by James A. Bacon

The relationship between the Virginia Information Technologies Agency and Northrup Grumman is getting nasty as the two bang heads over the alleged breaches of the $1.3 billion, 13-year contract to provide IT services to Virginia state government.

Del. John O’Bannon III, R-Henrico, called the relationship between the two “a whirlwind courtship, short honeymoon, rocky marriage, and now we’re heading to an ugly divorce,” reports Michael Martz with the Richmond Times-Dispatch.

Martz’s article details disputes regarding Northrup Grumman’s alleged lack of operational support for a messaging services contract assigned to a third party, licensing and maintenance support for the state’s IBM mainframe service, an increase in Microsoft licensing fees, and charges for unneeded capacity on a Unisys mainframe system. Northrup Grumman has its own beefs, claiming the state owes it $10 million. As the contract expires, the contractor has signaled its intention not to participate as prime contractor after the current expires next year.

Some might wonder if privatizing the state’s IT services, one of the major achievements of the Warner administration, was a bad idea. In actuality, the disputes simply show how incredibly complex it is managing a massive government IT operation that cobbles together legacy systems such as IBM and Unisys mainframe computers with state-of-the-art desktops and servers. Enforcing the contract makes visible issues that otherwise would have remained submerged and very possibly might have gone unaddressed.

Indeed, the system is now working as it should. The state is acting as overseer of the contract, holding Northrup Grumman accountable for living up to its terms and conditions. Under the old arrangement, there was no one to hold accountable. State IT operations were dispersed between fragmented IT fiefdoms. Responsibility was diffused; no one had effective charge. The system was antiquated, inefficient, subject to disruption and vulnerable to security breaches. The system operated by Northrup Grumman, while less than perfect, is vastly superior to what it replaced.

The big question now is what comes after the Northrup Grumman contract? Does the state look for a single vendor, or does it seek competitive bids for different chunks of state business? One huge change between 2017 and 2004 is the emergence of the Cloud. Instead of maintaining its own server farms in Chesterfield and Russell counties, the commonwealth could consider contracting out its data storage business to any one of half dozen highly competent providers — all of which have server farms here in the state. A counter-balancing consideration is the need to ensure inter-operability between different providers.

A concern I have is whether the state can afford to pay the salaries it takes to recruit the top talent to effectively manage oversight of the state’s IT architecture. The IT industry pays top salaries for the brightest minds and dangles rewards like bonuses and stock options. Who would want to work for the state, where salaries are uncompetitive and pay raises are contingent upon state budget conditions? When it comes to managing a $135 million-a-year contract (a sum that could jump to $200 million a year), a few hundred thousand dollars a year in senior executive salaries is chump change. But state law makes it impossible to hire the best people we can find.