After delay, PCs headed to health agency for swine-flu effort
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Click here to read about the troubled history of the Virginia Information Technologies Agency’s computer contract with Northrop Grumman.
Published: October 24, 2009
Extra computers are headed to health offices as part of Virginia's response to swine flu after the company providing IT services to the state initially resisted supplying the gear because it was uncertain it would be paid.
Northrop Grumman attributes the holdup to a misunderstanding. The Virginia Health Department blames confusion that, once cleared up, led to a better deal for the agency.
The incident is the latest example of a major issue contributing to friction between Northrop Grumman and its lead customer, the Virginia Information Technologies Agency: payments for services outside the company's 10-year, $2.3 billion contract with the state.
Virginia's largest-ever outsourcing contract restricts annual payments to Northrop Grumman to $236 million. But it includes provisions under which the company can bill the state for services beyond the basic agreement.
The company and state, however, are quarreling over what qualifies as an extra.
In Northrop Grumman's view, the contract is not an all-you-can-eat buffet. Rather, the meat of the contract -- basic services, such as updated computers and software -- is essentially fixed in cost. The gravy -- custom services -- potentially adds millions of dollars to the cost borne by taxpayers, but also could improve Northrop Grumman's bottom line.
The company has consistently argued that it is spending more on the Virginia venture than it gets back.
Both sides are trying to determine what is what. The process is a contentious one, requiring lawyers, vetting by the VITA oversight board and, ultimately, an OK from the agency's boss, George F. Coulter. But it spotlights what's at the core of the difficulty between the state and Northrop Grumman: government's responsibility to serve the public, versus the company's demand for profits.
In addition to the Health Department's roughly 115 laptop computers for monitoring H1N1 flu -- a request that lurched through the information-technology bureaucracy for about three weeks, according to state officials -- Northrop Grumman and VITA have clashed over payment for computers for 17 temporary unemployment offices.
In a report sharply critical of Northrop Grumman and VITA, the Joint Legislative Audit and Review Commission said the Virginia Employment Commission wanted the offices outfitted with computers and communications gear in one to three months. Northrop Grumman took up to six months.
"According to VITA, Northrop Grumman slowed procurement of PCs at other offices because temporary use would not ensure NG's full cost of recovery," said JLARC, the General Assembly's investigative arm.
Earlier this week, a subcommittee of the VITA governing board screened two other projects that apparently fall outside the contract: data security and enhanced Internet service.
In the tussle over the H1N1 computers, Samuel Abbate, recently named by Northrop Grumman to run its embattled Virginia project, first refused to approve the equipment request, citing concerns about payment.
"I don't have the confidence that your contracts or business organization will accept a cost after execution," Abbate said in an e-mail to a VITA manager, Debbie Secor. "The risk of recovering our costs is all on [Northrop Grumman]."
But in a statement yesterday, Abbate indicated he changed his mind. Without elaborating, he said: "There were some initial discussions about the particular requirements for the Health Department project, but those were quickly cleared up and the request was approved."
Dr. James Burns, deputy commissioner for public health, is pleased with the outcome.
He said the agency got the computers, is paying for them with federal funds and agreeing to a service charge from Northrop Grumman for the time that the equipment is expected to be used. After the flu outbreak ebbs, the computers -- Burns could not provide a cost per unit -- will be mothballed until the next emergency.
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
RE: [DraziL] “I believe you may have oversimplified things just a tad. If all you had to do was go into eVA and select what you needed like a PayPal shopping cart we all would not have had such dated equipment.“
Your logic is interesting to say the least. How does having access to a PC vendor contract equate with dated equipment? If an agency had dated equipment it was by virtue of not utilizing said contract to get a shiny PC in two weeks, or in other words they chose not to spend money on IT.
Here is how this would have rolled out old style:
Contract was utilized, Standard PC’s ordered and drop shipped to CO VDH. Clock time 2 weeks. CO VDH centrally configures systems and inputs into FACCS. Assuming a high priority status, two people could image 30 PCs a day. Clock time including some slop days 4 weeks. Ship to respective health districts. Clock time including prep + overnight 5 weeks. Distribution within health district. Clock time is now 6 weeks start to finish with a lot of slop days. Could probably trim off 1 to 2 weeks with drop shipment and configuration at VDH districts but lose central management of inventory and configuration.
