Bruce Neumann, James Gerlach, Hyo-Jeong Kim
International Journal of Public Information Systems, vol 2010 Issue 1, Pages: 83-109

When a government entity outsources IT projects, consideration must be given early in the project to potential disputes and/or litigation with other parties, particularly thirdparty
vendors, the public-at-large, and other parts of the supply chain. In this case, the State contracted for the Colorado Benefits Management System (CBMS) and the counties throughout the state were expected to deliver client services using the new system. The public expected transparency of government reporting while the State focused on accountability measures of the CBMS project. We use Agency Theory to help explain why certain public expectations were not initially met by CBMS and how some of these “disconnects” could have been avoided. Since the State, IT vendors, the public, and counties have different goals, risk preferences, and information needs, they used different measures to evaluate any government IT project. These mismatched measurements help explain the cause of any unmet expectations that can lead to disputes and/or litigation. We found that the State and IT vendors evaluated this IT project using more process-based accountability measures while the public and counties evaluated the project more with outcome-based measures. Therefore, we recommend that the State and IT vendors should emphasize both outcome-based and process-based measures in order
to be more transparent when designing and implementing IT projects. The Colorado Benefits Management System (CBMS) provides an interesting case study showing how Agency Theory can be applied to a governmental IT project and how different measurements used by the State, IT vendors, the public, and counties contributed to the
tension and turmoil experienced while implementing CBMS.