VITA: Initiative Still Makes Good Sense
Published: September 27, 2009
Virginia's ambitious partnership with Northrop Grumman to modernize, synchronize, and secure the state's information technology network is behind schedule and apparently over budget. On BILL
LEIGHTY
that, everyone can agree.
However, I took exception to several points contained throughout the Sept. 13 front-page story "Unfulfilled Promises Haunt VITA."
The article not only unfairly attacked the integrity of two governors I had the honor and privilege to serve as chief of staff, but also demonstrated a fundamental misunderstanding of Virginia's laws governing public-private partnerships. And it ignored the challenges presented by the governance structure of the agency and the oversight board that is managing this IT contract.
First, some history which is not in dispute:
In 2002, state auditors looked back over time and found that state government utilized an outdated and unsecured computer network that was inefficiently built and overseen by three state IT departments, and which was operated by duplicative IT departments operating independently within almost 90 separate state agencies. Legislative auditors documented more than $100 million wasted on 15 recently failed IT projects.
Obviously, that kind of IT mish-mash was inefficient and wasteful, and it was costing taxpayers a combined half-billion dollars a year through a patchwork of stove-piped IT offices that could not negotiate the best prices for hardware, synchronize operating systems among agencies, or provide training options and career advancement opportunities for employees.
In 2003, as then-Gov. Mark Warner worked to address Virginia's multibillion-dollar budget shortfalls, even as the state's sterling Triple-A credit rating was under review by Wall Street rating agencies, he turned to the private sector to apply common sense and rationality to upgrade Virginia's outdated IT network.
In an overwhelmingly bipartisan vote, members of the General Assembly agreed. And this bipartisan consensus, combined with Virginia's innovative public-private partnership laws, attracted the attention of the nation's leading IT firms, which submitted unsolicited proposals that included significant up-front private investment to allow the state to affordably bring its late 20th-century computer network into the 21st century.
This would ultimately help Virginia to protect its credit rating and bond capacity, and allow the commonwealth to pay off this initial $270 million private investment over several years.
The contract proposals were evaluated by members of the independent Information Technology Investment Board (ITIB), which includes an equal number of appointees from the executive and legislative branches.
In fact, as part of his negotiations with the legislature, Warner had accepted the General Assembly's insistence that VITA's director, the commonwealth's CIO, would report to the independent members of the ITIB instead of reporting directly to the governor.
The ITIB then reviewed two unsolicited bids from potential private partners. The ITIB spent an additional six weeks, as mandated by Virginia law, soliciting competing bids from other potential vendors in a further effort to make sure that the taxpayers would be protected through robust competition.
In the fall of 2004, the ITIB voted to award a 10-year, $1.9 billion contract to Northrop Grumman, a widely respected Virginia-based company that employs close to 30,000 Virginians, and a company with a long history of expertise in government consulting, IT services, and shipbuilding.
Unfortunately, the Sept. 13
Times-Dispatch article unfairly suggested that this process somehow was tainted by corporate campaign contributions, and the story specifically referenced only those contributions made to Mark Warner and Tim Kaine.
Since neither governor solicited, reviewed, awarded, or managed the implementation of this contract -- and, in fact, since Warner had taken the unusual step of calling on the ITIB to allow more sunshine and transparency into the bid review process -- the repeated references to campaign contributions were irrelevant.
It also was misleading for the story to fail to report on Northrop Grumman's long history of relatively even-handed political donations, or the fact that more of its campaign money has gone to Republicans (53 percent) than to Democrats (47 percent).
Here's the bottom line: The commonsense 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.
So, at this moment, I would suggest the responsible course of action is to wait to evaluate the recommendations of JLARC and the Senate Finance Committee. Then, I believe we all should be about keeping what works, and fixing what's broken. Clearly VITA's responsiveness to its state agency customers could be improved, and so could the awkward governance structure.
I would hope that all concerned can work to strengthen and improve VITA, because this ambitious project still makes good business sense, and it ultimately will save considerable money for Virginia taxpayers.
William H. Leighty served as chief of staff to Govs. Mark R. Warner (2002-06) and Timothy M. Kaine (2006-07). Contact him at
or (804) 393-9401.
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Reader Reactions
RE: [virginian64]
“Mr. Leighty’s main point - which appears to be valid - is that the concept of centralized IT services makes sense. Even if some state agencies had good platforms, that doesn’t mean that they shouldn’t be centralized.“
Centralization only makes “sense” if you can realize a positive gain on a measurable metric for said services. What metric would that be in this instance that you purport it makes sense? Cost Savings? More efficient purchasing? Security? Interoperability?
