One-term governors and the coming IT meltdown

The headcount of the political class in Virginia is fairly small.  Start with 100 delegates and 40 senators, add one governor, a lieutenant governor and an attorney general, sprinkle in the leaders of a few dozen large corporations, a handful of powerful law firms, a few dozen more political lobbyists and career bureaucrats, and that’s basically it — maybe a couple hundred folks basically calling all the shots.

Of course, there also are voters, but many in this genteel class don’t run for office and those that do face little opposition.

Among the elected officials, only the governor is constitutionally prohibited from a second successive term in office.  Virginia is the last of the 50 states to deny gubernatorial succession.

A strange storm has been brewing, one that spans at least four governorships.  It has to do with the outsourcing of the commonwealth’s apparatus for information technology.  Left unchecked, this storm will be a major headache for Virginia’s next governor.

Elected in 2001, then-Gov. Mark Warner was faced with an aging and decentralized state technology infrastructure that was badly in need of replacement and modernization.  Because of his experience in business as a Northern Virginia technocrat, this project was well within Warner’s wheelhouse to understand and accomplish change.

During Warner’s last year as governor, the commonwealth selected Northrop Grumman Corp. for a 10-year contract valued at approximately $2 billion to transform, update and consolidate the state’s information technology infrastructure across 91 state agencies.

Hailed at the time as an innovative and groundbreaking model for other states to follow, this agreement outsourced nearly all of Virginia’s IT functions to a private contractor.

From a political standpoint, the deal came with big plusses — two new data centers, one near Richmond in conservative-leaning Chesterfield County and one in Southwest Virginia. Around the same time, CGI, a Canada-based technology company, decided to open another data center in Russell County.

Together, the centers supplied hundreds of new jobs, while helping both regions establish themselves as technology hubs.

With Warner’s four years as governor at its end, most of the implementation of the project took place under the administration of Gov. Tim Kaine.  State IT workers were offered the option of staying employed by the commonwealth or signing on with Northrop Grumman. That is not exactly the way that the private sector would carry out a re-engineering project, but along with new jobs in Southwest Virginia, it certainly was a politically popular approach.

By 2009, toward the end of  Kaine’s four-year term, problems began to surface.  Disputes occurred over deadlines, payments, cost overruns and service levels.

Up next, in 2010, Gov. Bob McDonnell’s administration signed contract modifications designed to improve service while extending the Northrop Grumman contract for three additional years, keeping an annual payment cap of $236 million.

Fast forward to the current administration.  The Northrop Grumman contract, now swollen to almost $3 billion, is set to expire in mid-2019, 18 months after Gov. Terry McAuliffe leaves office.  After years of difficulty, Virginia now plans to move from a single-source to a multivendor solution with shorter contracts involving several companies.

Citing increased cyber security risks to the state and higher costs, Northrop Grumman has declined to participate in the new approach.  Winding down the agreement has led to disputes on a number of transition issues, such as unexpected increases in billing and the amount of information required to be shared during the new procurement process.

A mediated settlement between Northrop Grumman and the state failed to gain McAuliffe’s approval.  Now both parties are lawyered-up, with each accusing the other of breach of contract.  Northrop Grumman filed suit against the state in late May, seeking damages of more than $10.2 million. By all accounts this is headed to an ugly end.

Next November, the commonwealth will elect another governor, bringing to five the number of administrations seeking solutions to Virginia’s IT mess.

Information systems are mission critical to every business; they are also critical to the efficient functioning of state government.  Business leaders know that progress takes time and that big changes are inevitably accompanied by decisions that will be unpopular.  Political solutions to business problems are rarely successful.

Virginia’s one-term governors don’t have enough time to get much done.  Instead of passing the buck, it’s time to give them a chance at a second term and the time required to succeed.