County Data Processing Changes Studied : Privatization: Money could be saved if private vendors took over record-keeping, but concerns about reliability and the security of information must be met.

SANTA ANA —  At first glance, it looks like a windfall for bankrupt Orange County: Fully privatizing its massive data processing services could save as much as $3.5 million a year.

But that doesn’t take into consideration the potential pitfalls. Such as whether the county can find a firm or collection of vendors reliable enough to take on the job, or whether agencies are willing to turn over sensitive documents--court, jail and welfare records, for example--to outsiders.

“It comes down to what amount of risk and lack of control we are willing to accept,” said Robert Griffith, director of the General Services Agency, which is currently surveying county agencies for their views on the subject of privatizing.

The data includes everything from payroll and accounting to tax records, superior and municipal court records, local arrest warrants and state Department of Motor Vehicles information. The county has an extensive security system to prevent breaches of confidentiality, Griffith said Thursday.

“Almost every significant county operation is a major user” of this system, Griffith said. “Because of that we have to be cautious about what changes we implement.”

The county ordered an outside audit earlier this year following concerns about whether Martin Marietta--now Lockheed Martin--is giving the county its money’s worth in handling most of the county’s data processing services. The firm is paid $12 million annually for that work.

While Lockheed Martin’s performance has improved dramatically in recent months, Griffith said, GSA hopes to present the Board of Supervisors a recommendation in late September on how the county’s data processing should best be handled.

Critics who complain that the bankrupt county has not done all it can to save money are pleased that the county is scrutinizing its costs. But they say the county’s fears about security leaks are largely unfounded.

“Concerns about security and integrity of information are a bit overblown at times,” said Bruce Whitaker, spokesman for the Committees of Correspondence, a vocal anti-tax group. “Often it becomes a straw dog. The county can reach non-disclosure agreements with companies.”

Griffith and others said the dilemma facing his agency is being played out across the bankrupt county as financially strapped agencies look for ways to scrimp and save.

“Privatization looks good from the outside, in some instances, and then you start to peel back the layers and in some cases you find little or no savings,” Supervisor William G. Steiner said. “But we need to look closely at all the options.”

The data processing audit by Arthur Andersen examined a variety of options, from relying on a single firm to handle the bulk of the county’s record-keeping to handing over the work to a nonprofit organization--something that has rarely been tried.

The potential savings range from $1 million up to $3.5 million, Griffith said.

The county’s contract with Lockheed Marietta can be canceled with 120 days’ notice. A company spokesman did not return phone calls seeking comment Thursday.

Whitaker said he intends to watch the process closely.

“I just hope they will give it a real hard, honest look,” he said.