Bernie Niemeier
bniemeier@va-business.com
OurView from the Publisher
One-term governors and the coming IT meltdown by Bernie Niemeier
T
he headcount of the political class in Virginia is fairly small. Start with 100 delegates and 40 senators, add one gover- nor, a lieutenant governor and an at- torney general, sprinkle in the leaders of a few dozen large corporations, a handful of powerful law firms, a few dozen more political lobbyists and career bureaucrats, and that’s basically it — maybe a couple hundred folks basically calling all the shots. Of course, there also are voters, but many in this genteel class don’t run for office and those that do face little opposition.
Among the elected officials, only the governor is constitutionally pro- hibited from a second successive term in office. Virginia is the last of the 50 states to deny gubernatorial succession. A strange storm has been brewing, one that spans at least four governor- ships. It has to do with the outsourc- ing of the commonwealth’s apparatus for information technology. Left unchecked, this storm will be a major headache for Virginia’s next governor. Elected in 2001, then-Gov. Mark Warner was faced with an aging and decentralized state technology in- frastructure that was badly in need of replacement and modernization. Because of his experience in business as a Northern Virginia technocrat, this project was well within Warner’s wheel- house to understand and accomplish change.
During Warner’s last year as governor, the commonwealth selected Northrop Grumman Corp. for a 10-year contract valued at approximately $2 bil- lion to transform, update and consoli- date the state’s information technology infrastructure across 91 state agencies. Hailed at the time as an innova- tive and groundbreaking model for other states to follow, this agreement outsourced nearly all of Virginia’s IT functions to a private contractor. From a political standpoint, the deal came with big plusses — two new data centers, one near Richmond
Photo by Adrienne R. Watson
McDonnell’s administration signed contract modifications designed to improve service while extending the Northrop Grumman contract for three additional years, keeping an annual payment cap of $236 million.
Fast forward to the current admin-
istration. The Northrop Grumman con- tract, now swollen to almost $3 billion, is set to expire in mid-2019, 18 months after Gov. Terry McAuliffe leaves office. After years of difficulty, Virginia now plans to move from a single-source to a multivendor solution with shorter con- tracts involving several companies. Citing increased cyber security risks to the state and higher costs, Northrop Grumman has declined to participate in the new approach. Wind- ing down the agreement has led to dis- putes on a number of transition issues, such as unexpected increases in billing and the amount of information required to be shared during the new procure- ment process.
in conservative-leaning Chesterfield County and one in Southwest Virginia. Around the same time, CGI, a Canada- based technology company, decided to open another data center in Russell County. Together, the centers supplied hundreds of new jobs, while helping both regions establish themselves as technology hubs.
With Warner’s four years as gover- nor at its end, most of the implementa- tion of the project took place under the administration of Gov. Tim Kaine. State IT workers were offered the option of staying employed by the common- wealth or signing on with Northrop Grumman. That is not exactly the way that the private sector would carry out a re-engineering project, but along with new jobs in Southwest Virginia, it certainly was a politically popular ap- proach.
By 2009, toward the end of
Kaine’s four-year term, problems began to surface. Disputes occurred over deadlines, payments, cost overruns and service levels.
Up next, in 2010, Gov. Bob
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A mediated settlement between Northrop Grumman and the state failed to gain McAuliffe’s approval. Now both parties are lawyered-up, with each ac- cusing the other of breach of contract. Northrop Grumman filed suit against the state in late May, seeking damages of more than $10.2 million. By all ac- counts this is headed to an ugly end. Next November, the common- wealth will elect another governor, bringing to five the number of admin- istrations seeking solutions to Virginia’s IT mess.
Information systems are mission critical to every business; they are also critical to the efficient functioning of state government. Business leaders know that progress takes time and that big changes are inevitably accom- panied by decisions that will be un- popular. Political solutions to business problems are rarely successful. Virginia’s one-term governors don’t have enough time to get much done. Instead of passing the buck, it’s time to give them a chance at a second term and the time required to succeed.
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