The City of Los Angeles was supposed to be up and running on Google Apps June 30, but security concerns from the LAPD put a snag in the road.

Nine months ago, Google edged out Microsoft to switch the city’s e-mail and collaboration systems to cloud computing. But Google was unable to develop a system for the police department that met the security requirements of the California Department of Justice.

Google did develop “Gov Cloud,” which would provide enhanced security for the LAPD’s use of Google — but the department still had concerns.

From MarketWatch: “In particular, the L.A.P.D., which must meet California Department of Justice security requirements, said in the report that it had concerns about Google Apps’ data encryption, ‘segregation of city data from other data maintained by Google,’ and background checks for Google employees with access to police department information.”

Cloud computing can reduce costs for hardware purchases and maintenance and software administration. But due to the delay, the city, which is already strapped for money, would lose an estimated $415,000 over the fiscal year due to the delay. But the city’s chief technology officer, Randi Levin, said that Google and its partner, Computer Sciences Corp., would reimburse the costs, which he estimated to reach about $135,000.