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San Diego County Ready for Hewlett-Packard as New IT Outsourcing Partner

Northrop Grumman unexpectedly transfers ownership of its $700 million contract to Hewlett-Packard ahead of the agreement’s 2013 end date.

Over the past decade, the outsourcing of San Diego County’s technology and telecommunications has been widely complimented as a public-private partnership done right. The names and faces and companies involved changed occasionally, but results were typically constant.

The county’s help desk, desktop, network, data center and applications are managed entirely by a private company. The county began outsourcing in 1999 with Computer Sciences Corp., and then Northrop Grumman Corp. took over in 2007 after winning the contract rebid.

Now, San Diego County is unexpectedly dealing with another transition: On May 1, Northrop Grumman transferred ownership of its $700 million contract to Hewlett-Packard ahead of the agreement’s 2013 end date.

W. Harold Tuck, San Diego County’s CIO, said the county was pleased with Northrop Grumman’s performance, so it was unexpected — although not surprising — that Northrop Grumman made a business decision to walk away.

Regardless, Tuck said he’s expecting a smooth transition because HP already was a major subcontractor on the outsourcing contract. HP manages the county’s help desk, two out-of-state data centers the county uses, and application development and management for the county’s health and human services department. HP has also been a member of innovation council that advises the county.

HP also chose to retain most of the existing Northrop Grumman employees working for the county. “The staff are the same, they just have a different logo on their polo shirt,” Tuck said.

The points of emphasis will be somewhat different, though. San Diego County has asked HP to focus more resources on mobility for field workers and green initiatives. “We need to get more tablets to those workers who will be communicating wirelessly to the data center,” Tuck said. “That’s one of the areas [HP] wants to target because they know we have that need."

The county also wants to decrease IT costs in public libraries by deploying desktop virtualization and thin client. Tuck hopes to get the county’s approval to reinvest those savings in order to buy more equipment. Improving publicly available broadband is also on the list. HP will have time to do the job because the county extended the entire outsourcing contract through 2018 by picking up option years. The deal’s value is unchanged, according to HP and confirmed by Tuck.

“The [contract] transfer really was the most cost effective thing to do,’ said Ericka Floyd, an HP spokeswoman. The county didn’t have to spend taxpayer dollars to put the contract back out to bid and review RFPs.

Northrop Grumman gave few details about its decision to end the company’s business relationship with San Diego County. A Northrop Grumman spokesperson said the company and the county “have enjoyed a solid five-year relationship filled with many great accomplishments” and that the contract transfer was in the best interest of both Northrop Grumman and the county.

Northrop Grumman has been trying to improve its IT management contract with Virginia, a $2.3 billion partnership beset with some high-profile computer outages that have drawn the public eye. The latest was an e-mail outage that hampered the Virginia State Police last month. It’s unknown if Northrop Grumman’s decision to leave San Diego County is in any way related to the company’s ongoing work in Virginia. 
No matter Northrop Grumman’s business motives, Tuck is optimistic that partnering with HP will continue to improve the county’s IT services, building upon the successful partnerships of the past 12 years. He has been telling his employees that the arrival of HP is a “3-G” moment — the third time the county has brought in a new vendor partner.

“Each time it gets better,” Tuck said. “We refine our processes, and [IT outsourcing} is now organic in San Diego County.”

Lauren Katims previously served as a staff writer and contributing writer for Government Technology magazine.