Virginia Alleges Breach in IT Deal

The state now is accusing Northrop Grumman of failing to deliver computer services and hinting at unspecified action against the giant company.
In a shift Tuesday, the state—which has been defending its disputed 10-year, $2.3 billion deal with Northrop Grumman—said the Chantilly-based firm is in breach of contract.
Further, the state is demanding a plan from Northrop Grumman within 60 days for ending delays—some that have continued two years—and for completing an inventory of computer equipment that was supposed to be finished Tuesday.
That work may not be wrapped up for several months, with full implementation of the contract—now three years on—not expected until Christmas.
In a memorandum to two company executives, a senior official of the agency that hired Northrop Grumman signaled the state’s new stance in the growing controversy over the shift to privately managed information-technology services.
Fred Duball, a director of the Virginia Information Technologies Agency, wrote that “Northrop Grumman’s failure to complete transformation in a timely manner means . . . the commonwealth is deprived of the benefit of those services and may incur other damages to compensate for Northrop Grumman’s deficiencies.“
Duball left open the possibility of legal action, saying, “By notifying Northrop Grumman of its failure to fulfill its contractual obligations and requesting a corrective plan, the commonwealth is not waiving any contractual rights or remedies available to it, nor is it excusing Northrop Grumman’s breach.“
Northrop Grumman spokeswoman Christy Whitman, told of the Duball memo, replied in an e-mail, “We are working to address the issues of critical importance to the program’s success.“
The company, meanwhile, is running a full-page newspaper advertisement defending its work.
Gov. Timothy M. Kaine, for whom the Northrop Grumman contract—the state’s richest-ever privatization pact—is becoming an election-year embarrassment, said the matter is in the hands of the board that oversees VITA. The panel is made up of gubernatorial and legislative appointees.
“The governor has confidence in their ability to handle it,“ Kaine spokesman Gordon Hickey said.
The state’s latest position on the troubled VITA-Northrop Grumman alliance echoes that of the VITA chief, Lemuel C. “Lem” Stewart Jr., who was fired last month after complaining that Northrop Grumman is not fulfilling its obligations.
This week, the agency’s interim head, Secretary of Technology Leonard M. “Len” Pomata, fended off criticism from House and Senate committees that the state had failed to hold Northrop Grumman accountable for not delivering on a number of promises.
Initiated by Kaine’s predecessor, fellow Democrat Mark R. Warner, and backed by legislators in both parties, the IT privatization initiative is flowering as an issue in this year’s elections for governor and the House of Delegates.
“Frankly, there needs to be a stick,“ said House Majority Leader H. Morgan Griffith, R-Salem, urging a remedy. “I don’t want to pull away the carrot yet. But there definitely needs to be a stick in the process.“
He added, “Right now, it’s a pig in a poke.“
In another reflection of political sensitivities, the General Assembly’s investigative arm has been asked to accelerate a scheduled snapshot of the implementation of the Northrop Grumman contract.
Rather than report in December, the Joint Legislative Audit and Review Commission is expected to provide an update in October—a month before Virginians go to the polls.
The request for an earlier report came in a letter to JLARC’s chairman, Del. M. Kirkland Cox, R-Colonial Heights, from House Appropriations Committee Chairman Lacey E. Putney, I-Bedford, and Senate Finance Committee Chairman Charles J. Colgan, D-Prince William.