Category Archives: Governance reform

For All Its Problems, the State IT Contract Is Functioning Like It Should

Virginia state server farm in Chesterfield County. Photo credit: Richmond Times-Dispatch

Virginia state server farm in Chesterfield County. Photo credit: Richmond Times-Dispatch

by James A. Bacon

The relationship between the Virginia Information Technologies Agency and Northrup Grumman is getting nasty as the two bang heads over the alleged breaches of the $1.3 billion, 13-year contract to provide IT services to Virginia state government.

Del. John O’Bannon III, R-Henrico, called the relationship between the two “a whirlwind courtship, short honeymoon, rocky marriage, and now we’re heading to an ugly divorce,” reports Michael Martz with the Richmond Times-Dispatch.

Martz’s article details disputes regarding Northrup Grumman’s alleged lack of operational support for a messaging services contract assigned to a third party, licensing and maintenance support for the state’s IBM mainframe service, an increase in Microsoft licensing fees, and charges for unneeded capacity on a Unisys mainframe system. Northrup Grumman has its own beefs, claiming the state owes it $10 million. As the contract expires, the contractor has signaled its intention not to participate as prime contractor after the current expires next year.

Some might wonder if privatizing the state’s IT services, one of the major achievements of the Warner administration, was a bad idea. In actuality, the disputes simply show how incredibly complex it is managing a massive government IT operation that cobbles together legacy systems such as IBM and Unisys mainframe computers with state-of-the-art desktops and servers. Enforcing the contract makes visible issues that otherwise would have remained submerged and very possibly might have gone unaddressed.

Indeed, the system is now working as it should. The state is acting as overseer of the contract, holding Northrup Grumman accountable for living up to its terms and conditions. Under the old arrangement, there was no one to hold accountable. State IT operations were dispersed between fragmented IT fiefdoms. Responsibility was diffused; no one had effective charge. The system was antiquated, inefficient, subject to disruption and vulnerable to security breaches. The system operated by Northrup Grumman, while less than perfect, is vastly superior to what it replaced.

The big question now is what comes after the Northrup Grumman contract? Does the state look for a single vendor, or does it seek competitive bids for different chunks of state business? One huge change between 2017 and 2004 is the emergence of the Cloud. Instead of maintaining its own server farms in Chesterfield and Russell counties, the commonwealth could consider contracting out its data storage business to any one of half dozen highly competent providers — all of which have server farms here in the state. A counter-balancing consideration is the need to ensure inter-operability between different providers.

A concern I have is whether the state can afford to pay the salaries it takes to recruit the top talent to effectively manage oversight of the state’s IT architecture. The IT industry pays top salaries for the brightest minds and dangles rewards like bonuses and stock options. Who would want to work for the state, where salaries are uncompetitive and pay raises are contingent upon state budget conditions? When it comes to managing a $135 million-a-year contract (a sum that could jump to $200 million a year), a few hundred thousand dollars a year in senior executive salaries is chump change. But state law makes it impossible to hire the best people we can find.

No Magic Bullets, Just Hard Work

goochland_county_courthouse

Goochland County Courthouse

by S.E. Warwick

The fiscal perils of Petersburg are not unique. Five years ago Goochland County was in similar disarray. Then ten citizens, serving on a newly elected board of supervisors and school board, stepped forward to transform the county government from a dysfunctional mess into a model for the region. The turn-around, a great untold story, shows what everyday people can accomplish when they put their minds to it.

In late 2008 irregularities appeared in the Goochland Department of Public Utilities. Checks found stuffed in drawers and a safe, rather than deposited in the proper accounts, raised the first red flag. Utility billing was erratic at best.  In a public utility system with fewer than 3,000 customers, water meter records were unreliable. Forensic accountants called in to audit departmental records found widespread irregularities but no behavior that rose to the level of criminal. The director of public utilities departed.

The county administrator “retired” suddenly following a ham-fisted attempt to gag county employees. An interim county administrator recommended that a new auditor be retained to complete the FY 2009 Comprehensive Annual Financial Report, which uncovered 40 material restatements. The accounting firm used by Goochland for more than a decade was found to have closed the county books then audited its own work.  Internal accounting controls were few and not well observed. The actual general fund balance turned out to be half of its assumed value.

The school board refused to present budgets based on available revenue and demanded that the supervisors raise taxes.

Then the county treasurer was caught embezzling public funds, which brought more official scrutiny of Goochland’s fiscal matters.

