Unfortunately for Old Dominion taxpayers, Virginia’s 10-year, $2.3 billion IT outsourcing contract has become a political football being tossed among increasingly adversarial Democrats and Republicans, and exacerbated by the state’s upcoming gubernatorial election. The problems with the IT project, which, when one takes a step back, look to be eminently solvable, threaten to upend what is, at heart, sound thinking about private-public partnerships and their role in providing government services.
Controversy about the Virginia IT outsourcing program, the largest such state program so far, has been simmering since June, when Virginia Information Technology Authority (VITA), the agency overseeing the project, fired the state’s chief information officer, Lemuel Stewart Jr., for withholding a $14.3 million payment to the state’s prime IT contractor, Northrop Grumman, because certain goals had not been met on time.
In August, VITA named George Coulter to the post. Coulter’s term got off to a rocky start when, three weeks into his position, he fired three subordinates who had been most critical of Northrop Grumman's work. The action drew criticism from the Virginia House of Delegates, the Republican-controlled lower house of the state legislature, as well as concern from some VITA directors. One VITA trustee, Mary Guy Miller, said in an e-mail to fellow board members, "I am very disturbed by actions taken [Tuesday] by George Coulter. . . . I believe that the [oversight] board has significant responsibility, and either we are not being allowed to exercise our responsibility, or we have had it taken away."
Now, with closely-contested election weeks away, candidates Bob McDonnell and R. Craig Deeds, Republican and Democrat, respectively, have begun to use VITA as a proxy for the state’s entire long-term privatization strategy – which extends beyond IT to roads and ports. McDonnell favors staying the privatization course. Deeds does not. The basis for their positions, sadly, seems to be more about one candidate being against what the other candidate is for. What’s been forgotten is that the original outsourcing plan, a bi-partisan agreement approved by former Gov. Mark Warner, a Democrat, and the state assembly.
Funny thing is, in all the reporting about the IT project, no one has truly reported what the scope of the problems are. We know that Northrop Grumman missed deadlines and there were some issue with implementation and transition. As the private sector learned years ago, one way to get your contractor back on track is to withhold payment, especially if deliverables specified in writing were not met. We don’t know if Northrop Grumman used its leverage as a major Virginia employer to go over Stewart’s head, or what, if anything, may have happened behind the scenes, but had the state of Virginia acted like a peeved customer and pressed its supplier for adequate resolution, a lot of woe could have been avoided.
Virginia’s government had it right back in 2002, when Democrats and Republicans together agreed that public-private partnerships, outsourcing and privatization was the best way to make government operations more efficient and reduce costs. If, as some legislators are proposing, the privatization program be junked, at least consider first what has been accomplished as spelled out by William H. Leighty, former chief of staff to Warner and current Gov. Tim Kaine, in a guest column in the Richmond Times-Dispatch:
Here's the bottom line: The common sense business arguments for IT consolidation and modernization initially articulated by Mark Warner, validated by legislative auditors, and then overwhelmingly endorsed by the General Assembly still make sense today.
Contract proposals were evaluated and awarded by an independent board composed of equal numbers of appointees from both the executive and legislative branches, and the board acted to make its bid review more transparent at the public urging of then-Gov. Warner.
Implementation of the contract has been managed by an independent CIO, reporting directly to members of the oversight board, which precluded Gov. Kaine from exercising executive authority to address VITA's challenges or to hold individuals accountable for their job performance.
In the nearly five years since this contract was awarded, VITA has replaced 27,300 outdated PCs at 68 agencies, shifted more than 1,000 state Web sites onto a statewide network, standardized e-mail services, upgraded security measures, vastly improved data backup and storage, and implemented statewide support and help desk functions.
More than 630 state IT workers have transitioned to the VITA payroll and now work out of a single $35 million, state-of-the-art IT facility in Chesterfield County. Another 430 mid-level tech jobs have been created at a $33 million VITA backup facility built in Southwest Virginia's Russell County.
The next governor would be wise to consider the progress that’s been made and, rather than scrub the program or place it under direct control of the state government, signal VITA that he will stand behind any decision to keep Northrop Grumman’s feet to the fire. Virginia taxpayers deserve no less.