Bacon's Rebellion

James A. Bacon



Strong-arming Armstrong

Scrambling to save the Center for Innovative Technology from budget cutters, George Newstrom muscled CIT President Anne Armstrong out the door.


 

The inspiration for this column came from a press release. It wasn't what the document said, but what it didn't say, that piqued my interest.

 

On July 24, Virginia's Center for Innovative Technology released a prepared statement announcing the resignation of Anne Armstrong, CIT's president. I'd known Armstrong in a professional capacity for years, so I read the release with great curiosity. Oddly, there was no indication why she had resigned. Paul Brubaker, chairman of the CIT board, gave token thanks, alluding only to her "many years of dedication and service to CIT and the Commonwealth." Most peculiarly of all, I could find no statement from Armstrong herself. It's standard protocol for a departing executive to give some explanation for his or her departure and to maintain at least a fig leaf of good will. But there was nothing.

 

It didn't add up. I'd known Anne as a dedicated, selfless and hard-working employee of the state. I couldn't imagine her getting into any trouble. Yet everything in the tone of the document indicated that she'd left CIT under a cloud.

 

Over the next few days, reasons for cognitive dissonance only increased. Brubaker, the CIT chairman, told the Washington Post that the resignation was “mutual and amicable.” The Washington Tech Journal somehow gained the impression that Armstrong “arrived at last week’s meeting with a resignation letter in hand.” If everything was so hunky dory, why did Armstrong have nothing to say to either reporter?

 

After doing some digging, I found quite a different story -- a very human story about how a competent and respected public servant can get chewed up by high-stakes politics and then cast aside. As best as I can tell it from interviews with Armstrong’s friends and associates, CIT employees, members of the Warner administration and others, here's what actually happened on the morning of July 24.

 

Anne Armstrong had no inkling that her job as president of CIT was in jeopardy. After three years at the helm of the state’s technology-promotion arm, she’d forged cordial working relationships with universities, technology councils, elected officials and corporate leaders in every corner of the Commonwealth. Three months before, she’d made tough management decisions, laying off 14 of CIT’s 50 employees to comply with state budget cuts, yet she'd managed to retain the loyalty and respect of her surviving staff. Furthermore, despite her status as a hold-over from the Gilmore administration, she’d received assurances from her bosses in the Secretary of Technology’s office that she had a secure future under Gov. Warner.

 

Then, 20 minutes before a CIT board meeting, Secretary of Technology George Newstrom took her aside and informed her that she would have to resign. If she didn’t, he assured her, the board of directors would fire her. Taken totally by surprise, she complied. Numbly, she entered the board meeting and submitted her resignation.

 

In truth, Armstrong was fired, and the firing was handled badly. Indeed, the reverberations are still rippling today through the CIT staff and Armstrong’s friends in the General Assembly and the former Gilmore administration. Everyone agrees that it was Newstrom’s prerogative to replace Armstrong – he just didn’t have to be so brutal. If he'd simply delivered the message a few days earlier, she would have had plenty of time to compose herself and devise a face-saving message to the board.

 

The incident probably will be forgotten: Newstrom is redefining the role for a smaller CIT focused on the Warner administration’s priorities, and he has every right to install whomever he wants as president. Moreover, judged by the practice of previous administrations, his brusque treatment of Armstrong was not especially heinous. But politics are unpredictable. Armstrong has confided to friends, and details are leaking out. The incident could provide fodder for Republicans should they choose to orchestrate a political assault on Gov. Mark R. Warner’s technology policies. Already under scrutiny by Republicans in the General Assembly, CIT could prove to be the weak link.

 

CIT has seen its fair share of turmoil over the past few years. Under the Allen administration, the center was run by Bob Templin, a dynamic, high-profile leader who used it as a platform to define Virginia’s technology policy. For all practical purposes, Templin was Virginia’s tech guru. In the next administration, however, Gov. Jim Gilmore folded CIT into a newly created secretariat of technology. He appointed Donald W. Upson, a flamboyant Northern Virginia technology executive who carved out his own highly visible role as the state’s technology visionary. Virginia was not big enough for both Upson and Templin, and Templin was forced to resign.

 

In many ways, Upson’s choice for CIT president was the antithesis of Templin. Anne Armstrong, Editor in Chief of Federal Computer Week, was a respected businesswoman with a strong background in information technology issues, but she never craved the limelight. She diligently carried out the orders that came down from above. Taking over a staff that had been intensely loyal to Templin, she earned the respect and loyalty of CIT employees. She also won the deep appreciation of Upson, her boss.

