Lemuel C. Stewart, Jr.

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VITA Annual Report
Lemuel C. Stewart, Jr. Chief Information Officer
of the Commonwealth Joint Commission on
Technology and Science December 1, 2005
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VITA Update

• Governor and the General Assembly set change in
  motion in 2003
• VITA enterprise-wide IT re-engineering initiative
• Phase I Integration
• Phase II Transformation
• Integration completed successfully
• Created IT Utility
• Consolidated agency IT resources
• Provided continuous service
• Launched procurement reform
• Implemented disciplined IT investment program
• Achieved 45 million in cost savings and 14
  million in cost avoidance (FY04-05)
• Transformation is next step to meet duties
  established in 2003 legislation

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2005 Highlights

• Completed integration of 90 executive branch
  agency IT infrastructure and staff to VITA
• Reconstituted the Council on Technology Services
• Conducted independent validation and verification
  on 21 major IT projects
• Developed the Enterprise Business
  Architectureframework for Commonwealth strategic
  business plan and future enterprise solutions
  opportunities
• Completed refresh of the four-year statewide
  strategic plan for technology
• Expanded outreach to local governments to grow
  business and provide savings and efficiencies

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2005 Highlights

• Participated in the Commonwealth of Virginia IT
  Symposium (COVITS)
• Reduced investment in duplicative, stand-alone
  systems
• Launched collaborative solutions
• In 2005 Learning Management System and G2G
  Interface
• In 2006 Enterprise GIS and Enterprise Business
  Licensing
• Submitted the 2005 Recommended Technology
  Investment Projects Reports with recommendations
  for funding priorities
• Managed portfolio with a monthly average of 36
  major IT projects at 850 million with no major
  project failures
• Improved outreach to and participation from SWAM
  businesses

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FY 2005 Financial Results
As of June 2005
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FY 05 Results-FY 06 Projections
Revenue Expense
Revenue Expense
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IT Savings Initiatives
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Infrastructure Partnership

• This is a true partnershipshare in risks and
  rewards
• Good deal for the Commonwealth
• New, streamlined infrastructure
• Improved security
• Good deal for employees
• New standard for employee treatment
• Managed workforce reduction no mass layoffs
• Good deal for citizens
• Job creation
• Commitment by Northrop Grumman to grow business
  in Virginia

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What are the partnership highlights?

• 272 million total capital investment
• Job creation
• Excellent employment packages
• Extensive 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

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Who is Northrop Grumman?

• One of the largest providers of IT services to
  the US 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

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Why Northrop Grumman?

• Met all Musts
• Employees MUST be treated fairly and equitably
• No additional GF or taxpayer dollars
• No increased cost over our FY05 baseline expense
  level
• Must have skin in the gameinvestment risks
• Must provide value to citizens (economic
  development)
• Provide more efficient and modern IT environment
  that improves services and security
• No services provided from outside U.S.
• Shares a common vision for excellence in customer
  service and unwavering commitment to customer
  satisfaction

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Why Northrop Grumman?
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What is the employee package?

• All VITA employees who spend at least 60 of
  their time on infrastructure support/services
  will receive a competitive employment offer from
  NG
• 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

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What are the 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

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When will offers be made?

• Employees will receive detailed information and
  invitations to participate in information
  sessions prior to offers
• Offers will be made after final approvals of the
  agreement (est. Spring 2006)
• Once an offer is made, employees will have up to
  120 days to decide whether to accept
• Signing bonus incentives
• 6 of new salary if offer accepted within 30 days
• 4 of new salary if offer accepted within 60 days
• 2 of new salary if offer accepted within 90 days

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What facilities are proposed?

• Meadowville Enterprise Solutions Center
• New, Tier III primary data center in Meadowville
  Technology Park, Chesterfield County
• VITA Headquarters NG 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

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Meadowville Enterprise Solutions Center
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Southwest Enterprise Solutions Center
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Southwest Enterprise Solutions Center
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What are the technical highlights?

• Enterprise Help Desk
• Single point of contact for infrastructure help
  and service
• Hardware refresh
• Three-year cycle
• Security
• Enterprise-wide security
• Networks
• Enterprise voice and data network
• 100 network device refresh in years 2 3
• Break/Fix Repair
• Messaging
• Enterprise e-mail system
• Support Blackberry enterprise server

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What is the value of the agreement?

• The proposed agreement is valued at 1.98 billion
  over 10 years, with one 3-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

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What are the economic development highlights?

• 38.3 million in total estimated economic
  benefits to the Commonwealth
• Southwest
• Russell Regional Business Technology Park anchor
  tenant
• 22.8 million capital investment creation of 433
  jobs
• Approx. 90 of labor pool drawn from southwest
• Support of technology education at UVa Wise,
  including internships, student recruitment
  efforts, and a satellite office for the Russell
  facility
• Chesterfield
• Meadowville Technology Park anchor tenant
• 240 million capital investment 631 VITA and
  Northrop Grumman employees
• Dinwiddie County
• Project support center housing 34 employees

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What does this partnership mean for IT businesses?

• Short-term existing infrastructure contracts
  continue
• Some contract rights will be assigned to NG
• Statewide contracts retained by VITA and shared
  with NG
• Long-term Northrop Grumman to assume
  infrastructure procurement responsibility for the
  partnership
• May continue using existing contracts
• May leverage its own supply base and contracts
• VITA continues to offer statewide contracts
• VITA and NG will collaborate to optimize supply
  base
• Strong commitment to SWAM suppliers
• 5 SWAM partners in partnership agreement
• Establish SWAM liaison to promote SWAM
  participation
• Implement SWAM mentor-protégé program and
  suppliers

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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
• Service levels within each technical area
• Penalties for missing service levels
• Help desk response time
• Penalties for missing critical milestones
• Completion of the primary data center
  construction
• Independent audits of expected outcomes

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VITA and NG interface during SMO Build and
Transition
PPEA Partner - VITA
ITIB
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How will we mitigate risks?
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What are our termination rights and fees?
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What if the contract is terminated early?

• 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 2 years
• Ability to make employment offers to vendor
  personnel responsible for terminated services
• Rights to contracts used in the performance of
  services

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When will the partnership be implemented?
General Assembly review
Transition Planning
Transition Planning Completed
Interim Agreement signed
Transition Phase
Transition Activities Completed
Service Commencement
Transformation Phase
Transformation Activities Completed
Operational Phase
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What are the key milestones?

• Dates Adjusted to Incorporate General Assembly
  Approval of Capital Lease Component
• Subject to Revision During Interim
  Phase/Transition Planning

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What happens now?

• Commence partnership preparation for
  transformation
• Final agreement reviews
• 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
• Activities permitted by statute include project
  planning and development

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Please welcome our partner
Hugh E. Taylor President, Commercial, State and
Local Solutions Northrop Grumman Information
Technology
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For More Information on VITA

• www.vita.virginia.gov
• Lemuel C. Stewart, Jr.
• CIO of the Commonwealth
• 804.343.9002
• lem.stewart_at_vita.virginia.gov