West Virginia and Employees at Odds Over Possible IT Outsourcing

Citing drastic job losses and mixed results in states that have privatized services, workers union files legal challenge; state claims millions of dollars in savings will be realized.

by , / September 16, 2010

Following West Virginia’s recent announcement that it will consider outsourcing IT services, the union representing technology workers filed a lawsuit in late August challenging such efforts. But the state quickly responded with a motion to dismiss the suit, saying it was improperly filed.

The litigation has put the two sides at odds, a disagreement sparked last month when West Virginia Chief Technology Officer Kyle Schafer announced that his office would explore the possibility of using third-party providers to standardize and modernize the state’s applications portfolio. Currently the state’s 31 different agencies, boards, divisions and commissions within the executive branch develop their own application standards, according to the release, which costs more than $35 million annually.

The workers union is against the potential outsourcing because state jobs could be lost. “They’re moving very fast and very stealthily and under the radar to get this thing done,” Gordon Simmons, field organizer for the West Virginia Public Workers Union, said this week. “These are some of the better paid jobs in state government and in the state, period. I would hate to see the jobs evaporate in the state, especially given the economy.”

Attempts to reach Schafer and state attorneys for comment were unsuccessful. Department of Administration Spokesman Tony O’Leary said no one at the state could comment on issues raised in the lawsuit, citing the pending litigation. But he confirmed that the state filed a motion last week in the Kanawha County circuit court citing “a variety of technicalities” that the state argues are grounds for dismissal of the union’s complaint.

O’Leary also stressed that the state hasn’t begun the formal process of seeking potential outsourcing plans from providers, which he said was widely rumored to have already occurred. “We’re not trying to pull the wool over anyone’s eyes,” he said. “Nothing is trying to be snuck out of here.”

All documents related to that process will be public once it begins, O’Leary added. The release, issued Aug. 12, also emphasizes that exploring third-party options “is not an exercise to reduce or eliminate state workers.”

“To date, not a single technology employee has been laid off or furloughed as a result of previous consolidation efforts,” the release said. “This exercise is expected to be no different.”

But Simmons said that if these efforts are realized, 350 of the roughly 500 state IT employees could end up jobless, and he said privatization could produce costly, unforeseen results. The union’s lawsuit — also known as a mandamus complaint —alleges that Schafer hasn’t produced mandated reports like a four-year strategic plan and biannual reports. The lawsuit asks the Kanawha County circuit court to force Schafer and his office to produce these reports before moving forward with any outsourcing bids.

Part of Cost Cutting

Since beginning a consolidation effort several years ago, the Office of Technology has reduced “millions of dollars” in technology infrastructure through internal consolidation, standardization and centralization over the past several years, according the state. But Schafer’s office said those efforts have not included application development, which is still distributed across 31 different state organizations. As those applications age, support cost will grow, ultimately making them financially unsustainable, according to the Office of Technology.  

States that have outsourced IT services have certainly experienced their share of struggles and should provide cautionary tales to West Virginia policy makers, Simmons said.

Just next door, Virginia signed a 10-year, $2.3 billion agreement with Northrop Grumman in 2005, which could at best be described as a strained partnership. Just last month, the state’s IT infrastructure reliability was under the microscope following a major storage-area network breakdown.

In Texas, progress stalled this summer in its seven-year, $863 million data center outsourcing contract with IBM. And in Indiana, which nearly a year ago canceled a 10-year, $1.6 billion outsourcing contract with IBM to make welfare benefits easier to apply for, both sides are now suing each other.

On the other hand, New York state has moved to the other end of the outsourcing spectrum and decided to create up to 500 new state IT jobs by bringing contracted work back in-house.


Karen Wilkinson

Karen is a former staff writer for Government Technology magazine.

Karen Wilkinson

Karen is a former staff writer for Government Technology magazine.