Before you accuse me of bashing let me say that I do agree on a central agency which mandates standards and works towards enhancing security and interoperability where it makes sense and most of all is affordable to agencies. We just haven’t seen it happening in this venture to date. A fact Mr Leighty leaves out is NG asking for more money while underperforming in goals it agreed to. That doesn’t bode well for the future.
virginian64 - Knit-picking? It is an insult to besmirch those who point out the disingenuous statements of politicians and others.
The idea to improve the situation is disentanglement, i.e. terminating the NG contract and restructuring vita. As an earlier post showed, and I can confirm, the Commonwealth has been a leader in the centralization of IT.
vita and the NG contract were built on false statements, e.g. cost savings, outdated, inefficient. How can anyone take Mr. Leighty seriously when the arguments he purports to be undisputed history are shown to be untrue?
The blame lies with those who fostered this situation on the Commonwealth and continue to make statements that are contrary to the facts.
There are two types of people in this world. First, there are those who understand that things will never turn out perfect the first time, acknowledge and understand their shortcomings, and then do what it takes to succeed. Then there are those who can’t overcome their emotions to find negatives in anything. How much do you want to bet that many of those criticizing Mr. Leighty’s column are either disgruntled VITA employees or IT department folks at state agencies. WIll you please stop knit-picking and channel your energy in a positive direction. What are your ideas to make this better?
Mr. Leighty’s main point - which appears to be valid - is that the concept of centralized IT services makes sense. Even if some state agencies had good platforms, that doesn’t mean that they shouldn’t be centralized. It may be good for them individually, but bad for the whole. If all agencies are on a common platform, this can bring a number of efficiencies and productivity improvements.
Having been in the middle of several IT transformations in the private sector, I can tell you that there are always obstacles to overcome. It’s a constant exercise of figuring out the problems and fixing them. This often takes a long time. Consider those automated check-out machines at grocery stores. The first time I used one - it was a disaster. I had to look up every other item and it took forever. The next month, they made modifications and it got a little better. Now, two years later and 15 modifications later - it’s actually working well.
lastly, it’s always tough to go first. Virginia is on the cutting edge with this project. This means that there is no historical data to benchmark against. The timelines were essentially educated guesses.
Yes - everyone is responsible to some extent - the agencies, the contractor, and VITA. But until you all start working together and stop asigning blame to the others, this thing will never get on the road to improvement.
Leighty should reserve his comments to areas which he has experience. He is NOT subject to the stranglehold of VITA/NG and is unfortunately ignorant.
IT
IS
A
FAILURE.
We MUST invoke disentanglement ASAP to rid the state of this ever increasing expensive mess.
Rolling out Windows XP and Office 2003 is not modernizing the infrastructure. Prudent IT organizations keep there systems up to date with current versions of software which are included in the enterprise agreements with their vendors. But wait we taxpayers will get to pay for that rollout in a contract change order which will elevate the cost of the contract.
The large state agencies which represent the largest percentage of PC’s were up to date and actually had to scrap robust IT infrastructure and support in lue of what they now get which is inferior. The facts in this article are contrived. As we all know 54% of all statistics are made up!
FreeWilly - you are right on the mark!
Mr. Leighty may take issue with the reporting by the Times-Dispatch; I take issue with his “history which is not in dispute.“ Disregarding the facts is the same approach that was taken in the creation of vita.
There were two statewide networks in 2002; not three. These networks were not outdated or inefficient.
The ITIB awarded the NG contract on October 25, 2005; not fall of 2004.
Governor Warner did review and approve the NG interim contract.
No one seems to agree on the number of jobs that will be created in southwest Virginia but it appears to be considerably less than 430.
There is no evidence to support the statement that vita “ultimately will save considerable money for Virginia taxpayers.“
The JLARC vita report will be released in October. Hopefully, it will be a fair and factual representation of the situation accompanied by strong recommendations.
See earlier post for detail supporting information.
Missing in the historical account of the outsourcing project is that at least one of the initial proposals called for the modernization of a combination of the IT Infrastructure and the Enterprise Apps. As one who participated in such a proposal, I felt this was vital because both are interdependent and cost savings in both were needed to pay for the whole (with profit for the Private Sector Partners). In the only other State that had outsourced the majority of its IT Infrastructure, some 12-14 data centers were consolidated into 2. Such consolidation can be done relatively quickly and with a sizable up-front payoff. In VA, DIT & it’s predecessor agencies had already done this over the previous decade or so. The notion that Unix/Windows Server Consolidation & PC Standardization would provide savings enough pay for two new data centers (one of which full of all new mainframes, peripherals & servers) seemed absurd. For that reason, when the State opted to split the project into two 1) IT Infra & 2)Enterprise Apps, we bowed out.
