Virginia's seat management program, unveiled with high expectations last year, has stumbled out of the starting gate.

Virginia IT officials expected the statewide seat management contract -- the first of its kind in the nation -- to deliver state-of-the-art desktop computing to more than 10,000 workers by now. Instead, it covers less than 500 users and has been broadsided by a series of unforeseen challenges.

"On one hand, it's been a disappointment," said Donald Upson, Virginia's secretary of technology. "On the other hand, I've tried to figure out why because I think it's the best thing for the state of Virginia. We need to figure out a way to make it work."

Launched in September 2000, the program was meant to revolutionize state IT procurement by turning computing power into a utility much like electricity or telephone service. Agencies no longer would own rapidly depreciating personal computers, peripherals and networking gear. They would simply specify how many employees needed a networked PC on their desks and one of three contract vendors would provide the hardware, software and support for a "per-seat" price over three years.

So far, however, the program has been a tough sell thanks to tight funding, lack of multi-year agency budgets, inflexible procurement rules and a litany of other thorny issues.

Good News, Bad News

Seat management's biggest benefit -- its ability to radically change the way Virginia agencies acquire and maintain IT assets -- also represents the steepest hurdle to its implementation.

By eliminating PC purchases, the technique transfers IT spending from volatile capital budgets to stable operating budgets. The goal is to make PC acquisition, support and replacement a predictable, long-term operating expense. That's a huge change from the haphazard way most states procure desktop technology.

Virginia state agency budgets typically lack funds for regular replacement of desktop computers, said Constance Scott, manager of the Seat Management Section of Virginia's eGovernment Implementation Division. Instead, agency managers cobble together IT upgrades by raiding pockets of unspent money at the end of the fiscal year.

Managers never know how much leftover cash -- if any -- they will find. When they do find funds, they tend to pay top dollar for high-end PCs, simply because they don't know when they'll have money to replace them again.

"[Agencies] are in a reactive spending pattern. The whole point of seat management in Virginia is to eliminate this," Scott said. "You can't do your job without a PC. It's a utility now, so let's treat it as such."

Tough Transition

But moving from reactive to proactive IT spending has proven harder than expected, and Virginia officials point to a number of reasons for the difficulty.

First, the seat management contract hit the streets just as Virginia slid into an unprecedented budget crunch. Earlier this year, lawmakers failed to amend Virginia's biennial budget for the first time in modern history, throwing the state into fiscal turmoil. Recent estimates put Virginia's budget shortfall at anywhere from $50 million to $500 million, according to newspaper accounts.

The economic downturn injected plenty of uncertainty into the IT spending plans of state agencies. "The timing was terrible," said Scott.

Another key sticking point, according to Upson, is the lack of multi-year funding for Virginia agencies, which makes them reluctant to enter a three-year contract for seat management services.

"We haven't been able to figure out the budgeting issues in a way that makes it easy for them [to join the program]," he said. "In other words, when you enter into a three-year lease, we've got to be able to provide assurance that the money will be there."

Even when agencies do have money for technology, procurement rules can make it difficult for them to