- The Washington Times - Thursday, May 19, 2011

Northrop Grumman is paying nearly $5 million to compensate for losses to Virginia agencies when the information technology contractor failed to quickly repair a hardware malfunction last summer, Gov. Bob McDonnell’s office said Thursday.

Officials say that under the agreement the state will be paid the full costs incurred by the computer outage, which kept some people from getting driver’s licenses and paying some taxes and delayed some welfare services for about a week.

“This agreement brings closure to this incident, and provides the commonwealth with an improved information technology infrastructure that will reliably support Virginias citizens and agencies in the years ahead,” said Mr. McDonnell, a Republican.

The Department of Motor Vehicles, the Department of Taxation, the Department of Social Services and the Department of Juvenile Justice were some of the largest agencies that had problems accessing applications, shared folders and other data stored on servers when a memory card failed at a data center in Richmond on Aug. 25.

Out of 89 state agencies, 26 were affected. Of those, 16 reported financial losses.

Northrop Grumman has agreed to pay a $4.7 million financial package that includes $1.9 million for costs related to the disruption, $2.1 million for database improvements to guard against future failures and $750,000 for technology that preserves snapshots of data. The company also paid $250,000 for an outside audit.

Northrop Grumman spokeswoman Christy Whitman said the company is pleased to have reached an agreement with the Virginia Information Technology Agency (VITA) - the agency overseeing the contract.

“In partnership with VITA, we are implementing new procedures, policies and safeguards to help avoid similar occurrences,” Ms. Whitman said.

VITA head Samuel A. Nixon said he thinks Northrop Grumman has “satisfactorily addressed” shortfalls revealed by the audit.

“Moving forward, I am confident that the improvements will make our infrastructure more reliable and resilient,” Mr. Nixon said.

Northrop Grumman runs the state’s data centers, help desks and other IT operations as part of a $2.3 billion contract - the largest single-payer contract in the history of Virginia state government. Last year, the state agreed to extend the 10-year contract by another three years and pay nearly $200 million more after state agencies and the company clashed over payments and the quality of services provided.

Secretary of Technology James D. Duffey Jr., who negotiated the deal, said he was also satisfied that Northrop Grumman has been held accountable.

“This compensation package will benefit all agencies impacted by the outage and enhance the states information technology infrastructure,” Mr. Duffey said.

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