Legislators, Kaine warn defiant Northrop Grumman

VITA AND NORTHRUP GRUMMAN:

• JLARC review
• VITA letter to JLARC
• Northrup Grumman letter to JLARC
• Previous coverage

Gov. Timothy M. Kaine and legislators are warning the state's computer contractor, Northrop Grumman, that they won't allow Virginia's privately run IT system to become a money pit.

Following the release yesterday of a General Assembly report sharply critical of Northrop Grumman and the state's information-technology bureaucracy, lawmakers told the company that righting the embattled, 10-year, $2.3 billion project should not come at additional cost, particularly when Virginia is slashing spending by billions to balance its budget.

"I hope whatever corrective action and whatever path that you and VITA work on to get this back on track, I hope that's all being done with the realism that you shouldn't expect any additional money to do that," said Sen. R. Edward Houck, D-Spotsylvania.

While publicly accommodating of Virginia leaders -- the company's new project manager, Samuel Abbate, told lawmakers: "Our mission here is to move forward" -- Northrop Grumman struck a defiant pose nonetheless.

In a letter to the assembly's investigative arm, the Joint Legislative Audit and Review Commission, Vice President Tom Shelman said Northrop Grumman alone cannot be blamed for problems hobbling the switchover and that the report "yields an imbalanced view of the shared responsibilities and performance."

JLARC's findings -- first reported Saturday by the Richmond Times-Dispatch -- depict a program rocked by personality clashes, continuing and costly delays in refitting agencies with updated computer and communications gear, and legally questionable freelancing by state overseers to clear obstacles with Northrop Grumman.

Scrapping the contract and returning to a state-run system, an option outlined by JLARC, seems unlikely for now, legislators said. The cost of severing the contract could approach $400 million, money the cash-strapped state doesn't have. Litigation could add to the cost, which would include crafting an alternative to the Northrop Grumman program.

"If this were a divorce, where are we? . . . Counseling," said House Majority Leader H. Morgan Griffith, R-Salem, a JLARC member. "Clearly, I would like to see a reconciliation, but only time will tell whether that's effective."

JLARC, which will offer another snapshot in December of Northrop Grumman's contract with the Virginia Information Technologies Agency, also recommended an overhaul of the agency's management and governance.

JLARC says VITA's chief should be selected by the governor and approved by the General Assembly, with its oversight board, now made up of legislative and gubernatorial appointees, replaced with a panel of Cabinet secretaries who would advise the computer czar on IT needs.

The state's fiscal problems notwithstanding, Northrop Grumman is pressing for additional money, saying it's spending more than it's getting back from Virginia. Officials say, however, that they will keep in place until at least next year an annual cap on payments to Northrop Grumman of $236 million.

Abbate told JLARC that agencies will be responsible for controlling their costs: "It's up to them, it's up to the agencies what they consume. It's based on usage."

But George F. Coulter, VITA's new chief information officer, wouldn't say what modifications to the contract would cost.

"We're being very aggressive on the cost side," said Coulter, who previously said possible contract revisions will not have a substantial financial impact.

On the job seven weeks, Coulter is still mastering the political landscape. During his testimony yesterday, Coulter said he didn't know the membership of the General Assembly, apparently unaware he was addressing an entity made up of delegates and senators.

Coulter replaced Lemuel C. "Lem" Stewart Jr., who was fired by the VITA board in June after recommending withholding a $14 million payment to Northrop Grumman as punishment for poor service and incomplete billing.

Kaine, who inherited VITA from his Democratic predecessor, Mark R. Warner, favors gubernatorial control of the agency, which is now beyond Kaine's statutory reach even though it supplies services to 84 departments within the executive branch.

Yesterday, however, Kaine's focus was fiscal. The Democrat, who will have pruned state spending by nearly $7.5 billion because of the recession, told VITA and Northrop Grumman they will have to make do with existing dollars.

"Moving forward, I expect VITA and Northrop Grumman in particular to redouble their efforts in ensuring prudent and appropriate stewardship, especially as it relates to the procurement and use of IT infrastructure and services," Kaine said.

Contact Olympia Meola at (804) 649-6812 or .

Contact Jeff E. Schapiro at (804) 649-6814 or .