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Can Jim Duffey save Virginia's huge outsourcing contract?

As former EDS executive James Duffey prepares to become Virginia’s next secretary of technology, one big task looms ahead of him – getting the state’s outsourcing contract with Northrop Grumman back on track.

The $2 billion contract has missed deadlines and fallen well short of expectations. State auditors and the company have traded salvos over who carries the most blame.

The contract is so large and far-reaching – every state agency is supposed to turn over their IT infrastructure to Northrop – that cancelling the contract isn’t really an option.

So who better to face that challenge, or call it a mess, than Duffey?

He was part of EDS when the company turned around its own troubled outsourcing contract, the Navy-Marine Corps Intranet. NMCI has gone from being an albatross for the company to being a star.

EDS, now HP Enterprise Services, also manages other huge outsourcing contracts on the state and local level, particularly in the Medicaid and Medicare processing area.

Because Virginia can’t afford to fire Northrop Grumman, it has to help the contractor succeed, and Duffey knows very well what a contractor needs to succeed.

He faces two hurdles, though. First is getting the state legislature to give him the authority to directly manage the contract. Virginia, my beloved home state, has a screwy structure among its secretary of technology, chief information officer and the Virginia Information Technologies Agency. In an effort to remove politics from the CIO and VITA, the state created a structure where no one is really accountable.

I hope that will get fixed.

The second hurdle is that no one has pulled off a successful statewide outsourcing project.

Good luck, Mr. Duffey.

Coincidentally, Northrop Grumman is in the midst of moving its headquarters from California to the D.C. area. I'm not sure what role, if any, Duffey will have in trying to bring the company to Virginia for its corporate headquarters. Gov.-elect Bob McDonnell has pledged that he won’t let the wooing of Northrop Grumman to the commonwealth interfere with pressure on the company to perform better.

Posted by Nick Wakeman on Jan 07, 2010 at 12:18 PM


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