Citizens were increasingly outraged as good old boys, in power for decades, used the “whistle past the graveyard” approach to the growing problems faced by the county.

In November, 2011, voters elected an entirely new school board and four new supervisors. They campaigned together listening to the concerns and complaints of the citizens, and had common goals—make Goochland government work for its people and restore public trust.

Even before taking office, the “new broom” as many called the new team, crafted strategies to reverse years of lackadaisical government. Relations between the supervisors and school board became collaborative instead of contentious. Budgets were trimmed with surgical precision to address falling tax revenues and cut out dead wood.  Some functions were consolidated, others eliminated.  The tax rate held steady at 53 cents per $100 of valuation because the supervisors believed that government must live within its means, and higher taxes would discourage badly needed economic development.

The world did not end.

Core services got priority. The budget process added a look-ahead provision to anticipate and plan for extraordinary costs. Public meetings were live-streamed using a free service.

Massive debt was restructured to a manageable level. A policy to limit debt service to a small percentage of the annual budget was adopted.  Financial professionals were added to the county staff.  Goochland County earned a AAA Standard & Poor’s Bond Rating in 2015 and now regularly receives accolades for its budgets. Schools rank at or near the top in the area. Economic development, which was dead in the water under the old guard, is, thanks to a new attitude and streamlined procedures, picking up.

A skilled county administrator, working in concert with the supervisors, transformed local government from a collection of fiefdoms that often worked at cross purposes, into a team whose primary goal is to provide excellent and efficient service to citizens.  Citizens are encouraged to “grade” interactions with county government.

Why did the “new broom” team do it? Certainly not for the modest salary, nor for personal gain. They could easily have turned a deaf ear to the county’s problems and enjoyed their lives. In the best traditions of citizen leaders, Goochland’s supervisors and school board pledged their time and talents to reform local government.  They rolled up their sleeves to ask hard questions and seek remedies for insoluble situations. They have high personal standards and understand that they answer to the citizens and are accountable for their actions.

In Goochland, the right people stepped forward when voters were looking for people to fix a badly broken organization.  These citizen leaders spent untold hours looking for ways to do things smarter, better, cheaper. Good government, they contend, is common sense in action. They have been in office for five years and are not done yet. No magic bullets here, just hard work and commitment to the citizens who put them in office.

S.E. Warwick, a Goochland resident, publishes the “Goochland on My Mind” blog. For years, she has been the only journalist regularly covering Goochland board of supervisor meetings.

Three City Council Seats, Only One Candidate

Vacant store fronts in downtown Manassas Park.

Vacant store fronts in downtown Manassas Park. (Photo credit: Washington Post)

The City of Manassas Park in Northern Virginia has three open City Council seats this fall — but only one candidate will be on the ballot.  The situation is a stark example, suggests the Washington Post, of the apathy that is growing more prevalent among America’s small cities and towns.

Who can blame Manassas Park citizens for not wanting to run? The city has huge challenges and serving on City Council is a big time commitment, but the job pays only $9,200 per year. The mayor makes $9,800.

The Washington Post describes the challenges this way:

In recent years, the city took on debt — about $120 million — building new schools and other government buildings in hopes of competing with nearby Prince William County and Manassas City for jobs and shopping attractions. So far, there hasn’t been much economic activity. A downtown business district sits mostly empty. …

Meanwhile, local schools are becoming more crowded with the children of families who have moved to Manassas Park in search of cheaper housing. Many are Latino immigrants working low-wage jobs.

With an annual debt payment of $9 million — about 12 percent of the total operating budget — local leaders are anxious about the possibility of cutting services or raising property taxes beyond the $3,947 per year on average that homeowners are already paying.

Few people, it seems, want to take on those headaches.

Heavy debt, eroding economic base, civic apathy and difficulty recruiting qualified candidates for public office is a recipe for decline. Council member Michael Carrera suggests reducing the number of council seats from seven to five, which makes sense for a city of 15,000 people.

Better yet, the city should consider reincorporating with Prince William County and devolving into a town…. assuming Prince William would go along. Unfortunately, there’s no guarantee that Prince William would be willing to take on the city’s headaches and liabilities.

Harder Than It Looks

When Bacon's Rebellion caught up with Sara Carter, Appomattox County supervisor, she was driving this snappy yellow two-seater. She insists that she normally drives a "mom" car, but when she, her husband and kids start playing musical chairs with cars, she sometimes ends up with her husband's "midlife-crisis car."

