Virginia to review IT, services contracts

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Virginia officials will review the state’s information technology and services contracts and provide recommendations on how the state can spend taxpayer dollars with greater efficiency.

Gov. Terry McAuliffe ordered the evaluation with an executive directive Wednesday out of his concern that the Virginia government is “inappropriately dependent on expensive contract labor when traditionally appointed state employees can perform at a higher level at a lower cost,” he said in a statement.

The state’s secretaries of administration, finance and technology will lead the review, which will also evaluate the impacts of insourcing versus outsourcing contract services.

The goal is to study the extent to which contracting companies may misclassify workers as “independent contractors” rather than employees, a distinction that often results in employees being denied benefits like health coverage.

The directive does not include the state’s massive outsourcing contract with Northrop Grumman, but instead it focuses on the information technology contracts the state uses. From 2012 to 2013, the state government saw an increase in more than 100 contingency contractors, costing the state an additional $17 million.

Northrop Grumman has run the state’s information technology since 2005 as part of a 10-year agreement valued at $2.3 billion. The project struggled in the past as state agencies worked with Northrop Grumman to transition to the new system.

Despite those struggles, Virginia decided to extend that contract in 2010 through 2019. Since the appointment of Chief Information Officer Sam Nixon, who was appointed by former Gov. Bob McDonnell, the state has stabilized this program and now features almost all state agencies working in concert.

Read the full executive directive:

Executive Directive 2 (2014) 

ASSESSING AND EVALUATING MAJOR INFORMATION TECHNOLOGY AND SERVICE CONTRACTS

One of the primary responsibilities of the Chief Executive Officer of the Commonwealth of Virginia is to ensure that every taxpayer dollar is being spent as efficiently and transparently as possible.  In the face of a revenue shortfall and potential budget cuts, the urgency to increase accountability and find cost savings in Virginia government is even greater. Virginia taxpayers spend millions of dollars annually on contractors for information technology (IT) and other services outside of our state workforce.  I am concerned that state government is inappropriately dependent on expensive contract labor when traditionally-appointed state employees can perform at a higher level at a lower cost.

In an effort to ensure that procurement decisions in state government are based on sound fiscal analysis, I am directing my Secretaries of Administration, Finance and Technology to report to me by October 1, 2014 on the following: 

 Recommendations for cost savings and efficiencies through this review. 

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States, Virginia
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