Virginia's IT chief re-opens talks with Northrup Grumman

RICHMOND, VA -- Despite warnings from lawmakers to back off, the state's computer chief quietly reopened negotiations with Northrop Grumman over additional services that could add millions to Virginia's information-technology bill.

State officials yesterday could not provide the cost but said it might be lower than an estimate this summer by General Assembly investigators of $30 million to $40 million.

The latest talks with Northrop Grumman are focusing on services for agencies beyond those that the company already provides. They include, officials said, security for laptop computers as well as wireless and network services.

As recently as last month, legislators urged Chief Information Officer George Coulter to put off negotiations with the company until at least January, when the new governor, Republican Bob McDonnell, takes office.

Lawmakers cited the state's budget crisis and the upheaval surrounding the switch to a privately run IT system under a 10-year, $2.3 billion contract with Northrop Grumman.

Talks, mostly between Coulter and Northrop Grumman's Virginia project executive, Samuel Abbate, then were suspended.

But they resumed last week and included a conference call Friday with Coulter; Secretary of Technology Leonard M. "Len" Pomata; his deputy, John McDonald; James F. McGuirk II, head of the state IT board that hired Coulter; and Wayne Turnage, chief of staff to departing Gov. Timothy M. Kaine.

Coulter, who, by law, is solely responsible for crafting and carrying out contract changes, yesterday pledged to clear changes in advance with Kaine and the assembly's money committees.

Coulter's embattled predecessor, Lemuel C. "Lem" Stewart Jr., negotiated nearly 60 changes to the contract, which pushed up costs about $10 million. The IT oversight board fired Stewart in June after he proposed that the state withhold a $14 million payment to Northrop Grumman as punishment for poor service.

"There are critical services that are not included in the contract with Northrop Grumman that must be addressed," Coulter said in an e-mail to the Richmond Times-Dispatch. He did not elaborate.

Abbate did not respond to an e-mail from The Times-Dispatch seeking comment.

A legislative spokesman was troubled by the jump-started talks.

"There is no money, and we need to understand what the problems are before we start leapfrogging to the conclusion that more taxpayer dollars need to be spent," said G. Paul Nardo, chief of staff to House Speaker William J. Howell, R-Stafford.

Despite uncertainty over their authority to do so, lawmakers are threatening to weave into the state budget restrictions on future payments to Northrop Grumman, now capped at $236 million a year.

Several factors are driving the latest negotiations, including renewed pressure from Washington to come up with a billing system for IT services for state management of federal programs, such as transportation, health and jobless benefits.

Last week, an official with the U.S. Department of Health and Human Services traveled to Richmond to discuss the matter, unresolved since 2006, with representatives of the Joint Legislative Audit and Review Commission -- the General Assembly's watchdog agency -- and the Virginia Information Technologies Agency, which Coulter leads.

Also, Kaine's office is of the view that failing to resolve contract issues now could cause additional delays in refitting agencies with new computers and moving to a service-based billing program, which could drive up future costs. Northrop Grumman missed its deadline of June and now is promising to complete the so-called transformation by June 30, 2010.

Another concern is litigation. The state has declared that Northrop Grumman in violation of its contract. Virginia could take additional steps against the company by December, a key date for the unlikely option of junking the contract.

Northrop Grumman, whose representatives conferred Friday with JLARC staffers for the next phase of the agency's examination of the state IT program, could sue Virginia, with the company alleging it provided services for which it was not paid.