1 expect the best Agency Head and AITR Meeting February 16, 2006 Welcome The Honorable William H. Leighty Chief of Staff Office of.

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www.vita.virginia.gov

Agency Head and AITR Meeting

February 16, 2006

WelcomeThe Honorable William H. Leighty

Chief of StaffOffice of Governor Timothy M. Kaine

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RemarksThe Honorable Aneesh Chopra

Secretary of TechnologyOffice of Governor Timothy M. Kaine

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Lemuel C. Stewart, Jr.Chief Information Officer of the Commonwealth

Agency Head and AITR Meeting

February 16, 2006

VITA Update:•Infrastructure Partnership•Services and Rates•Survey and Communications

www.vita.virginia.gov 4expect the best

VITA: The State’s IT Utility• Formed by Governor and General Assembly in 2003• Primary responsibilities

– Operate state’s IT infrastructure– Govern IT investments– Procure technology– E-911 and Virginia Geographic Information Network (VGIN)

• Structure– VITA is an Internal Service Fund agency*

• VITA’s budget is the fees it collects• VITA’s rates are approved by ITIB and JLARC

* Some general funds and E-911 fund

– Information Technology Investment Board (ITIB), a 10 member supervisory board appointed by Governor and General Assembly, is responsible for VITA

– ITIB hires the state’s Chief Information Officer under five-year contract to oversee VITA’s operation


VITA’s Responsibilities• Operations: State’s IT infrastructure

– State data center– Statewide telecommunications network (voice and data)– “In-scope” agencies’ servers, networks, desktops,

peripherals• Governance

– Statewide IT strategic plans– Commonwealth IT policies, standards, guidelines– IT investment management

• Review and approval of agency IT plans• Review and approval of IT projects/ procurements of $100k

or more• Ongoing oversight of major IT projects (>$1M, or mission

critical, or enterprise)• Project manager development program


VITA’s Responsibilities

• Procurement– Set statewide IT procurement policies,

guidelines, procedures– Lead supplier selection and contracting– Develop innovative, strategic partnerships

• E-911• Virginia Geographic Information Network

(VGIN)


VITA Operations at-a-Glance

VITA is responsible for approximately• 3,000 servers• 57,000 desktops• 1,500 locations • 1,200 VITA staff• $290 million annual budget• 500 government customers

– Executive branch– Localities– Other political subdivisions


Savings Report

FY 04 Savings FY 05 SavingsFY 06

Estimated Savings

Projected Cumulative

Savings

Cost Savings $15,858,000 $29,544,000 $26,000,000 $71,402,000

Cost Avoidances

$875,000 $13,455,000 $17,395,000 $31,725,000

Total $16,733,000 $42,999,000 $43,395,000 $103,127,000

• Cost savings: a reduction in costs for which funds are currently budgeted

• Cost avoidance: actions to avoid higher costs in the future

• 52% of savings benefited non-executive branch agencies


Accomplishments To Date

Created IT UtilityFormed a new organization in four months Defined organization, services, and culture

Consolidated Agency IT ResourcesTransitioned IT assets and support staff from 90 Executive Branch agencies in 18 months

Met All CommitmentsMet all deadlines, promises, and commitments with no disruption of services, without start-up funding

Launched TransformationInitiated efforts to truly transform service delivery in the Commonwealth by consolidating, standardizing, and leveraging a common infrastructure

Complete?


Key Points to Start• Transformation = Better Services

The Commonwealth will get a 21st century IT infrastructure for what it’s paying to maintain a 1980s IT infrastructure

• No InflationVITA will not be seeking more appropriations than it receives today for the facilities, hardware, software, and services in question

• VITA Employees Treated WellIt is our intent that reductions in VITA’s workforce will be accomplished through active management of attrition, retirement, retraining, and job placement


Transformation OutcomeIT Investment Present State Future State

Security Inadequate Adequate

Network Fragmented Integrated

Servers Numerous locations, excess capacity (3,000+)

Consolidated (<1,000)

Computing environment

Inconsistent Standardized

Help desk support Multiple (70+) Combined (1)