When Bacon’s Rebellion caught up with Sara Carter, Appomattox County supervisor, she was driving this snappy yellow two-seater. She insists that she normally drives a “mom” car, but when she, her husband and her teenage children start playing musical chairs with cars, she sometimes ends up with her husband’s “midlife-crisis car.”

by James A. Bacon

Elected to the Appomattox County Board of Supervisors in 2013, Sara Carter enjoyed an edge over other newby supervisors when it came to learning the intricacies of local government — she also was serving as planning director for  Cumberland County not far away. An “exemplary” certification program provided by the Virginia Association of Counties (VACO) on open government and other legal aspects of the job was helpful. But when it came to deciphering government finances, she was largely on her own.

Carter and I chatted early this morning at a Sugar Shack (obscenely delicious doughnuts guaranteed to cut short your life expectancy) while she was in Chesterfield County for a VACO conference. She reached into a tote bag and pulled out two hefty documents, one a line-item budget, the other a copy of the Comprehensive Annual Financial Report. No one offers certifications for reading documents such as these that would make even a CPA’s eyes glaze over.

Our discussion was prompted by the travails of Petersburg City Council, which got blindsided by a massive backlog of unpaid bills and a budget deficit equivalent to roughly 20% of the budget. While steering clear of comment upon Petersburg’s woes or the performance of its council members, Carter emphasized the challenges of councilmen and supervisors of small towns and rural jurisdictions in Virginia.

For starters, the subject matter is forbiddingly complex, encompassing a wide array of disciplines — even for a College of William & Mary grad like Carter. It can take years for a novice to master the nuances  of everything from school funding, public works, water & sewer, public safety, and transportation, land use and community development.

VACO’s programs focus mainly on public policy issues and on keeping newbies from violating open-government laws, such as unwittingly discussing in private communications or chance encounters subjects that should be limited to a public forum. Those topics are important, Carter says, but newcomers need help on other subjects, too.

Second, part-time public officials have a limited amount of time to dedicate to understanding the numbers. Most members of the Appomattox board work for a living. She, too, has a full-time job, not to mention a marriage, three children and a small pig farm to occupy her attention. And when she is on the job, her time is often consumed by “micro” issues that get people stoked up but have minimal budgetary impact. “I can’t tell you how much time I’ve spent on the animal shelter,” she says. “Animal people are crazy!”

To understand local finances, elected officials typically rely upon presentations by city or county staff. The quality of staff varies widely in smaller localities. (She’s quick to sing the praises of Appomattox’s county manager.) Competent, ambitious managers often move to larger jurisdictions that pay better. “You have board members who don’t understand finance. They listen to staff – and the staff is often overwhelmed, too.”

Another source of advice comes from outside financial advisers such as Davenport & Co., a Richmond-based investment banking firm. While Davenport’s representatives are professional – she does not question their integrity – they do have a subtle bias. They make money by selling bonds, Carter observes. They don’t make policy recommendations on whether or not to sell bonds. But, she adds, “their job is to sell a product.”

When she joined the Appomattox board, the county enjoyed sound finances and low indebtedness, and it had the capacity to issue new bonds, Carter says. What the books did not say, she adds, is that important public buildings suffered from a major maintenance backlog. The balance sheet did not necessarily reflect the true condition of the county’s assets – a level of detail that investment bankers from Richmond might not be familiar with.

A third challenge is citizen indifference. Only one issue is guaranteed to pack the supervisor chambers – a proposed tax increase. Many are the meetings where no more than one or two citizens show up. Supervisors get punished for taking a highly visible action like raising the property tax, but no one notices if they take budgetary short-cuts that undermine the county’s fiscal health.

Most people don’t pay attention to the nitty gritty issues of local government until things fall apart, Carter says. “Then they want to know, what went wrong?”

Goodwin Says Closed Meeting Was Legal

William H. Goodwin, rector of the University of Virginia, has disputed the account by former rector Helen Dragas that a June Board of Visitors meeting held in closed session violated the Freedom of Information Act.

The Freedom of Information Advisory Council issued an advisory opinion Friday saying that the board appeared to violate the law, assuming events unfolded as alleged in a letter written by Virginia Beach attorney Kevin E. Martingayle at Dragas’s behest. (See details of the opinion here.)

During a break in the orientation program for new board members Sunday, Goodwin told the Daily Progress that the narrative was inaccurate, but declined to get into specifics. “I think it was disappointing they would write such a lengthy article based on what one person said,” he said, referring to the 5,000-word opinion.

