Northrop Grumman and the myth of privatization

By Peter Galuszka

If you want to see just how privatization can get really fouled up, look no further than Northrop Grumman, the huge defense corporation that Virginia officials persuaded to bring its headquarters here this year with a goodie basket worth millions in tax breaks and incentives.

If you live in Virginia and need to get a driver's license or ID card at one of the state's 74 Department of Motor Vehicles offices today, you are out of luck. Still due a tax refund? Wait a little longer. The Department of Taxation's computers don't work. Worried about pollution? Chill out until the Department of Environmental Quality can get its systems up and running.

What happened? Northrop Grumman has struck again. The firm won a $2.3 billion contract -- the largest state pact ever -- in 2005 to provide the state with communications and computer services. Another state agency, the Virginia Information Technologies Agency (VITA), is supposed to help Northrop Grumman run the system.

The system has been a mess. It has had regular outages, forcing a game of musical chairs at VITA top management. The latest mishap occurred Aug. 25 when a couple of small circuit boards fried. Affected were 26 state agencies. All but six were up and running this morning.

There's plenty of blame to spread around. Former governor Mark Warner, a Democrat who now represents the state as a senator, was so enamored with the then-fashionable privatization concept back in 2005 that he entered into this outsourcing deal. At the time, state computing was a mishmash of incompatible systems.

Republican Gov. Robert F. McDonnell inherited the mess, plus about $75,000 in campaign contributions from Northrop Grumman. During the campaign, he made some noises about the issue but piped down. Why? Virginia was in the running to snag Northrop Grumman's Los Angeles headquarters. It competed against Maryland and the District and won the relocation derby by offering up more than $13 million in state incentives and breaks, plus a like amount from Fairfax County.

Now we're stuck with Northrop Grumman. Once again, Virginia's naive leaders skipped down the yellow brick road of privatization. They support limited government because old Thomas Jefferson did. They are still in love with the era of Margaret Thatcher and Ronald Reagan, who wanted to get government off our backs -- through privatization, of course.

Then-Gov. George Allen pushed the concept further in the 1990s, with the state's law to sidestep transportation finance shortfalls by farming out state highway responsibilities to private infrastructure firms. Warner, a businessman who made his millions selling cellphone bandwidth, marched in tune.

And that is why you can't get a driver's license in Virginia today or tomorrow or maybe not until Friday.

Peter Galuszka blogs at Bacon's Rebellion. The Local Blog Network is a group of bloggers from around the D.C. region who have agreed to make regular contributions to All Opinions Are Local.