Service levels Undefined performance, variable costs

Defined performance, predictable costs

PCs Incompatible, outdated Compatible platforms, scheduled replacement


Transformation Outcome

Ag

ency

Tim

e an

d E

ner

gy

Mainframes Servers

Networks

App. Dev. Business Process

Re-engineering

Desktop Computing

Ag

ency

Tim

e an

d E

ner

gy

Mainframes Servers

Networks

App. Dev. Business Process

Re-engineering

Desktop Computing

Present State Future State

Source: Gartner


Infrastructure Partnership = TransformationWhat are the partnership highlights?• $272 million total capital investment by

Northrop Grumman • Significant job creation

– 400+ jobs in southwest Virginia alone

• Excellent employment packages• Consistent and proactive technology refresh• New, state-of-the-art facilities in Chesterfield

and Russell Counties• Innovative and flexible service contract model• A reliable and agile 21st century infrastructure


Northrop Grumman Background• One of the largest providers of IT services to

the U.S Government• Experienced systems integrator• Largest technology/manufacturing private

employer in Virginia• Nearly 32,000 employees in 14 primary

locations in Virginia• Three of seven sectors are headquartered in

Virginia: IT, Mission Systems, and Newport News


Employee Package

• VITA employees will receive a competitive employment offer from Northrop Grumman– Similar job requirements and responsibilities– Similar job location– Salary and benefits package that is

comparable or better than Commonwealth

• Employees can choose to accept or remain Commonwealth employees– “Managed” employees who remain will receive

technical direction from Northrop Grumman


Highlights of the Offers

• Employment guaranteed for first 12 months (except for “good cause”)

• Immediate 4% salary increase• Signing bonus of up to 6%• Immediate vesting in defined benefits plan/401k • Service credit for all prior state service to

determine eligibility for leave, disability, severance, retirement and health plans

• Free parking at new facilities and subsidized parking in current facilities and locations


Proposed Facilities

• Meadowville Enterprise Solutions Center– New, Tier III primary data center in Meadowville

Technology Park, Chesterfield County– VITA Headquarters and Northrop Grumman Richmond

Operations– Secondary Security Operations Center

• Southwest Enterprise Solutions Center– Back-up data center in Lebanon, Russell County– Enterprise help desk– Disaster recovery within 5-24 hours– Primary Security Operations Center

• Dinwiddie Project Support Center



Meadowville Enterprise Solutions Center


Southwest Enterprise Solutions Center


Southwest Enterprise Solutions Center


Technical Highlights• Enterprise Help Desk

– Single point of contact for infrastructure help and service

• Hardware refresh– Three-year cycle: initial 80% - 100% refresh

• Security– Enterprise-wide security

• Networks– Enterprise voice and data network– 100% network device refresh in years two and three

• Break/Fix Repair• Messaging

– Enterprise e-mail system


Value of the Agreement

• The proposed agreement is valued at $1.98 billion over 10 years, with one three-year extension

• Annual spending cap is $236 million• If we did nothing, the Commonwealth

would spend about $200 million more over the 10-year term– Duplicative, stove-piped infrastructure– Increased maintenance expenses– Inability to transform


Economic Development Highlights

• $38.3 million in total estimated economic benefits to the Commonwealth

• Southwest– Anchor tenant in Russell Regional Business Technology

Park– $22.8 million capital investment; creation of 433 jobs– Approx. 90% of labor pool drawn from southwest– Support of technology education at UVa Wise

• Chesterfield– Meadowville Technology Park anchor tenant– $240 million capital investment; 631 VITA and Northrop

Grumman employees • Dinwiddie County

– Project support center housing 34 employees


Risk MitigationRisk Mitigation Strategy

BudgetMinimum of 85% of total targeted baseline fees for any given year of contract

Price fluctuationBenchmarking Most Favored Customer status

Milestones/Schedule Payments tied to completion of milestones

Service level performance Performance penalty system

Contractual performance Termination and disentanglement

Economic development$2.3 million penalty for failure to meet job creation targets, applied as credit to CoVA