The board voted to hold a closed session to discuss personnel and legal matters. Dragas, whose term on the board has since expired, said that the board discussed substantive details of a $2.3 billion Strategic Investment Fund, a topic that should have been aired in open session — a charge seemingly backed by the distribution of guidelines for spending revenue from the fund that were tagged for discussion in “executive session.” University officials retorted that board members “asked questions about the Fund that deviated from the designated personnel topic” and that when university counsel brought it to his attention, Goodwin “ended the discussion.”

— JAB

FOIA Case Against UVa Tightens

uva_fog_smallDiscussion of a controversial $2.3 billion Strategic Investment Fund in closed session during a University Virginia Board of Visitor’s meeting appears to be a violation of the Freedom of Information Act (FOIA) — assuming events unfolded as alleged in a letter by an attorney representing former Rector Helen Dragas, concluded Maria J.K. Everett, executive director of the Virginia Freedom of Information Advisory Council in a staff advisory opinion released today.

Virginia Beach attorney Kevin E. Martingayle asked for the opinion in a letter describing Dragas’s version of events at the board meeting, her last before being rotated off the board. In that meeting, she dissented from a vote to certify that the closed session had been held in compliance with the FOIA.

Wrote Everett:

The answer to your question is therefore “yes,” it would be a violation to hold a closed meeting to discuss a fund when the motion to convene the closed meeting was for purposes of discussion of personnel, legal matters and litigation.

The open-meeting exemptions allowed for “personnel” and “legal matters” do not cover “general policy or other matters that may eventually have legal consequences,” Everett wrote.

However, the law does not set forth any remedial action to be taken by the public body, in this case the UVa Board of Visitors. The statutory remedy for a FOIA violation, Everett wrote, is “a petition for mandamus or injunction supported by an affidavit showing good cause.”

While University of Virginia officials have stoutly defended both the justification for the $2.3 billion fund and the manner in which it was approved by the board, they have met Dragas’s FOIA charge with silence.

— JAB

More Questions about UVa Board’s Closed Session

Email from Megan K. Lowe, who works in the office of Patrick D. Hogan, executive vice president and COO of UVa, to Hogan.

Email from Megan K. Lowe, who works in the office of Patrick D. Hogan, executive vice president and COO of UVa, to Hogan four days before the Board of Visitors meeting.

by James A. Bacon

The Virginian-Pilot has identified material in Freedom of Information Act documents released to members of the General Assembly that seem to support the version offered by former University of Virginia Rector Helen Dragas of a closed session held June 10 by the board.

While the board justified the closed meeting on the grounds of discussing confidential personnel issues, which is allowed by law, Dragas maintains that the board dealt with substantive policy issues relating to a controversial $2.3 billion Strategic Investment Fund that should have been discussed in an open forum.

Here’s what the Pilot has to say:

The June 6 email from an assistant vice president at the University of Virginia to two other administrators seems clear.

In a summary of what was expected to happen at the June Board of Visitors meeting a few days later, it said the rector would give a report:

“EXECUTIVE SESSION: [Rector] Bill Goodwin to give overview on Strategic Investment Fund.”

Board members received similar information in an email a few days earlier: “In preparation for the discussion in Executive Session on June 10, please review the attached background materials on the Strategic Investment Fund.”

The Pilot article doesn’t mention it, but those background materials included a list of more than 50 projects, proposing the expenditure of $128 million over five years and submitted for funding by the Strategic Investment Fund, and a list of guiding principles for selecting projects. Dragas has said that the closed session, consistent with the distribution of those two documents, provided an overview of how the projects would be evaluated and funds granted, and timetables for the first awards.

The University has insisted that it did not break the law. A university spokesman provided the Pilot a narrative of the closed session, which the newspaper summarized as follows:

The materials circulated about the fund ahead of time were to provide board members background for the “confidential discussion of personnel issues.”

It continues: “During the personnel discussion, some Board members asked questions about the Fund that deviated from the designated personnel topic.”

At that point, university counsel Roscoe Roberts “called the deviation to the Rector’s attention” and Rector Goodwin “ended the discussion and moved on to another personnel matter.”

Bacon’s bottom line. The question that naturally arises is this: If the Board of Visitors intended to discuss “confidential personnel issues” only in the executive session, (a) why did the administration say in an internal communication that Goodwin would “give overview on Strategic Investment Fund” in that session, and (b) why did the administration distribute to board members a list of proposed projects and funding guidelines ahead of time?

For those inclined to digging deeper into UVa’s Strategic Investment Fund, here are 837 pages of documents released in response to the General Assembly’s Freedom of Information Act query.