The Commonwealth of Massachusetts is canceling a $13 million contract with Cognos - which was bought by IBM in January - on the grounds that the contract was part of a back-door deal predicated on friendships in high places.

The Boston Globe reported Monday that Massachusetts House Speaker Salvatore DiMasi played a central role in creating interest around Cognos' Performance Management software, at one point meeting with the state's CIO in person to push Cognos' software.

Here's how Globe reporter Andrea Estes described the situation:

"At almost every turn, DiMasi, his aides or his friends played a role in either creating a demand for Cognos ULC's computer software or in pushing Cognos to the head of the bidding field...A middleman in the deal, Joseph Lally, portrayed himself to key state officials as DiMasi's friend. A longtime DiMasi friend, Richard McDonough, was hired as a lobbyist for Cognos and was paid $100,000 by the company. The result of the process was a contract award that violated basic state bidding rules."

Inspector General Gregory Sullivan recommended to the Administration and Finance Secretary last week that the contract be voided - an action that was taken this week. The state is seeking a refund.

Cognos officials have declined comment on whether they will refund the $13 million to the State of Massachusetts. Cognos spokesperson Steve Milmore said in an e-mail to eWeek that "Cognos fully complied with the process required by the Commonwealth for bidding this transaction." Milmore made two additional points:

· We (IBM-Cognos) have received a letter from the state of Massachusetts and are reviewing it.

· We are not speculating on next steps.

In the meantime, there doesn't appear that there will have to be much back-peddling on Cognos' implementation. Only one instance of the software was actually implemented at the state, at the Administration and Finance agency.

Oracle and SAS apparently bid for the project as well and came in lower than Cognos. But, if the allegations are true, friends in high places won out.