 

Although Armstrong phased out some of Templin’s pet projects, she preserved the same basic mission and organizational structure that he’d put into place. The Herndon-based center supported R&D at Virginia’s universities, promoted technology transfer to business and fostered entrepreneurial start-ups. Inevitably, though, the organization took on new tasks to reflect the priorities of the new administration. Upson, whose secretariat had little staff, relied on CIT for administrative support for his conferences, policy initiatives and side projects. Looking back, critics have accused CIT of “mission creep” as the agency took on Upson programs such as VirginiaLink, E-communities and Main Street to E-Street.

 

In one major change from the Templin era, Upson downplayed the use of “metrics.” To shore up political support for CIT funding, Templin had devised a series of measurements that tracked CIT’s contribution to Virginia’s R&D activity and economic development. Upson expressed contempt for the number crunching, which he deemed a form of bureaucratic navel gazing that consumed an inordinate amount of resources. Indeed, not only did CIT hire auditors to review the numbers, it paid people to audit the auditors. Still, there was no getting rid of the numbers. CIT was required to report performance measures every year to the General Assembly. Although Armstrong didn't disdain metrics like her boss did, she did agreed that excessive resources were devoted to the effort. And she resisted the temptation of the number gatherers to claim credit for successes to which CIT had contributed only marginally.

 

After Warner took office, he retained Upson as the only Gilmore hold-over in his administration until Newstrom could unwind his obligations to his employer, EDS. Likewise, Armstrong stayed on at CIT. Although she had opportunities in the private sector, she told friends that working for CIT was the most exciting job she’d ever had.

 

George Newstrom had spent 28 years with EDS, an information-technology giant with a major presence in Northern Virginia. When contacted by Warner to become Virginia’s technology chief, he was serving as head of EDS’ Asia-Pacific operations. The job he accepted back in Virginia had two main components. In one, he would run the state’s $1 billion-a-year department of information technology. In the other, he would set Virginia ’s legislative, R&D and tech-transfer agenda.

 

Arriving in Richmond in early March, Newstrom landed in the middle of a crisis. The General Assembly was in session, the budget was out of balance, and legislators were hacking hundreds of millions of dollars out of state programs. As Newstrom said publicly on many occasions, the bean counters had no clear idea of how much money the state was actually spending on IT. Meanwhile, the legislature had CIT in its cross-hairs. Seeing little value to the organization, key Republicans argued that the state should shut down the center and sell its futuristic headquarters building near Dulles.

 

Shuttering CIT would have represented a huge setback to the governor's vision for energizing Virginia’s economy. The former venture capitalist ran on a campaign platform of promoting the technology sector across the Commonwealth, and there simply aren’t any other mechanisms in state government to carry out such a mandate. The technology working group for the Warner transition team had strongly recommended saving CIT from the budget cutters in order to carry out the governor’s goal of using technology to transform Virginia’s economy.

 

CIT did survive the 2002 session of the General Assembly, though its budget was cut drastically, from $12.5 million in fiscal 2002 to $9.2 million in 2003. Even then, the center’s long-term future still isn’t secure. The Joint Commission on Technology and Science (JCOTS), an arm of the General Assembly, is reviewing CIT’s future, and the center may come in for criticism by the Wilder Commission appointed by Warner to overhaul state government. Against this backdrop, Newstrom rallied support from the CIT board this spring and summer to focus CIT on goals consistent with its diminished funding – goals that could be explained clearly to skeptical legislators.

 

At some point in the process of redefining goals, Newstrom decided that Armstrong was not the person he wanted to lead the new CIT. Under Upson, Armstrong’s role had been largely an operational one: managing budgets and staff, working with tech councils, organizing conferences. Newstrom concluded that the center needed a stronger, CEO-like leader.

 

Newstrom may have had other reasons to be dissatisfied with Armstrong. The Secretary of Technology is a big believer in measuring performance and results. His plan for the new CIT will contain reams of measures to track performance on key goals and objectives. Sources tell me that Armstrong may have demonstrated insufficient command of or appreciation for the performance measures to satisfy him.

 

I could not confirm this with Newstrom, however. He turned down my request for an interview, referring me to Paul Brubaker, CIT’s chairman. Brubaker was on vacation this past week and unavailable for comment.

