Google was handed a $7.2 million deal in 2009 by Los Angeles in which the city, including the Los Angeles Police Department, would shift its email and office applications to Google’s hosting service. Now that deal is falling apart.

It was made public that Randi Levin, general manager of LA’s Information Technology Agency, sent a letter to one of Google’s main contractors in August alleging that the company is unable to ensure the system’s security. The city will neither require nor pay for the planned implementation at the police department. LA’s finest will remain on Novell GroupWise, its current email and office system, through November of next year.

Advocacy group Consumerwatchdog.org has been skeptical of the deal since its inception. “It’s been two years and Google has still not met the security requirements, and the city knows this. And yet Google goes around the country and the world suggesting that its experience is one of its greatest success stories,” John Simpson, director of Consumerwatchdog.org’s privacy project, told reporters.

Read more at GigaOM ^[1].