Report: Computer contractor may miss 2010 deadline

AP News
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Posted: Dec 14, 2009 8:25 PM

Northrop Grumman Corp. is likely to miss next summer's deadline _ already extended once _ for replacing and consolidating Virginia's far-flung computer systems, the General Assembly's watchdog agency reported Monday.

Northrop Grumman's deadline for transforming the infrastructure of the state's system of computer networks was July of this year, but it was extended for a year under its partnership with the state's computer superagency, the Virginia Information Technologies Agency.

A briefing Monday by the Joint Legislative Audit and Review Commission said the company can't complete work for at least four state agencies and eight more are unlikely by the new deadline.

The final full report won't be available until early next year. But a JLARC staff briefing prepared for legislators who serve on the commission contained more troubling stories of service disruptions, delays and disagreements between Northrop Grumman and VITA.

For example, an outage on Oct. 21 forced the Department of Taxation to send 100 wage employees home for the day, and a Nov. 16 Department of Corrections outage left up to 1,300 agency employees unable to do their work.

The briefing also says that rather than saving the state money through centralized procurement, the VITA-Northrop Grumman partnership has increased costs and lengthened the time required to complete an order.

Northrop Grumman holds a 10-year contract worth nearly $2.4 billion. It's the largest single-vendor contract Virginia state government has ever entered.

Monday's briefing updated and expanded on a scathing preliminary report the agency issued in October. The earlier report blamed flawed and neglected oversight of the contract by VITA, despite Northrop Grumman's repeated missed deadlines and computer service failures so severe that it shut down core functions in some state agency offices.

It concluded that the partnership may end up in lawsuits between the state and the major defense and government contracting corporation _ a breakup officials liken to a divorce.

The Richmond Times-Dispatch on Monday quoted Northrop Grumman's lobbyist, Jorman Granger, and the state's chief information officer, George Coulter, as saying mediated talks could avert litigation.

In ongoing talks between Northrop Grumman and the state, the company has proposed collecting an additional $32 million to $42 million annually from Virginia on top of up to $236 million a year the state now pays as part of negotiations over the contract. But Northrop Grumman has also offered to reduce some of its charges to the state.

Northrop Grumman contends that the state expects additional services not covered under the contract six years ago.

A divorce between VITA and Northrop Grumman would be lengthy, litigious, and so costly it could impair the state's bond rating, affecting its ability to borrow money. It could also could cripple operations ranging from vital databases to access to phones.

Should Virginia end the partnership and Northrop Grumman challenge it in court, the state could face fees of about $400 million if a judge finds that the company did not violate terms of the contract. That doesn't count legal bills.

VITA was formed under a 2003 after studies showed the state could save money with a centralized information technology system that allowed the systems of different agencies to interact with one another. The partnership has yielded benefits despite the failures, including replacement of outmoded information technology systems, enhanced online security and hundreds of new jobs at Northrop Grumman data centers in the state.

But the agency has been in turmoil since June, when the board abruptly fired former state CIO Lemuel Stewart and replaced him briefly with a member of Gov. Timothy M. Kaine's cabinet, Technology Secretary Leonard Pomata. Stewart was dismissed after he refused to sign off on monthly payments to Northrop Grumman because of the missed deadlines.

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On the Web:

Monday's JLARC briefing: http://jlarc.virginia.gov/meetings/December09/vitabrf.pdf