I’d love to see NG’s analysis on how this would be profitable and over what period of time. Seems to me (an admittedly uninformed opinion) that this was planned to be “Profit by Change Order.“
I agree with Mr. Leighty that services have improved for small agencies and that they can now leverage large scale buying power.
There is just so much IT goodness to go around. Large agencies already had large scale buying power, distributed IT staff, standardized infrastructure, and loads of state-of-the-art technology. At their expense, the small agencies have benefited. Mediocrity for all whether they can afford it individually is the watchword.
Mr. Leighty also points out hundreds of millions of dollars in waste (projected and actual.) As I recall money was flowing freely for any number of agency pet projects (too freely in my estimation.) Why single out IT? DIT had already done major overhauls on its mainframe computing environment pre-VITA/NG. Agency IT systems fed those centrally and securely. I don’t think NG/VITA brought much to the table there. So far they’ve struggled to replace desktops Commonwealth wide and you would have us believe they have “Answers” to agency IT systems incompatibility? In that assertion you have ignored facts Mr. Leighty.
Mr. Leighty: Some of your “history” is in dispute.
You state; “that state government utilized an outdated unsecured computer network that was inefficiently built and overseen by three state IT departments.“ Outdated? Inefficient? The networks being used were frame relay (provided by MCI and Verizon) and the Network.Virginia Asynchronous Transfer Mode (ATM) network created by Virginia Tech and Verizon. In 2002, these were state of the art networks. The Department of Information Technology ran the frame relay network and Virginia Tech ran the ATM network. What state IT department built and oversaw a third network?
You state; “In the fall of 2004, the ITIB voted to award a 10-year, $1.9 billion contract to Northrop Grumman…“ According to an ITIB press release, the actual date was October 25, 2005.
You state; “Since neither governor solicited, reviewed, awarded, or managed the implementation of this contract…“ Your statement is in direct conflict with the above mentioned October 25, 2005 press release that states; “If approved by Governor Mark R. Warner, the partnership will be managed by the Virginia Information Technologies Agency (VITA) and will provide a streamlined, 21st century infrastructure with no additional taxpayer dollars above current funding levels.“ In addition, a November 14, 2005 IT Partnership press release states; “Governor Mark R. Warner today approved an interim agreement with Northrop Grumman Corporation to modernize the state’s information technology infrastructure that will result in a $272 million capital investment in the Commonwealth.“
You state; “Another 430 mid-level tech jobs have been created at a $33 million VITA backup facility built in Southwest Virginia’s Russell County.“ The January 15, 2009 CIO Report stated that 370 high-tech jobs were being created. An August 3, 2009 VITA story by Secretary Pomata stated that “the partnership is creating more than 400 new jobs in southwest Virginia (more than 80 employees already have been hired)...“ What is the real number of jobs created or to be created? I cannot find facts to support 430 but whatever the number of jobs, a very small number have actually been filled.
You state; “I would hope that all concerned can work to strengthen and improve VITA, because this ambitious project still makes good business sense, and it ultimately will save considerable money for Virginia taxpayers.“ What facts support that conclusion? Do you support Governor Warner’s and Secretary Newstrom’s estimate of $100 million per year in savings? That was an initial off the wall estimate that fell over the years but there were never any facts to support that kind of savings. There certainly have not been savings or cost avoidances that approach $100 million per year since the inception of VITA in 2003.
Lastly, you were the head of the Virginia Retirement System (VRS), an independent agency. Because it is an independent agency, VRS is not required to use the services of VITA / NG. If VITA makes such good business sense, why not advocate to include VRS, Supreme Court, State Corporation Commission, Lottery, and the General Assembly within this project and save even more money?
I look forward to reviewing the JLARC report and hope that it is a fair and factual representation of the situation accompanied by strong recommendations. I agree that “the responsible course of action is to wait to evaluate the recommendations of JLARC and the Senate Finance Committee.“ Unfortunately, it appears that you and this administration have already made up your minds.
This guy understands public-private partnerships. Sure, there have been some bumps in the road. But the blame doesn’t rest with Northrup Grumman alone. The state agencies and their unwillingness to “let go” have been an anchor on this project. The bottom line is that we need to move forward to finish the job that is only half-done. This is too important to let fail, and so if it takes a little more money to get it done right, so be it.
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