Northrop Grumman wins San Diego County IT outsourcing pact

Northrop Grumman IT, pending approval of the San Diego County Board of Supervisors, is set to take over management of the county's IT services from Computer Sciences Corp.

The seven-year IT outsourcing contract with Northrop Grumman's IT division, based in McLean, Va., would be worth $667 million, said Michael Moore, CIO for San Diego County. The proposed contract also has one five-year option, which would be priced at about $500 million, Moore said.

The initial contract calls for the county to pay Northrop Grumman $93 million annually, plus about $10 million in start-up costs, which will be spread over the life of the project.

The county currently pays CSC of El Segundo, Calif., about $100 million annually to manage its IT services, under a contract awarded in 1999. CSC officials declined to comment on the loss of the contract.

If the proposed contract is approved by the county board on Jan. 24, the deal would be signed the next day and services would be phased in over the next year. The first phase would transition help desk services, followed by applications support services, desktop support services, network services and then the takeover of the data center.

Moore, while praising the contract with Northrop Grumman, would not compare it to the CSC contract.

"I won't say better or worse, but it's a great deal," he said. "We expected that [the price] could've gone up. But, because of competition, and because we were very specific about what we wanted, and because we know we have seven years worth of history, I think we got a great deal for the county."

The project value had been reported to be in the neighborhood of $800 million or more, figuring a 5 percent increase from the CSC contract, but Moore said negotiations kept the price down.

Northrop Grumman was picked over two other finalists: CSC and IBM Corp.

Northrop Grumman's teammates on the project include SBC Communications Inc. of San Antonio, Texas, EDS Corp. of Plano, Texas, and BearingPoint Inc. of McLean, Va.

CSC was hired by the county in 1999 to run its IT services. The landmark project had its problems though, especially in its first three years, with the county claiming that CSC was not meeting numerous service-level agreements.

But the two sides worked out their differences, and Moore said that the county no longer had any problems with CSC, and that any earlier problems did not influence the decision to go with Northrop Grumman over CSC.

"We went back out to the market because IT changes a great deal over seven years, and we wanted to make sure we were getting the best deal we could get for the county," Moore said. "We were OK if CSC won it, but we didn't want to do an extension to CSC without the benefit of competition."