In 2005, Virginia signed the largest contract in the state's history, for Northrop Grumman Corp. to manage the state's information technology system for 10 years. The $2.3 billion contract, seen by many as a potential model for other states, was intended to save money and improve the quality of the large, intricate system by transferring operations to the private company. But as of late 2009, with more than 80 state agencies relying on Northrop Grumman for their information technology needs, the project is behind schedule and has been plagued by numerous problems, including a decline in service quality and many technical glitches.
Information Technology
Information technology privatization includes:
• IT services
• Telecommunications
• Websites and online databases
Advances in technology help organize information in truly amazing ways, and governments often look outside their staff for help with major IT projects and services. However, without careful safeguards, sensitive information can be abused or lost, and the end product may not have the desired functionality needed to deal with changing laws and policies. And, as with other outsourced contracts, costs often skyrocket.
Private contractors provide a wide range of technological services, such as internet services, setting up computer networks, voice technology services, system maintenance, and system infrastructure design and implementation. These services can involve highly personal data relating to health, medication and psychiatric records; educational records; unemployment benefits; accounting information; legal services; permit and licensing information; tax data and processing, and car registration and insurance verification.
In the past few years, several states have tried contracting out the state’s entire information technology needs. These experiments have had dismal results, as contractors failed to deliver key technological functionality in a timely manner. Furthermore, there have been several instances of sensitive government information, such as Medicaid data and state driver license databases, being compromised by contractors. Handing over sensitive IT information and infrastructure to private interests has proved to be fraught with risk.
Recent reports of interest:
IT Contracts with the State of California: Too Many, Too Costly, Too Little Oversight
SEIU Local 1000, 2008
Privatizing Information and Information Technology - Whose Life is it Anyway?
Dannin, 2004
For additional reports, please see the research section on the side bar or visit our research library.
Related Cases
In January 2006, the state of Texas hired a private consortium headed by Accenture LLP to develop, operate, and staff Texas's eligibility and enrollment system for Medicaid, Children's Health Insurance Program (CHIP), Food Stamps, and Temporary Assistance for Needy Families (TANF). Almost immediately, problems occurred such as high call center wait times, technical issues, insufficiently trained contractor staff, delays in application processing, and improper benefit denials. Many families eligible for public benefits failed to receive the assistance they needed when they needed it. In March 2007, the state cancelled the contract.
IT contracts: Huge investment buys headaches
August 2010
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