How long will it take NG to deliver? Why is it possible that they can nay-say when a customer has made a business decision and has stated they have money to pay?
I believe you may have oversimplified things just a tad. If all you had to do was go into eVA and select what you needed like a PayPal shopping cart we all would not have had such dated equipment. The RFS is similar in nature to the RFPs without having to do IPRs or business case justifications.
As a citizen, taxpayer, and 18 IT employee what really spins me is VITA billing.
< rant >
If VITA negotiates on behalf of the agencies for services delivered to those agencies by NG then gets to mark up the services once provided in the bill to those agencies, how is this not blatant conflict of interest?
Why is VITA allowed to profit as a State entity? Why aren’t there just a few seats that watch the Ts & Cs of the contract. Let the agencies negotiate directly with the vendor and remove the bureaucratic layer that separates the people that know how to do their job from the tools to do it.
< /rant >
DraziL,
Good effort there trying to put some positive spin on the NG/partnership effort. Unfortunately, your perceptions are way off from reality.
The new regime actually ADDS a significant amount of bureaucracy, it doesn’t remove it. Remember the story about it taking 6 months for VEC to open an “express” office? Well, that’s because this kind of thing requires what’s called a “Request for Service” or RFS. Agencies have been told to expect an RFS to take at least 6 months to fulfill.
The old system involved DPB negotiating basic contracts with equipment vendors like Dell, HP, IBM and others, and when an agency needed equipment they selected what they needed from the contract and the vendor shipped it pretty quick.
The new procurement system involves these nebulous RFS things, which then get knocked around VITA and NG as negotiations are made regarding what to buy (it’s always HP now), how much to charge the agencies, and who gets to pocket the added fees. No wonder the agencies are incredulous when they are told what equipment has been selected and how much they are expected to pay.
Anon,
It depends on how they ‘communicate’ VITA security standards are rather stringent when it comes to connecting an ‘outside’ pc to a state computer domain, it gives everyone a lot less heartburn if they are VITA/NG machines.
DraziL,
In this economy I suspect either Dell or HP would have had them delivered in about two weeks. At least that was my experience, state procurement usually allowed 30 days, but with stock on the shelf…..
“ Agencies historically maintained some idle equipment that was put to use when these emergencies or increased demand (like unemployment) required it. “
They kept them, yes. Under current maintenance, no. I’m sure those Pentium Pro 166s with Win95 would have been very useful.
Prior to VITA or NG, how long do you think it would’ve taken to get that many machines under State procurement?
Tell that to the family of the little girl in Amelia County.
BeenThere:
This should work for your link to the rates.
Actually, it’s more like 135, not 115.
I had heard about this dispute a few days ago, but not much more detail than the article. The way I heard it is that NG didn’t want to provide the computers for this because the monthly fee during the short duration will not provide enough to cover the purchase and deployment costs (or, perhaps, supply enough profit to make it worthwhile).
Which is another issue with the whole partnership setup. Agencies historically maintained some idle equipment that was put to use when these emergencies or increased demand (like unemployment) required it. But the partnership demands high monthly fees for ever piece of equipment regardless of whether it is actively in use or not. Consequently, agencies have been dumping and surplussing every bit of equipment they can to reduce costs (especially to deal with the budget cuts required to make up the state’s shortfall).
This is just example of NG’s one-size-fits-all shoe-horn method just fails to support the agency’s business requirements. Remember that when NG claims that their problems meeting the contract terms are do to “cultural resistance to change” or agencies being “uncooperative”.
rtdild,
I was hoping to get some inside information, because the article is a little light on facts. The reason I asked was because 115 closely approximates the number of school districts in the state. If the Health Department wanted to give a laptop to each school district so they can communicate directly with the state, I can see NG’s beef. A CD with software would simpler and less wasteful.
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