Affairs of state: Virginia offers formula for outsourcing success

William Welsh

When I ran into Virginia Gov. Mark Warner (D) earlier this year at the National Governors Association headquarters in Washington, I pulled him aside for a quick chat. I wanted to gauge how serious he was about Virginia's nascent IT outsourcing initiative and how hard he was going to work to make it happen.

"We are the first ones to do this," he said.

He was referring partly to the state's use of an innovative procurement law for the initiative, and partly to the fact that if such a contract, or contracts, was awarded, Virginia would be the first state to pull it off.

I had to chuckle to myself. Anyone who claims he is the first to undertake an innovative project, particularly while the deal is still in the making, sets himself up for ridicule if it fails.

But with fewer than 60 days left in Warner's term, Virginia has awarded one outsourcing contract and is negotiating a second. Fellow Democrat Tim Kaine, Warner's lieutenant governor and political ally, won the gubernatorial election. Rather than being dismantled by an opposition party candidate taking office next year, the outsourcing initiative likely will get off the ground. It looks as if Warner might get the last laugh.

The road to Virginia's so-called IT Transformation Initiative can be traced back to the administration's early days. Shortly after he took office in 2002, Warner named George Newstrom, a close friend and corporate globetrotter working at the time for EDS Corp. in Asia, to the plum position of state secretary of technology. Newstrom hit the ground running. He first helped the state get a grip on how much it spent on IT, and then set his sites on saving money and improving service.

It wasn't long before Newstrom and Warner's people were working to get Virginia's Public-Private Education Infrastructure and Facilities Act, which allows for sole-source awards for innovative projects, extended to cover IT infrastructure work as well. Once done, the state began to collect outsourcing proposals from some of the biggest names in state technology contracting, including IBM Corp., American Management Systems Inc. (now part of CGI Group Inc.) and Northrop Grumman Corp. The stage was set for IT outsourcing to move forward.

When Newstrom stepped down in October 2004, responsibility for shepherding the project fell to Lem Stewart, the state's newly hired chief information officer. Stewart, a long-time state employee adept at working with agencies and other officials throughout state government, was the right person to pick up the outsourcing ball and move it from concept to contract negotiations.

Virginia has stayed on schedule and has awarded a 10-year, IT infrastructure outsourcing deal to Northrop Grumman. Negotiations are continuing for an enterprise applications deal to CGI-AMS.

If Virginia's IT outsourcing initiative succeeds, it won't be because of dumb luck. It took a technology friendly governor, an innovative procurement approach, a visionary secretary of technology and a diplomatic state CIO to bring it to fruition. Warner will hand it off to Kaine to launch as soon as Kaine takes office.

Contractors have waited a long time for a state IT outsourcing opportunity of this scope. They should make every effort to ensure it succeeds by meeting milestones and performance standards, ensuring the state gets the savings and new facilities promised, and that state workers get job benefits and fresh opportunities that are as good, if not better, than what they had working for the state.

It's the responsible thing to do.

Deputy Editor William Welsh has covered state and local contracting for five years at Washington Technology. He can be reached at wwelsh@postnewsweektech.com.

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