tary of technology, determined that state agencies were spending $800 million to $1.3 billion a year on software, comput- ers and other technology, according to a Virginia Business interview in June 2002. The fragmented process led to wasteful spending. In 2002, the commonwealth consoli-
dated its technology agencies into VITA and began looking for a contractor to overhaul and modernize IT services. “If we go back in time … the state,
I think, was in the place many organi- zations found themselves,” says Fred Norman, head of Commonwealth of Virginia Consulting in Richmond, which helps clients navigate the state’s procure- ment system. “They had investments in assets that were aging, and to maintain or improve those assets, they were going to spend a great deal of money. They wished to explore the opportunity to spend it in a different way that would get them modernized capabilities and assets. That process resulted in the award to Northrop Grumman after a lengthy competition with the industry’s finest.” Since the contract was implemented,
the relationship between the state and Northrop Grumman at times has been rocky. In 2009, disputes erupted over deadlines, payments and the level of service being provided. In 2010, Gov. Bob McDonnell’s
administration signed contract modi- fications designed to improve service and resolve conflicts. The length of the contract was extended three years and kept the annual cap of $236 million paid to Northrop Grumman. Then, earlier this year, headlines
documented new disagreements between VITA and the company. Letters revealed VITA’s disappointment with the perfor- mance of some IT services and the com- pany’s failure to save emails related to a court case. Then, after VITA informed Northrop Grumman of its decision to move to a multi-vendor model, the company warned of problems inherent in such a system. Despite the disputes, Moe argues
that the Northrop Grumman contract accomplished what it was meant to do. “The goal was a consolidation of the commonwealth’s assets and the creation of centralized governance,” says Moe. “It
Photo by Rick DeBerry
did that. It did that very well. Northrop Grumman upfront provided an invest- ment of almost $300 million to accom- plish this and build us two data centers [one in Chesterfield County] and one in Southwest Virginia.” With two high-tech data centers and
a centralized IT system, Moe, who was previously chief information officer for the U.S. House of Representatives, says Virginia is in a much better position than it was in 2005. “IT systems we use daily now are
standardized,” says Moe. “The data trusted to the commonwealth is more secure than when the contract was put into place. We are in a much more advantaged position now than we were in 2005.”
Moving to multiple vendors Using a multi-vendor model will
allow Virginia to get lower prices, better meet state agencies’ needs and respond more quickly to the rapidly changing IT industry, according to an analysis by Inte- gris Applied. It’s the consultant VITA hired in 2015 to determine the best way for Virginia to supply IT services to state
www.VirginiaBusiness.com
“It’s obviously in the commonwealth’s best interest and Northrop Grumman’s best interest to resolve these disputes, and there are ongoing discussions with us and VITA and the Offi ce of the Attorney General.”
— Nelson Moe
agencies. “Shorter contracts going forward are
going to provide the contract framework and the services framework to adapt more often,” says Moe. “Look how fast phones change. Technology changes in six months, and the contract we have now can’t keep up with that.” Integris Applied concluded that the
current contract could not keep pace with the IT marketplace, resulting in higher prices and fees than the state could obtain under present market conditions. The current structure also prevents state agencies from getting the flexibility and service changes they need. The consultant’s findings, detailed
in a December 2015 memorandum, said that the current contract was not in line with current market conditions in part because it was designed to allow Northrop Grumman to recoup its upfront investment in Virginia’s IT infrastructure. “We’ll be able to go out more
frequently, obtain the latest IT services at market competitive prices,” says Moe. “That’s the goal of the multi-service provider.”
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