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Virginia names systems integrator as dispute with Northrop flares

A new vendor named to coordinate service contracts shows progress for state IT. Meanwhile, Virginia stands to incur $14 million in liabilities as it escapes from its estranged contractor.

Kate Roddy and Colin Wood
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Kate Roddy and Colin Wood Editorial Intern & Managing Editor
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Amid ongoing disputes with its longtime single-source IT contractor, Northrop Grumman, the Virginia Information Technologies Agency (VITA) announced Tuesday it had reached a significant milestone in naming a vendor to coordinate suppliers within the state's new multi-vendor IT sourcing model.

VITA named Science Applications International Corp. (SAIC) as the state's mutlisourcing service integrator, with the intention of soon using many vendors to "diversify the state’s portfolio of suppliers, improve service delivery quality, ensure cost competitiveness, and provide transparency and accountability into the commonwealth’s service delivery platform."

The announcement comes after a report released Monday by the Joint Legislative Audit and Review Commission (JLARC) showing that the state's continued attempts to detach from Northrop Grumman could cause the state to incur an additional $9 to $11 million in liabilities on top of the $2.9 million it has already incurred.

State Chief Information Officer Nelson Moe said in a statement the new contract's purpose is to replace the its 13-year Northrop Grumman contract, which expires June 30, 2019.

“Our goal is to deliver uninterrupted, secure, agile, high-quality services at cost-competitive rates with transparency for customers and suppliers," Moe said. "We also want the ability to take advantage of new technologies in the rapidly changing world of IT. We are entering the next generation of IT services for state agencies. Our work today will have positive impacts for years to come on state government and its services to the commonwealth’s citizens, businesses and visitors.”

VITA's role in the state IT transformation will be to work with state agencies, develop strategy and be responsible for oversight of SAIC's work as an integrator, Moe said. 

The new vendor fits into the state's second phase of IT modernization, following a first wave comprised of contracts already awarded for messaging and an IBM mainframe. Those contracts, the state reports, are now being evaluated by its vendors.

Disagreement about agreeing

Tension between VITA and Northrop Grumman escalated last year when the state technology agency announced its decision to transition from a single provider to a new central IT services model with multiple contracts and providers in 2019 following research initiated in 2015 that made such a recommendation. Northrop Grumman filed suit against VITA in May for not operating "in the best interest" of the state. A countersuit from VITA quickly followed.

Despite word of an agreement between the two entities in July regarding access to a data center in Russell County, legal conflict and finger-pointing continue.

The vendor now claims that VITA has reneged on an agreement that was intended to resolve the state's claims that the vendor had been intentionally blocking progress on transition to a multi-vendor IT model, according to The Richmond-Times Dispatch. VITA protests these claims, however, asserting that the agreement was strictly limited to the scope of a single project.

In the wake of these disputes, the state agency has expressed concerns about service decline and disruption, communication from VITA, a timeline for transition, and costs to agencies.

This month, Gov. Terry McAuliffe signed an executive order directing the Virginia Department of Motor Vehicles to extend the validity period of Virginia driver's licenses, learner's permits and special identification cards after claims that the IT equipment managed by Northrop Grumman failed, causing interruptions to electronic services offered by the state's data center.

The first wave of VITA’s plan is experiencing delays, the state reports, and has already incurred $2.9 million of liabilities during the transition of the IBM mainframe and messaging systems. According to VITA, these delays are the result of Northrop Grumman’s “refusal to perform necessary transition activities,” an “inadequate knowledge transfer,” and “payment disputes.”

Northrop Grumman denied these claims, alleging that the setbacks were caused by VITA’s failure to provide a comprehensive disentanglement plan and delays from the new provider, DXC Technology.

The most recent legal motion in the dispute was filed on July 24, as VITA moved for injunctive relief. There currently is not a set timeline for the litigation process, but the report from JLARC predicts that the cases may not be resolved until 2018 or beyond.

According to an update produced by Moe and Deputy CIO Eric Link, the judicial hearing on the messaging notion has not been set. Both parties are said to be “working through procedural disputes on that motion” as they seek to resolve the conflict without another hearing.

The agency claims that “litigation will impact VITA in different ways, but it is separate from operations, and will influence, but not dictate, transition.”

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States, Virginia, State & Local News, Partnerships, Procurement, Tech News, IT Infrastructure, Software, Enterprise Services, Virginia Information Technologies Agency, Northrop Grumman, VITA

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