 

One of the few people to talk to me on the record was Alan Merten, president of George Mason University and leader of the search for a new CIT president. He refused to discuss Armstrong, but did describe the qualities he will be looking for in a replacement. The new CIT president, he says, needs to help Warner and Newstrom catalyze technology development in the state. The new person must have the background and temperament to make things happen, to mobilize the support of corporate leaders, university presidents and elected officials for the administration’s initiatives.

 

If Newstrom and the Board want someone else for the job, that’s their prerogative. As far as I'm concerned, the Secretary of Technology deserves credit for acting forcefully and decisively to save CIT. I have every confidence that the proposals he submits to JCOTS in a few weeks will be carefully thought through and lucidly presented. My concern is not the fact that he decided to fire Armstrong, but how he fired her, how he then distanced himself from his action, and the consternation he created as a result.

 

The same day that Armstrong was strong-armed into submitting her resignation, CIT issued the aforementioned press release. To those in the know, the document raised questions that I had overlooked when I had first read it.

 

After thanking Armstrong for her service, Brubaker, the CIT chairman, moved abruptly to the following statement: “CIT has a new plan to move forward, a focused plan that is goal- and performance-oriented. Our plan will help contribute to the overall effectiveness and efficiency of government by concentrating our efforts on increasing federal research and development investment in Virginia, commercializing the intellectual property from Virginia’s colleges, universities and federal laboratories, and enhancing economic development, particularly in rural areas.”

 

The implication was that CIT previously had followed some other set of priorities. Yet CIT watchers were left scratching their heads. As Taylor Lincoln, a writer for the Potomac Tech Journal noted in his story, “But weren’t those always the main tenets of CIT’s mission?” Indeed, he might have added, was it not Armstrong who’d hired the first CIT employee dedicated specifically to roping in federal research funds? Was it not Armstrong who’d set up the first field office in far Southwest Virginia? According to Lincoln, Brubaker conceded that CIT’s mission was substantially the same as it was before. The difference, he told the Journal, was that the objectives were more clearly stated now.

 

Why, then, link the re-statement of CIT priorities with the announcement of Armstrong's resignation if not to draw a connection between the two? Without explicitly saying so, the press release implied that policy disagreements were the basis of Armstrong's departure. But none of the subtle policy adjustments Brubaker noted seemed grounds for firing a senior executive. Could there be some hidden agenda for removing her?

 

Adding fuel to the speculation was Newstrom’s decision to refer all questions to the CIT board chairman, part of a larger effort orchestrated by Sotec (short-hand for the Secretary of Technology’s office) to pin responsibility on the Board. Newstrom was the one who had fired Armstrong after lining up the board's backing. Why was he hiding behind the chairman's skirt? Could it be, people wondered, that he had something to hide?

 

Rumors ricocheted around the state. Maybe Newstrom was clearing the way for appointment of a Warner favorite. Maybe he was trying to bullet-proof CIT by making Armstrong the fall-guy for its shortcomings. Maybe he kept her on so she could do the dirty work of whacking down CIT’s workforce then dumped her when they didn’t need her anymore. I don’t give any credence to such speculation. As I explained above, I believe that Newstrom concluded that Armstrong lacked the background needed to steer CIT as he redefined it. Out of respect for Armstrong, I'm conjecturing, the Board did not want to insinuate that she'd been forced to resign. But in the rush to get out a press release after the board meeting, the authors drafted a document that raised more questions than it answered. Nothing ominous, just a P.R. snafu.

 

Unfortunately, as I write this column, the rumors rage unabated. Neither Brubaker, CIT’s chairman, nor Newstrom, the interim president, have acted effectively to quell the speculation. And that's dangerous. In politics, perception -- even misguided perception -- can come back to haunt you as a reality.

 

It remains to be seen if the Republicans will make an issue of Armstrong’s firing. Del. Jeannemarie Devolites, R-Fairfax, told me she was “disappointed” in the way Armstrong was let go – “Anne deserves better than that” -- and she finds it “interesting” that Newstrom would be willing to incur a six-figure severance package plus executive search fees, given the state’s budget straits. But she also emphasized the Secretary has a right to put whomever he wants in the CIT slot.

 

Meanwhile, battered by the budget cuts, uncertain about the future, disoriented by the loss of their boss, CIT staffers are dazed and confused. Their angst is compounded by a sense of injustice. As one staffer put it, “I feel bad for Anne. … They let her do all the dirty work on the budget cuts. They let her announce two weeks ago that we’d only get two percent pay increases. … She loved CIT. They could have handled things differently.” 

-- August 5, 2002                                

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Anne Armstrong