report does not mention DiMasi, but describes a number of alleged flaws
in the way the Cognos pact was formed.

For one, the state's Information Technology Division did not widely advertise
the fact it was looking for performance management software, according to the
report.

Instead, "a staff member at ITD simply consulted a chart of leaders in
performance management developed by the analytical firm Gartner Group and e-mailed
the Request for Quotes to four companies identified as 'leaders.' "

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