The long-anticipated Joint Legislative Audit and Review Commission report showed that some provisions of the contract between the Virginia Information Technologies Agency and the company were based on nothing more than handshake deals involving two or three officials, all outside of public view. The Information Technology Investment Board, which oversees VITA, often was unaware or uninterested in the developments, with some members of the board missing up to half of its bimonthly meetings.
Reports mounted of Northrop Grumman missing key deadlines and dozens of critical service failures daily, at times severe enough to shut down core functions of state agency offices. And when the state finally tried to impose penalties, the company often eluded them because of weak provisions in the four-year-old contract.
Only 14 of 74 deadlines involved financial penalties for the company if they were missed, "thus, for the other 60, Northrop Grumman could receive full payment, no matter when they were delivered," said Ashley Colvin, the JLARC analyst who supervised the investigation and delivered its findings. In cases where the state granted the company extensions, it was still eligible for financial credits that offset any penalties.
"So, it's as if I'm late turning in a term paper, and I go to my professor and say, 'Gee, I can't get it done, can you give me another week,' and then he says yes," said an incredulous Sen. Janet Howell, Fairfax Democrat, a JLARC member. "And I turn it in five days later and say, 'Can I have an 'A' for turning it in early?' "
Some decisions to relax Northrop Grumman deadlines made it before the ITIB, Mr. Colvin said. They were granted under "gentlemen's agreements" that only the chief information officer and top members of the nine-person board approved. Because no more than two people were involved at any one time, Mr. Colvin said, the state's Freedom of Information Act would not apply.
Now, the state faces a Dec. 27 deadline for acting to terminate the agreement under a claim Northrop Grumman breached the contract, Mr. Colvin said.
"That's precisely the conundrum the state finds itself in: It's costly to get out, but it may be costly to remain," he told the panel of House and Senate members.
The JLARC study recommends the legislature scrap the current VITA governance structure to make the agency fully answerable to the governor, who directs nearly all agencies served under the technology partnership. And Democratic and Republican members of the commission said changes will be put before the 2010 General Assembly starting in January.
Severing the partnership would be lengthy, litigious and so costly it could impair the state's bond rating, affecting its ability to borrow money. It could also could cripple operations ranging from vital databases to access to phones. So as unhappy as legislators are, they're not ready yet to enter into what Delegate H. Morgan Griffith, Salem Republican and a lawyer, likened to a divorce between VITA and Northrop Grumman.
"As in all divorces, both sides lose something," he said, noting efforts to salvage the partnership. "Hopefully, counseling can work that out, but maybe we're at irreconcilable differences."