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Finance Officers BriefingJuly 14, 2006

VITA – Northrop Grumman Transition/Transformation

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In the Beginning …

• VITA Creation – 2003 –Infrastructure (in-scope)–Individual agency applications (out-of-scope)–367 FTE–Three agencies/organizations

• Integration – 2004 – 2005–90 Executive Branch agencies

• PPEA – Unsolicited Proposals – Received 2004 –Infrastructure track

–VITA - Northrop Grumman–Enterprise Applications track

–Secretaries Administration & Finance

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Scope

• Desktops: 69,323

• Servers: 3,099

• Telecommunications: 15,441

• Peripherals: 72,778

• 1,100 Employees

• 90 Executive Branch Agencies

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Public/Private Partnership – IT Infrastructure

• Northrop Grumman Selection– Model: Utility/unit cost vs. direct bill– Infrastructure and service delivery = 875 FTE– Contract administration, governance, E-911, GIS, Security,

other• Retained agency = @200 FTE (350 to 1,100 to 200)

• Service Commencement - July 1, 2006– Transitional service improvements, equipment replenishment

in years 1-3

• Contract Base Funding – Not to Exceed 2005 Levels Across the Enterprise– <15% economic contingency– VITA retained except for cost-of-living also capped for current

workload

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Select Partnership Milestones

• Employee Offer Letters – May 2006• Begin Desktop Refresh –March 2007• New Data Center – July 2007 (Full Operation Late

in 2007)• Statewide Help Desk – September 2007• Computer Security Incident Response Center –

October 2007• Complete Agency Desktop Refresh – March 2009• Enterprise-wide Messaging – June 2009• Server Consolidation Complete – June 2009

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Response to Employment Offersfrom Northrop Grumman

•846 VITA Employees Received Offer Letters

•65.2% (553) Accepted in First Wave

•15.8% (128) Declined (to be “managed”)

•Offer Expires September 12

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Current Rates

• Direct Service - Operations– Legacy (Telecom, computer, direct service)

enterprise shared unit costs– Direct Bill: Cost + 5.52% - move to agency specific

unit cost• Transition MOU Process (amendments as needed)• Goal: SINGLE enterprise shared service rates in 2008

• Governance– Security Management

• Product/service specific rate– Project Management

• Project specific rate

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Why Move from Direct Bill

• Interim JLARC Approval Rate for Two Years to Support Integration began FY04-05

• Allows/Improves Capacity Planning and Usage

• Reduces Large Swings in Budgeting and Expenditures

• Eliminates Annual Agency Administrative Hoops to Get Dollars for IT

• Caps VITA’s Cost for Current Services at 2005 Expenditure Levels

• Cost Model Will Provide Consistent Service, Consistent Planning at a Predictable Cost

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The Challenge – Service and Financing

• Direct Bill Moves to Agency-Specific Services Rates Based on Asset Categories (Charge-Back Model)– Maintains current levels of service

• Implement July 2006 for Up to Two Years– Base: Not to exceed cost before NG partnership (2005)

• $100 million legacy (telco/mainframe existing)• Agency Based Support

– $52 million labor (executed)– $75 million non-labor (in process)

» MOU amendment

• Challenges– Enterprise view– Variable agency spending patterns

• Budgets vs. actual expenditures, year-end balances– Small/medium agencies budgets– Federal/audit allowable costs & documentation– Tracking Assets (new & refresh)

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Enterprise Shared Services Rates – Phase III

• GOALS

– Enterprise-Wide shared service rates based on asset categories

• Customers choose service levels• Consistent service levels at consistent costs

– Implement by July 1, 2008• Aligns with NG contract

– Challenge• Will cause increases or decreases to base funding

depending upon service levels selected• Eliminates need for one-time investments

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What We Need Help With

• Understanding of the Enterprise Rate Structure Objective

• Understanding That VITA is Working with the Agencies to Agree on Real, Acceptable Numbers

• Commitment to Help Manage Change with Agencies

• MOU Process – Under Way– Collaborative meetings with agencies, based on records of

actual agency spending/financial data and plans– Asking for consistent monthly spend on non-personal/

equipment based on the real numbers

• NG Partnership Success Depends on COV Enterprise Cooperation and Support

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Key Milestones

• To improve communication and coordination between the Commonwealth and Federal agencies

• To position agencies to move to service-based rates

• More details will be provided on specific milestones as they become available