State paid disputed $13 million bill to Northrop Grumman

Even though agency rules say he shouldn't have, the state's acting computer czar paid a roughly $13 million bill that his ousted predecessor disputed.

That improperly processed payment came days before the state accused the contractor of failing to fulfill its contractual obligations and being in breach of contract. The payment was not authorized by any member of the Virginia Information Technologies Agency contract management or financial staff.

The disclosures came today in a series of reports to a Senate Finance subcommittee investigating the state's IT services under a $2.3 billion, 10-year deal between the Virginia Information Technologies Agency and defense giant Northrop Grumman.

Shortly before the Senate panel convened today, members of the Freedom of Information Advisory Council said VITA may have violated the state's government-in-the-sunshine law when it went into closed session last April 16 to discuss the contract with Northrop Grumman.

In response to the state's accusation of breach of contract, Northrop Grumman wrote that it was surprised by the state's tone. It said "the parties have been aware for some time" that Northrop Grumman would miss the widely publicized deadline for transforming the state's IT services.

"We look at Northrop Grumman as a partner to VITA because Northrop Grumman is someone we hired to assist VITA," James F. McGuirk II, chairman of the state Information Technology Investment Board, told the Senate panel today.

VITA has granted deadline extensions to Northrop Grumman routinely -- allowing them on more than 40 percent of key milestones the contractor was supposed to hit, the watchdog Joint Legislative Audit and Review Commission reported to the committee.

Even so, Northrop Grumman was late on 63 percent of the milestones -- 44 in all. Of that total, it missed 14 deadlines even after an extension.

And while it was early on 18 deadlines, 11 of them were extensions.

Hitting deadlines early, included extended ones, allowed Northrop Grumman to gain $1.8 million in credits. That more than offset $1.4 million in penalties VITA levied because the contractor missed deadlines.

"We've had several discussions with the head of Northrop Grumman about the ineptness of their inventory," McGuirk said. "If I walk into a room and I see 10 [personal computers], I should be able to count to 10 and two weeks later when you ask how many PCs were in the room, I should be able to tell you 10."

Jorman Granger, a Northrop Grumman vice president, said that process involves more than counting the physical assets.

"If you can find them, it involves understanding how those assets were paid for, the invoicing associated with those assets," and he said that they are close to completing inventory for the remaining two state agencies.

Maria Everett, executive director of the Freedom of Information Advisory Council, said the motion to go into closed session April 16 appeared to be too vaguely worded.

McGuirk said he made the motion because the five members present wanted to discuss negotiating strategies with Northrop Grumman. He said he had let VITA members know in advance that he planned to make the motion.

"We didn't want to tip our hand," he said.

The council has advisory authority only and cannot impose sanctions.

In light of concerns surrounding the quality of the state's IT services, among other issues, the chairmen of both legislative money committees and of JLARC wrote to Gov. Timothy M. Kaine today.

They said they cannot support any changes to the existing contract terms or conditions until reports from JLARC and the Auditor of Public Accounts are completed, expected in October.

"At that time, it may be appropriate for the commonwealth to modify the terms of the contract to reflect the recommendations . . . " it states.

Staff writer Tyler Whitley contributed to this report.