The Virginian-Pilot
©
RICHMOND
The private company tasked with upgrading the state's computer network recently told officials that, if costs aren't contained, the state could face $26 million more in annual payments, according to newly released documents.
Paperwork detailing that concept was released late Thursday in response to a Freedom of Information Act request. It came hours before a Northrop Grumman Corp. executive testified in front of a state technology panel about the tardy technology transformation process.
In 2005, Northrop Grumman Corp. entered into a 10-year,
$2 billion contract to overhaul and maintain Virginia's technology. It was supposed to modernize the state's computer network and save money. But if costs increase, those savings could evaporate.
The contractor, which also owns the Newport News shipyard, has been late on several deadlines and become mired in billing disputes with Virginia's technology agency.
On Friday, Cheryl L. Janey, a Northrop Grumman vice president, offered assurances that the technology upgrades would be finished soon but acknowledged that the process has taken "longer than we wanted... longer than we planned."
Northrop Grumman has until Aug. 30 to give the state a revised schedule for technology transformation.
The projections about future costs were presented to the state during a closed-door portion of an April meeting.
In addition to more money, the document mentions cutting staff at the Virginia Information Technologies Agency. That agency functions as a middle man between Northrop Grumman and the state government divisions the company serves.
Janey characterized the recommendations as a "discussion document" that highlights one potential outcome if costs aren't controlled.
"Technology, as you know, is not static. It's dynamic," Janey told members of the state Information Technology Investment Board on Friday morning. "And so, too, must our contract be so that we can adjust as a team to the complexities of technology."
John McDonald, Virginia's deputy technology secretary, said officials disagree with some of the recommendations in the report. The contract has not been changed, he added.
Terms of that deal capped state technology spending at $236 million annually. But the uncovered documents show Northrop Grumman discussing a possible fee closer to $262 million each year. In return, the company offered to make a one-time $40 million investment to complete the technology overhaul.
Technology board chairman James F. McGuirk II said the company believes it is spending more money on the technology overhaul than it is receiving in payments from the state. But the state isn't convinced that is true, he added.
Lawmakers have held several hearings of late to probe the technology pact.
One legislative panel that deals with open government issues raised concerns about the propriety of going into a closed session to discuss financial strategies.
Two events this year helped train a spotlight on the contract. One was a security breach of a state prescription drug Web site in late April. The other was the removal of Lemuel Stewart Jr. from his job as Virginia's chief information officer in June after he suggested withholding a $14 million payment to Northrop Grumman.
Already under the microscope, the appointment of Virginia technology secretary Len Pomata to Stewart's old job on an interim basis served to further rankle critics.
Del. Sam Nixon, R-Chesterfield, has raised concerns about Pomata serving in both roles while also holding a seat on the technology board.
Nixon sponsored 2003 legislation that established the technology board and specified the role of the chief information officer. Its intent, he said, was for the chief information office to operate "at arm's length from the administration."
As technology secretary,
Pomata is a member of Gov. Timothy M. Kaine's cabinet.
Nixon this week asked the Attorney General's Office to issue a legal opinion about whether Pomata should serve in both roles.
During Friday's meeting, McGuirk said criticisms of Pomata bother him.
"We're doing everything possible during the interim situation to make sure there is no conflict of interest," he said.
A search for permanent information officer is under way. Officials have said they hope to make a hire shortly.
Julian Walker, (804) 697-1564, julian.walker@pilotonline.com
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VITA and Northrop
I have experience working a large contract like this one. It was with AT&T on replacing/upgrading the Federal Phone system in Hawaii in 1997.
AT&T worked with the Federal contract manager to coordinate surveys/inventories of the old system at all military bases and Federal buildings in the state. Everyone agreed to the schedule but once the process started, it went south very quickly. The customers/users delayed the surveys/inventories not by hours or days, but by weeks. This caused AT&T to overrun their proposal bid. Sounds like the same situation here but multiple ISs are much more complicated than telephone systems. Maybe VITA needs to ask for lessons learned by the Navy on the NMCI contract.
Why can't they stay within budget?
I really am bewildered as to why the state should pay one penny more than what was agreed to in the contract. If Northrup Grumman underbid and is going to lose money on it, that is their problem, not the commonwealth's. It just goes to show the willy-nilly world that most defense contractors live in. If they don't accurately forcast certain costs they find a way to bill the Government for the difference. How about if they give up an executive bonus or two instead!
Some skills don't transfer
Sticking it to the Commonwealth must be different from sticking it to the military....?
Private industry verses government
And some would say that private industry is more efficient that the government? Northrup Grumman sounds just as screwed up as the government and just as bad. It's time for the state to find another company to do the computer upgrades and for the government to check ALL of N.G.'s work on all ships they've built or refitted. Who knows what sort of ticking time bombs in the way of equipment or structural failures are in them?
I wouldn't hold..
any Defense contractor up as an example of what the private sector is or can do vice govt. Govt is their main customer, and that customer comes with more strings attached than any other! These companies often mirror the govt in how they are set up, how they go about conducting operations, etc.
Cheap Shot
The comment about the new crack in the Toledo is a cheap shot. The sub was inspected and tested intensely before it left the shipyard, has been on several dives since, and the new crack is apparently not even at a weld. If the yard is responsible it will fix it. But that is not a brand new ship and it may be unrelated to the recent repairs. Do you really think a shipyard run by a former submarine officer would ignore the safety of those ships? Or the Navy overseers at the shipyard?
I don't understand the comments about clearances. The state IT operation is largely staffed by former state employees hired by Northrop Grumman at the beginning of the contract. They hired something like 600 right out of the box, and hiring the existing staff was one of the things the state wanted. Clearances was not a consideration.
I.T.
Hey I've got an I.T. degree with no real world experience, do you think they would hire me????? I'd get out of the Air Force for 50K a year.
How big of a project is
How big of a project is this? Those numbers are so big. I've seen other gov't contracts where $10+ million was spent and I could immediately think of a solution that would have cost a fraction if not none of that and fit the requirements.
Stuff is just nuts. I know when I deal with the DMV and Norfolk city stuff I can see places all over where a little big of technology tweaks would have saved me the time of interfacing with the humans at all.
Hmmm .Net? I'm all for the best solution to fit the job but why not go open standards? Also, new is not always better. I use an email client from 1980's. I can clear out my inbox faster than modern clients, no virus/spam/malware threats, and I can access it from anywhere. So much faster than web or thick clients. But it's from the 80s, just way more efficient.
First the sub Toledo comes
First the sub Toledo comes out after a prolonged overhaul with hull cracks and now this.
Looks like Northrop Grumman needs an overhaul.
I'm lost
Does this mean that they get more money and more money and not have to provide anything after 10 years. Why is it that shipps do the same thing just built and then 60 million upgrade. The states system will be out of date before its done.