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Lemuel
C. Stewart vividly remembers his first day on the job,
in 2005, as chief of the Virginia Information
Technologies Agency (VITA). The agency had recently
been created to rationalize the Commonwealth of
Virginia's fragmented, outdated and expensive
information technology system.
Attending a hearing of the Senate appropriations
committee, Stewart presented an overview of what the
agency hoped to accomplish and how it needed $300
million to do it. The
hearing went smoothly until the end, Stewart
recalls. "The chairman looked at me and said,
'You know what? We don't have any money to do this
with.'" Stewart
spent the next 90 days devising a fall-back
plan: Virginia would solicit
bids from a private vendor to join in a
public-private partnership, contribute the up-front
investment capital, and recoup its investment over
the life of the contract. As Stewart
recapitulates what he was asking for: "You put
up the money, assume all the risk, and cap expenses
at 2005 levels for 10 years." The
proposal, the first such state IT outsourcing in the
country, attracted bids from four major national
players. In the end, Northrop
Grumman, the Northern Virginia defense and IT giant,
snagged the job with a promise to invest
$270 million to be repaid over 10 years, and to cap
expenses at $236 million a year (with adjustments if
the scope of services increased). As VITA
went about consolidating the state's IT
administration, Northrop Grumman started
building the hardware backbone for a statewide
infrastructure, including the state's IT nerve center, the state-of-the-art Commonwealth Enterprise Solutions
Center (CESC) south of Richmond, a back-up center in Southwest
Virginia, and a telecommunications system to tie
everything together.
Expectations
were high. By consolidating hardware and services
that had been scattered among dozens of agencies,
VITA's champions had promised to drive down costs and reap millions
of dollars yearly in savings that lawmakers could
apply to other priorities. Today, three years after
Stewart's arrival, functions are moving to the
enterprise solutions center and VITA is nearing the end of the restructuring process. But
not everyone is happy. Many government employees are
saying, "Show me the money!" Some agencies
are actually paying more for IT services today than
before the much-vaunted reform. Some state employees
assert that service is worse. (See End
Note One.)
Complaints
reached such a fever pitch that Gov. Timothy M.
Kaine put language in the fiscal 2009-2010 budget
that would have transferred IT procurement from VITA
to the Department of General Services -- a startling
rebuke had it been carried out. The
administration subsequently backed off that idea,
but Sen. Ken Stolle, R-Virginia Beach,
introduced a bill
directing the Joint Legislative Audit and Review
Committee (JLARC) to evaluate the cost, quality and
value of services that VITA provides state agencies.
That bill passed the state Senate and is now under
consideration by the House of Delegates.
Against that background, VITA chieftain Lem
Stewart responded to a post on the Bacon's
Rebellion blog in which I had queried whether the
agency was living up to its promise. He invited me
to the state's new facility for a tour and an
interview. I accepted the
offer, and I present here what I saw and heard. This is only one side of the
story, but I offer it in the hope that it will
stimulate a constructive conversation about an issue that
has received only sporadic public attention.
There
can be no disputing the fact that VITA
has implemented major improvements to the state's IT
system, although many of the benefits may be less
than apparent to the end users, the state agencies. Benefits include:
Before
VITA, there were more than 90 autonomous IT shops:
in effect, one for each agency. There was massive
duplication of resources, obstacles to information
sharing, and no ability to leverage the state's buying
power. Although there is still work to do, Stewart
says, VITA has remedied those deficiencies to a
significant degree.
Security
and redundancy. Pre-VITA, the state IT control
center was located in a rehabbed warehouse in
Richmond near the
Interstate. "The facility met virtually no
relevant security standards," Stewart says. The building
leased out space to non-state workers, and it
contained a parking lot that took in renters from
nearby businesses. There was even a cafeteria that
served the public. The circumstances made it all but impossible
to control access.
The
most visible change to the state's IT system can be
seen at the Commonwealth Enterprise Solutions
Center in a remote, hard-to-find facility in
southern Chesterfield County. The facility meets
Tier 3 security standards, just below that of the
military. Cameras watch every
movement outside -- the artificial intelligence can
spot someone leaving a briefcase unattended -- and
the building is protected by an array of ornamental stone barriers strong enough to halt anyone, such
as a car bomber, who might try to plow into the building. The
facility also is built to withstand 155 mile-per-hour
hurricane winds.
In case the electricity goes
out at the main Dominion power sub-station,
CESC connects to a second, separate sub-station.
In case both sub-stations go out, the center
can draw upon its own diesel generators with enough
fuel on hand to run for 72 hours. In case one of the
two generators blows a gasket, there's a third
standing by. Plus, there's a massive array of
truck-sized batteries to supply surge power for the
12 seconds it takes the diesel generators to kick
in.
Security
is tight indoors as well: card swipes at
corridor doors, roving
guards, and a biometric, fingerprint scan to reach the inner sanctum. Deep inside the
facility, a team of professionals guard against viruses,
hackers and other cyber threats.
Coordinating with national and international
organizations, the security team monitors hundreds
of threats around the world and on any typical day
hones in on five or
six that might pose a risk for the state IT system. It was not uncommon
for security threats to penetrate the old,
decentralized system, says Fred Duball, director, service
management. So far, there have been no breaches at
the CESC.
In
the remote chance that a natural disaster or
terrorist act took out the Chesterfield facility,
the Commonwealth maintains a
back-up facility in Russell County that can get the
state IT system back up and running within 24 hours.
