Northrop Grumman wins $667 million San Diego County outsourcing deal

The San Diego County Board of Supervisors voted this week to finalize a seven-year, $667 million contract for Northrop Grumman Corp. to take over the county's IT and telecommunications operations. Northrop Grumman replaces Computer Science Corp. as the incumbent contractor on the project.

Terms of the contract call for Northrop Grumman IT of McLean, Va., to oversee San Diego County's data center, help desk, desktop, network, applications and cross-functional IT and telecommunications services.

The contract also has a five-year extension option, valued at about $500 million, San Diego County CIO Michael Moore said last month.

The initial contract, which Moore said is valued at $667 million, calls for the county to pay Northrop $93 million annually, plus about $10 million in start-up costs, which will be spread over the life of the project, Moore said.

The county's contract with Northrop Grumman calls for services to be phased in over the next 12 months. The first phase will be the transition of help desk services, followed by applications support services, desktop support services, network services and then takeover of the data center, Moore said.

Northrop Grumman's key teammates on the project include BearingPoint Inc., EDS Corp., and SBC Communications Inc./AT&T Corp.

CSC was hired by the county in 1999 to outsource 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.

Both 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 reflect on Northrop Grumman being chosen over CSC, the only other company considered in the final round of the selection process.

Northrop Grumman of Los Angeles has about 125,000 employees and had annual revenue of $29.9 billion in fiscal 2004. The company ranks No. 2 on Washington Technology's 2005 Top 100 list of federal prime contractors.