Virginia taxpayers may have to wait a decade or more to see if the state's $2 billion switch to privately run information technology services saves money.
A report yesterday by the General Assembly's investigative arm said the transition -- started in 2005 -- has been slow and difficult.
Under a legacy initiative of Gov. Mark R. Warner, an umbrella department was formed -- the Virginia Information Technologies Agency. In turn, it hired Northrop Grumman to oversee the purchase and upkeep of computers, software, Internet access and other needs.
Virginia agreed to a 10-year deal with the defense and information-systems giant, paying it $2 billion in the state's biggest contract ever.
The Joint Legislative Audit and Review Commission said that, among other things, computer equipment across the bureaucracy is not being replaced as quickly as promised.
By next March, 90 percent of all personal computers are supposed to be traded for new ones. Northrop Grumman says it has replaced more than 80 percent, but JLARC reports less than half have been swapped.
Another concern: That VITA, contrary to a 2007 directive by the legislature's watchdog panel, has yet to lower the rates that state agencies pay for computers and other gear.
Some agencies have complained that the rates are excessive; that they would pay less if they still were free to go into the marketplace rather than forced to operate through VITA.
This, JLARC said, contributes to tension between "centralization and agency autonomy." The commission report also said that agencies have raised concerns about the adequacy of Northrop Grumman services, despite a $270 million investment by the firm.
Privatization of Virginia government's information-technology structure was envisioned by Warner, who made his fortune in high technology, as a showcase of collaboration between the public and private sectors.
Instead, the program has been beset by delays and quarrels between agencies accustomed to independence and a new department with sweeping powers.
JLARC said savings for the public may be evident if the contract is extended beyond a decade and perhaps if Northrop Grumman absorbs information technology work for local government as well as public colleges and universities.
Lemuel C. Stewart Jr., VITA chief, acknowledged difficulties in consolidating under a single agency but said the initiative nonetheless is on track.
In a letter to JLARC, he said "merging such varied environments has been, and continues to be, a very significant challenge." As for disputed fees, Stewart said that "has, indeed, been a challenge," but it "is a work in progress, and frankly, we have had to learn on the job."
Judi Ballesteros, a spokeswoman for Northrop Grumman, said in a written statement that the company -- its information-technology wing is based in McLean -- will work with the state to "address any issues."
"To complete this transformation to a centralized, enterprise-wide system, there can be unforeseen issues that need to be worked out for a project of this magnitude," Ballesteros said.
Contact Jeff E. Schapiro at (804) 649-6814 or jschapiro@timesdispatch.com.
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