In pre-VITA days, someone would have had to run magnetic
back-up tapes to a facility in Pennsylvania where it
would take three days to get the state operating
again.
All
that security and redundancy costs money, and the
value of that expenditure may not be readily
apparent to state agencies -- until some terrible mishap occurs.
If the state IT system crashes during a
disaster or emergency, there would be no calculating
the cost from the disruption to state operations.
New
technology. The quality of IT services under the
old regime was very uneven, Stewart says. Large
organizations like the Department of Corrections and
the Department of Transportation ran strong IT
operations. But many smaller agencies did not; they
limped along on antiquated equipment. Sixty percent
of state equipment was eight to 10 years old, and
the technology environment dated back to the '80s.
When
Stewart came on board, he found PCs with
286-generation computer chips still in use. The warranties
on many PCs had run out,
and no one was servicing them. Indeed, some were so
old they couldn't be serviced. The machines were
prone to breakdowns, and they had limited
functionality. The statewide VITA standards ensure
that state workers are equipped not only with
faster, more reliable PCs but they are connected by faster communication links.
Procurement.
VITA identified instances in which the state had
more than 100 separate contacts with a single
computer vendor -- many of them buying at different
prices. "We took the 100 contracts,
consolidated them and put them out to bid,"
Stewart says. Consolidation of purchasing saved
state and local government $16.7 million in 2004 and
$26 million in 2005. The same economies of scale
apply to the purchase of software products. Before
VITA, the annual price of leasing anti-virus
software ran about $23 each for the state's
60,000 PCs, Stewart says. That price has dropped to
$6 per PC. The savings exceed $1 million a year!
Energy
efficiency. Many of the techniques for
maximizing energy efficiency are
on display at the Commonwealth Enterprise Service
Center. A big challenge of buildings stuffed with
servers is maintaining a constant temperature around
70 degrees that allow the computers to operate at
maximum efficiency. That's not easy because the
servers give off so much heat. The CESC has an
elaborate system for delivering cool air where it's
needed and to ventilate away the hot air. VITA's
state-of-the-art server facility is far more
efficient than the many jury-rigged operations that
some agencies maintained, with servers stuffed in
closets, hidden under desks or arranged any old way.
Between the CESC and the adoption of Energy Star
standards for PCs, Stewart says, he expects to save
$12 million a year in energy costs reductions by the
end of next year.
Administrative
overhead. The decentralized pre-VITA system was
inefficient in another way: massive duplication of
manpower in each agency silo. Stewart calculates
that administrative overhead constituted 17.1
percent of total IT expenses. Through consolidation
VITA has brought that
number down to 9.5 percent, which is better than the
national average, but Stewart believes there is
still room for improvement.
If
VITA has achieved so much, why are people unhappy? I
offer Stewart's argument here, recognizing that
there may be other valid perspectives that go
unstated.
First
of all, change is always difficult, especially when
it means that agency chiefs lose some of their
autonomy and authority. Any IT project costing more
than $100,000 -- such as implementing a law
enforcement activity management system for the state
police or a fleet equipment management system for
VDOT -- must be signed off by VITA. Acknowledges
Stewart: "That causes heartburn."
Second,
it takes time for the benefits to materialize.
Stewart can't snap his fingers and magically create
the efficiencies he has in mind,
especially when VITA committed to not lay off any
state IT workers. Furthermore, he can't migrate
everyone to the new system all at once. While
some agencies benefit right away, others feel left
behind.
Thirdly,
says Stewart, there are winners and losers from the
reorganization -- and the losers tend to be more
vocal. VITA has instituted a uniform system for
charging agencies for their IT equipment and
services. Everyone gets treated the same. Under the
new cost-allocation methodology, agencies that
scrimped on IT spending wind up getting charged
more. They may have better equipment and service as
a result, Stewart says, but there was "lots of
noise and dismay" that the added expense would
come out of their hides. However, that controversy
should die down, he suggests, now that the Kaine
administration is making budget adjustments to
offset the higher charges.
Stewart
envisions that the transition to the new VITA
standards will take about three years and be
substantially complete by the end of this year. At
some point, VITA efficiencies will save enough money
to pay back Northrop Grumman for its giant
infrastructure investment and start piling
up savings for the state. Meanwhile, VITA is leveraging
its investment for the benefit of local governments,
schools and libraries.
Perhaps
VITA's best defense is what the state would have
spent had the agency never existed. By Stewart's
calculation, state agencies would have spent $120
million more over the next decade on failed IT
projects, $200 million supporting an aging IT
infrastructure, $120 million on energy consumption
and $45 million for IT products and services. If
those numbers are close to credible, it's hard to
argue that VITA isn't accomplishing its goal.
--
February 25, 2008
End
Notes
(1).
It is difficult to get government officials unhappy with VITA
to speak
on the record. But a sense of the dissatisfaction
comes through in anonymous comments posts about VITA in the
Bacon's Rebellion blog. For a taste, see the
following entries:
"After
Filling 1,368 Positions, Kaine Moves to Trim State
Workforce," Feb. 7, 2008
"Oh,
the Pain, the Pain! Fifty State Employees (out of
119,000) Might Get Laid Off!", Sept.. 18,
2007
"On
the Path to Outsourcing: The Biggest Computer Crash
in Recent History," June 22, 2007
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