Northrop Grumman running late on Va. computer work

Not a single state agency's computer system was transformed by the deadline Virginia and its politically connected contractor have worked toward for the past three years, under a $2.3 billion contract.

And key audits of the contractor, Northrop Grumman Inc., have been months late -- in one case, 2½ months after the Virginia Information Technologies Agency, which manages the contract, gave Northrop a deadline extension.

The audits, once delivered, showed patterns of overbilling, delays in paying subcontractors, and a lack of security at a warehouse that was holding state computers waiting to have memories erased -- in some cases of sensitive information.

Meanwhile, less than one-third of state e-mail addresses were switched to a new statewide system. The contractor missed its March deadline that 90 percent of state sites be converted to a new secure state network, but it since has hit that goal after a last-minute push.

The information comes from VITA files and answers to follow-up questions from the Richmond Times-Dispatch.

Northrop Grumman, which has given more than $1 million to candidates for state offices in the past decade and employs about 19,000 people in Newport News, won the contract in 2005.

Last week, James F. McGuirk II, chairman of the independent board that oversees VITA, said Northrop Grumman had been inept in doing an inventory stipulated by the contract.

"Transformation takes longer than you think," Secretary of Technology Leonard M. "Len" Pomata said in an e-mail response to a series of questions.

The transformation work -- replacing old equipment and improving support systems -- is running six to 12 months behind schedule but should be finished by the end of the year, Pomata said.

He said 11 of the 90 state agencies in the transformation effort now are 90 percent complete. He did not name them, and VITA has not provided the names despite repeated requests during the past six days.

The transformation of the state government's computer system involves more than 50 projects to replace old equipment; improve security and e-mail systems; and build data centers, one of which would generate 400 jobs in Southwest Virginia. So far, 80 people have been hired for the Southwest Virginia data center.

The state and Northrop Grumman realized from the beginning of the contract in 2007 that the original plan was aggressive, Pomata said. He is acting as interim head of VITA after Chief Information Officer Lemuel C. Stewart Jr. was sacked last month when he suggested Northrop Grumman's latest $13 million bill not be paid. Stewart remains on the state payroll as a consultant.

Pomata paid the bill without following internal guidelines about approvals and review, state Senate Finance Committee staff reported last week.

"I followed the same procedures that former CIO Lem Stewart followed precisely. If there was any deviation from policy, I will look into the matter," Pomata said.

So far, the state has penalized Northrop Grumman by withholding a net $8.8 million of payments. The last payment brings the total paid by the state to more than $545 million, VITA financial records show.

The state also docked Northrop Grumman $237,500 for delaying audits it was supposed to submit.

Those audits, when received, showed:

• Northrop Grumman was late paying subcontractors for work for which the state had paid Northrop Grumman, in 40 percent of cases from last year checked by the auditor.

• Northrop Grumman charged the state more for salaried employees' services than its internal personnel records showed it should. The overbilling occurred in one-third of 27 cases from last year reviewed by the auditors. The previous year the auditor found similar errors, which the company promised to address.

• Northrop Grumman billed the state for sales tax on one-quarter of invoices for items it purchased, when invoices from the original vendors did not include sales tax.

• Northrop Grumman charged the wrong accounts for subcontractors' work in more than 80 percent of subcontracts from 2007.

• The warehouse where old state computers were stored before being erased of, at times, sensitive data didn't have the fencing, security guards or backup generator Northrop Grumman promised.

• Northrop Grumman hadn't installed a system to track old state computers slated for destruction and had not tested a disaster-recovery plan by the 2007 deadlines set in the contract.

Pomata has canceled plans to speak to a Richmond technology business group today, saying he "had to cancel mostly due to time constraints. I am spending a great amount of time in [Freedom of Information Act] responses."

Contact David Ress at (804) 649-6051 or dress@timesdispatch.com.

Staff writer Olympia Meola contributed to this report.