Google and its partner, Computer Science Corp., has struck a major blow to on-premise email software vendors by scoring a major cloud services deal with, according to press reports.

The one catch: CSC will pay stiff penalties to the city of angels if its implementation of Google Apps suffers a security breach.

Los Angeles plans to migrate 30,000 city workers from its current Novell GroupWare to Google Apps in a deal worth $7.2 million. The Google Apps implementation will be among the largest government deployments undertaken by Google, and will be hosted on Google’s still incomplete ‘Government Cloud.’

Google has expressed its intention to seek and earn certification under the governments Federal Information Security Management Act (FISMA), which is a requirement for selling IT goods and services to federal agencies. FISMA certification isn’t applicable to state and local government contracts.

Because Google Government Cloud is incomplete and unproven, the Los Angeles City Council wanted assurances against security breaches. At the urging of consumer privacy advocates, the city wrote a rider on the Google contract that would require “liquidated damages” or financial compensation in the event of a security breach.

According to some reports, liability for security breaches doesn’t fall to Google but rather to CSC, which will implement and manage the Los Angeles contract.

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