The city of Minneapolis is cutting ties with the company behind its largest contract, IT provider Unisys, ending a relationship ultimately worth about $147 million to the Pennsylvania-based firm.
The city has outsourced much of its IT services to Unisys since 2003, at an annual cost of about $13 million in recent years. Officials sought a new company for the work last year, however, amid concerns that the Unisys agreement was out of date and too rigid. The current contract expires in December.
At a City Council meeting next week, technology officials will recommend switching to Arizona-based OneNeck IT Solutions and bringing some of the technology jobs back to the city. Eighteen companies, including Unisys and two local firms, bid for the work.
If approved, the change would result in annual taxpayer savings of about $3 million, or 25 percent, according to a staff report. But the transition will also carry a one-time cost of $10 million, about $7.3 million more than outlined in November budget presentations.
"If you want to stop the bleeding, you've got to buy a Band-Aid," said Council Member Andrew Johnson, a former systems engineer who has helped steer the effort. He expects the final transition cost to be lower.
City spokesman Matt Lindstrom said the original transition cost estimate of $2.7 million did not account for the expense of paying two vendors simultaneously and insourcing some services. The city's IT department will cover the difference using money from past billing of other departments, according to city finance staff.
Johnson emphasized the annual savings from the change, as well as improved security and tech support. "It's the city's largest contract, and by making this switch, we are going to be saving taxpayers more than $3 million a year," Johnson said. "And the city's going to have better support as a result of it."
While Unisys represents the largest cumulative spending on one contract, Lindstrom said the city spends more annually on its medical insurance contract.
