Favoring flexibility, more states pursue multi-sourced IT models
Published: May 03, 2018
Virginia's single-provider contract with Northrop Grumman is the last of a dying breed in government.
Virginia will soon be ending a 13-year IT contract with Northrop Grumman on June 30, 2019 which will mark the end of a prolonged and disruptive legal dispute between the two parties. But for the state IT community at large it also represents the end of an era. Virginia's single-provider contract is the last of its kind in the nation and there is unlikely ever to be another like it. Monolithic IT outsourcing deals are no longer in demand after a stint of experimentation in Virginia and elsewhere showed that while states should no longer provide all IT services themselves, simply handing over the entire operation to a single company to be managed externally isn't an effective model either.
Cost effectiveness and flexibility are the two reasons CIOs cite most commonly when moving toward a multi-sourcing model. Virginia's deal with Northrop Grumman provides cautionary examples of why the single-vendor model is all but dead in state government. A result of this trend is what NASCIO calls an evolution of the CIO's role into that of a "service broker," rather than a service provider, according to Doug Robinson, NASCIO's executive director. According to Nelson Moe, Virginia’s Chief Information Officer, “because of the way that technology changes so fast, a broker model allows you to be able to pick and choose and be much more adaptive to the technology options that are out there," Moe said. "And then you can provide cost-effective, value-add relevant services to the agencies you support. That’s the model we want to go to: the build-to-adapt model.”
Evidence that Virginia is ready to move away from the Northrop contract can be seen in a newly awarded contract with Atos for managed security services, which will provide one of the essential components of the new multi-sourced infrastructure services. Additionally, Virginia also recently finished moving more than 55,000 state employees onto a Google-based messaging system and off of Northrop Grumman’s messenger. The state awarded this messaging services contract to Tempus Nova almost two years ago but implementation was delayed due to legal matters. In addition, Virginia is expected to announce more contracts under the new multi-sourcing model later this year.
Virginia's progress on a new sourcing model marks an evolution in the state government IT market. Demand from state governments everywhere for massive single-provider contracts has all but evaporated. Other states, including Texas, Georgia, Missouri, Utah, Ohio and Pennsylvania have each negotiated different degrees of a multi-sourcing model, which could be indicative of new opportunities for multi-source integrators in the coming years.