State accuses Northrop Grumman of breach
Published: July 1, 2009
Updated: July 1, 2009
LETTER TO NORTHRUP GRUMMAN: Notification of Failure to Complete Transition
The state now is accusing Northrop Grumman of failing to deliver computer services and hinting at unspecified action against the giant company.
In a shift yesterday, the state -- which has been defending its disputed 10-year, $2.3 billion deal with Northrop Grumman -- said the Chantilly-based firm is in breach of contract.
Further, the state is demanding a plan from Northrop Grumman within 60 days for ending delays -- some that have continued two years -- and for completing an inventory of computer equipment that was supposed to be finished yesterday.
That work may not be wrapped up for several months, with full implementation of the contract -- now three years on -- not expected until Christmas.
In a memorandum to two company executives, a senior official of the agency that hired Northrop Grumman signaled the state's new stance in the growing controversy over the shift to privately managed information-technology services.
Fred Duball, a director of the Virginia Information Technologies Agency, wrote that "Northrop Grumman's failure to complete transformation in a timely manner means . . . the commonwealth is deprived of the benefit of those services and may incur other damages to compensate for Northrop Grumman's deficiencies."
Duball left open the possibility of legal action, saying, "By notifying Northrop Grumman of its failure to fulfill its contractual obligations and requesting a corrective plan, the commonwealth is not waiving any contractual rights or remedies available to it, nor is it excusing Northrop Grumman's breach."
Northrop Grumman spokeswoman Christy Whitman, told of the Duball memo, replied in an e-mail, "We are working to address the issues of critical importance to the program's success."
The company, meanwhile, is running a full-page newspaper advertisement defending its work.
Gov. Timothy M. Kaine, for whom the Northrop Grumman contract -- the state's richest-ever privatization pact -- is becoming an election-year embarrassment, said the matter is in the hands of the board that oversees VITA. The panel is made up of gubernatorial and legislative appointees.
"The governor has confidence in their ability to handle it," Kaine spokesman Gordon Hickey said.
The state's latest position on the troubled VITA-Northrop Grumman alliance echoes that of the VITA chief, Lemuel C. "Lem" Stewart Jr., who was fired last month after complaining that Northrop Grumman is not fulfilling its obligations.
This week, the agency's interim head, Secretary of Technology Leonard M. "Len" Pomata, fended off criticism from House and Senate committees that the state had failed to hold Northrop Grumman accountable for not delivering on a number of promises.
Initiated by Kaine's predecessor, fellow Democrat Mark R. Warner, and backed by legislators in both parties, the IT privatization initiative is flowering as an issue in this year's elections for governor and the House of Delegates.
"Frankly, there needs to be a stick," said House Majority Leader H. Morgan Griffith, R-Salem, urging a remedy. "I don't want to pull away the carrot yet. But there definitely needs to be a stick in the process."
He added, "Right now, it's a pig in a poke."
In another reflection of political sensitivities, the General Assembly's investigative arm has been asked to accelerate a scheduled snapshot of the implementation of the Northrop Grumman contract.
Rather than report in December, the Joint Legislative Audit and Review Commission is expected to provide an update in October -- a month before Virginians go to the polls.
The request for an earlier report came in a letter to JLARC's chairman, Del. M. Kirkland Cox, R-Colonial Heights, from House Appropriations Committee Chairman Lacey E. Putney, I-Bedford, and Senate Finance Committee Chairman Charles J. Colgan, D-Prince William.
Contact Olympia Meola at (804) 649-6812 or
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Contact Jeff E. Schapiro at (804) 649-6814 or .
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Reader Reactions
Obviously, you have not had to work under the VITA/NG control.
Both of them command, not work together. Their deadlines are arbitrary and when the can not meet them, or when they screw it up, it’s always someone else’s fault. They insist on software and system changes without the slightest concern for the impact on the state workers.
Spanky, it will get easier to bash NG and it should. Gov’t should be more transparent esp. when a company is not performing.
State agencies have to cooperate with VITA/NG. You obviously don’t know the agreement between NG and the State.
How easy it is to bash the large company. The success of this contract, and any contract for that matter, depends on cooperation from both parties. All too often state elected and appointed officials simply do not have the skills required to meet deadlines. When profit is not a motive for your career, skills like budget management and resource organization do not develop. Northrop Grumman depends on state cooperation to successfully implement this contract, as did First Health Services for the Medicaid contract. Both have suffered as a direct result from blatant absence of state cooperation and effort. This is not to say that companies like First Health and Northrop Grumman are flawless, but neither one can engage in activities that involve thousands of state operated offices and hundreds of state departments, without unfettered cooperation and support from the state.
So… It seems that “Lem” is able to say “I told you so” after his ouster. A bit of vindication one would think. I would be curious to see the record of Northrop Grumman’s campaign contributions.
What is really sad is the fact that VITA and other state employees were disciplined, humiliated in meetings and even fired for saying all of this about N/G. The Senate needs to make an open call for these employees and former employees to come forward so their supervisors can be disciplined for not listening to their warnings about waste. (BTW, the Waste Fraud and Abuse Hotline has been useless on the N/G issue. They refer it back to the people who caused the problem in the first place.)
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