Termination Rights

Cause Fees

Default No exit or resolution fees

Lack of funds No exit or resolution fees

Incurred liability No exit or resolution fees

Change in control Resolution fees only

Force Majeur Exit and resolution fees

Convenience Exit and resolution fees


Early Contract Termination

• Disentanglement– Up to 2.5 years to transition services to new provider or

back to Commonwealth• Smooth transition with no service interruption• Ongoing use of assets

– Broad perpetual license for proprietary technology, including free maintenance and upgrades for two years

– Ability to make employment offers to vendor personnel responsible for terminated services

– Rights to contracts used in the performance of services


Key MilestonesMilestone Anticipated Date

General Assembly approval/public comment and transition planning

Service Commencement + 6 months

Move into new data center March 2007

Establish single help desk May 2007

Establish back-up data center June 2007

Complete initial desktop refresh November 2007

Complete single enterprise e-mail February 2009

Complete server consolidation February 2009

• Dates adjusted to incorporate General Assembly approval of capital lease component

• Subject to revision during interim phase/transition planning


What Does All This Mean for Our Constituents? • Agencies

– Improved 21st century technology services at today's cost

– Improved security of Commonwealth assets– Consistent technology innovation– Improved disaster recovery– Lower reoccurring cost at end of the project

• Local governments– Leveraged state services at lower costs– Backup and security services that previously were

unaffordable now are available– Expanded broadband access – Collaborative projects and services


What Does All This Mean for Our Constituents? • Taxpayers

– Improved security of information– Expanded, improved and simpler services – No additional taxpayer dollars– Economic development and new jobs

• Businesses– Continued opportunity to compete for

Commonwealth business– Strong focus on SWAM business opportunities


How Will the Partnership be Managed?• The Service Management Organization (SMO)

within VITA will manage infrastructure service delivery– Single point of accountability– Ensures both partners fulfill contractual obligations

• Significant contract provisions to manage effectiveness of partnership

• Independent audits of expected outcomes• Agency, local government and higher education

focus groups, work groups and advisory committees


What Happens Now?• Commence partnership preparation for

transformation• Final agreement reviews – General Assembly• Project implementation plan for ITIB approval• VITA internal organizational transformation• The interim phase will become final upon the

earlier of:– Completion of all General Assembly and other approvals– June 30, 2006, unless extended

• Commonwealth has the option to terminate with limited exposure


Memorandums of Understanding (MOUs)• VITA will maintain governance and oversight of

the IT Infrastructure Partnership• Purpose of memorandums is to clarify roles and

responsibilities (APA), establish performance metrics, and shift to service-based billing (JLARC)

• MOUs are the tool to document current service requirements and to manage and measure partnership performance

• Northrop Grumman obligated to comply with our MOU terms and conditions

• All of us have been working together since November


Memorandums of Understanding (MOUs)• Move from direct bill plus to service-based

billing– New model combines labor and non-labor

components– Labor service billing effective March 1, 2006

• Most agencies have signed MOUs– Working with others to finalize MOUs

• Will immediately begin working with you to establish non-labor component– Capacity vs. asset based– Non-labor service billing begins July 1, 2006


Services and Rates• New Security and Project Management Services

– General Assembly and JLARC directive– Security monthly fees and project management time

and material project based– The administration is seeking general fund support for

agencies in HB/SB 30– Agencies and higher education – Effective June 1

• Small Agency Start-up Funding– Equipment and technical support services– End June 30 - $500,000 annual subsidy– Have approached DPB for assistance


Customer Survey and Communication• UVa Center for Survey Research

– Technical services and support– Communication and business understanding– Surcharge fee– Governance – rules, policies, and service


Next Steps

• VITA organization restructure – April• Survey Action Plan for ITIB approval – April• Quarterly meetings and regular updates• Focus groups and work groups• Agency advisory committees (multiple

levels)• Annual independent survey – Fall FY06


For More Information on VITA


Lemuel C. Stewart, Jr.CIO of the Commonwealth

[email protected]

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Closing RemarksThe Honorable William H. Leighty

Chief of StaffOffice of Governor Timothy M. Kaine

1 expect the best Agency Head and AITR Meeting February 16, 2006 Welcome The Honorable William H. Leighty Chief of Staff Office of.

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