Virginia moves IT services off Northrop Grumman contract

The state's chief information officer says the break is a step toward a multi-vendor model that will ultimately provide more flexibility and higher-quality IT services.

At midnight on Friday, 10 months earlier than planned , Virginia officially took over its IT service contracts from longtime vendor Northrop Grumman, and though the two remain locked in litigation, officials are now celebrating what a multi-vendor model will mean for the future of the state government’s technology offerings.

The Virginia Information Technologies Agency’s 13-year $2.4 billion contract with Northrop Grumman will technically persist until June 2019, but the services on that contract have been transitioned to the state’s services integrator, Science Applications International Corporation (SAIC), which will manage the services itself until Virginia officially transitions to a multi-vendor model in December.

Virginia Chief Information Officer Nelson Moe told StateScoop the coming change will allow the state an unprecedented degree of flexibility and quality in its service offerings.

“When you’re in an arrangement, and when team members — or in this case, suppliers — have the same like mind and the same goal and agenda, you can move mountains. You can move mountains,” Moe said. “If you don’t have that, you’re constantly battling over the smallest thing like what color pencil to use.”


Northrop Grumman has served as the state’s sole IT service provider since 2006. Moe likened the partnership to a sports contract, except the contract included everyone — players, coaches, support staff — and if the state didn’t like any part of the deal, negotiating changes proved nearly impossible. An annual review option that allowed the state to refresh its technology through the Northrop contract was only used once, despite attempts every year and ultimately the failure to “negotiate mutually beneficial terms,” Moe explained.

“They had gotten out of this business model years ago,” Moe said of Northrop Grumman. Now the state and the vendor are suing one another. Northrop Grumman has disputed Virginia’s attempt to exit the contract early since it was first advised to do so by an internal state report in 2015.

Moe said that despite the legal conflict, Northrop Grumman’s willingness to unify all of the state’s technology services, for better or worse, has now put Virginia’s IT organization in an enviable position.

“Twelve years ago, it was groundbreaking,” Moe said. “Nobody had ever consolidated state IT.”

In fact, South Dakota consolidated IT in 1996, but Virginia was an early adopter of the idea.


All of Virginia’s data center workers who had been contracted through Northrop Grumman — more than 400 — were offered new positions with SAIC this summer and Moe said more than 80 percent of those employees were retained.

There are still loose ends to tie up — the state owes Northrop Grumman about $67 million for exiting its contract 10 months early, and an Aug. 30 court date is expected to provide some resolution on that figure, but the case is expected to continue beyond the contract’s formal conclusion next year.

Five contracts under the state’s new services model have been signed with vendors for service integration, mainframe, messaging and email, security, and service storage. The state is still looking for vendors for voice data network and end-user support.

In December, Virginia will get to call the shots, Moe said — if a contractor isn’t performing or the state decides to change its strategy or swap-in new technologies, it can replace any of the vendors.

“There are plenty of people who want to work in the commoditized IT that we have here,” he said.


This story was updated on Aug. 24 to point out that South Dakota consolidated IT in 1996.

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