San Diego County, which had refused to make a $44 million payment owed to the company hired to upgrade and operate its telephones and computers, has reached a settlement with the firm.

The deal resolves a dispute that arose when county government officials complained in April of persistent problems with the company's work, including sporadic computer outages.

The company, Computer Sciences Corp., is based in El Segundo. It is the lead contractor in a consortium of firms that in 1999 won a seven-year, $644 million contract to take over operation of the county's telephone and computer systems. County labor unions criticized the contract, which received national attention in technology and government sectors as one of the largest privatizations of government to have occurred up to that time.

Under the settlement, the county will pay the firm $34 million immediately, withholding $10 million until it finishes installing up to 3,000 computers and other equipment. That could occur by December.

County officials had earlier warned that a lawsuit over their refusal to pay was likely. Yesterday, they said the new agreement improves the contract and clears the way for the county to continue upgrading its technology and putting more public services online.

"We're poised to turn the corner and take off," said Gary Clarke, executive director of the county's technology office.

After the county's announcement in April, more than a dozen negotiating sessions were held between county government officials and company representatives, Clarke said, resulting in the signing of the settlement Tuesday.

Officials said the agreement includes new provisions to improve accountability, including allowing the county to hold back payments until specific projects are done.

For example, it will not make an $18 million payment on a new payroll and financial software system until that project is completed.

Computer Sciences spokesman Frank Pollare issued the following prepared statement: "We are pleased to have reached a mutually acceptable understanding with the county. Under the amended agreement, we look forward to continuing to provide value to the county and helping provide improved services to the citizens of San Diego."

Sign on San Diego

-- Anonymous, July 13, 2002