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The Death of the Mega Contract? The Journey to Multisourced IT

Having consolidated their IT, the states of Georgia and Virginia are updating how services are outsourced and are moving away from larger, longer contracts to smaller more agile pacts.

As the year continues, the technology organizations at two southeastern states are looking toward outsourced services secured through smaller, more agile contracts that more closely mirror the fast pace of tech.

The Virginia Information Technologies Agency (VITA) has given notice it will terminate a 12-year contract with Northrop Grumman Aug. 17 and migrate to other suppliers. And in Georgia, where a procurement official cited inspiration from Virginia, the state awarded a contract June 20 to Unisys Corp. for cloud brokerage services.

Both states are moving toward a multisourcing model for providing IT services to individual agencies. This often means smaller, shorter-term contracts in place of the larger, overarching pacts with relatively few vendors for a decade or more. And a key component is the so-called multisourcing service integrator (MSI), a vendor that can connect and unify new suppliers coming to work for a state.

Georgia brought on Capgemini as its MSI in May 2015, with a seven-year contract and three optional one-year extensions — but Chris McClendon, chief procurement and sourcing officer at the Georgia Technology Authority (GTA), pointed out that the state had considerable conversations with Virginia officials about multi-sourcing before that happened. Texas’ move toward multisourcing also served as a guide, he said.

VITA announced May 21 that it would retain the Science Applications International Corp. (SAIC) as its MSI, in a role that will change as work progresses. Virginia Chief Information Officer Nelson Moe told Government Technology the state will bring the company on in late August to run several towers of service still handled by Northrop Grumman, but will scale it back by December as other suppliers come online, to function strictly as an MSI. Virginia has also hired Atos to provide “advanced managed security services” for executive branch agencies, VITA announced April 30.

Moe described these two pacts as “the fundamental building blocks of how this works,” comparing them to the pivotal roles of a football coach and team equipment manager in making the team work. Active procurements are underway, he said, in three more services areas — voice and data networking; end-user support; and service, storage and data centers. But the Northrop Grumman agreement, the CIO said, had been hugely significant for the state.

“It was groundbreaking at the time. I think it solved the problem of ‘How do you consolidate 63 agencies’ IT, which was all over the map, into one entity. The challenge is, is now the large models don’t adapt fast enough and that is the need going forward,” Moe said. The speed of tech, he explained, has quickened to a point where states need “a contract that’s designed from the ground up to bolt things in and bolt things out” to provide cost-effective services.

“I think if you look to some of the states who have chosen this model, most all of us started out with the larger single vendors and then I think every one of us have now moved towards breaking it up some,” Georgia CIO Calvin Rhodes said. The state transitioned from its work with larger “prime” contractors like IBM and AT&T toward Capgemini, which delivers IT infrastructure services to 85 executive branch agencies.

Moving to a multisourced environment has enabled the state of Georgia to get “more specific with each procurement we did and each solution provider,” McClendon said, noting that the state’s MSI and its service management layer cut across all lines of service horizontally, in contrast to various vertical service towers. The state also recently contracted with NTT Data in January for end-user computing, and with Atos for on-prem and cloud mainframe in December.

Hiring Unisys, Rhodes said, will let the state maintain standardization and exit strategies as it migrates from on-prem solutions to the cloud over the next five years. Ultimately, McClendon said, the state will likely arrive at a hybrid cloud approach, with its hosting provider managing servers in the state data center, storage backups and disaster recovery also being the broker for its cloud offerings. This scale could then be leveraged in contracting with cloud providers like Google or Azure for hosting space.

“When you leverage the cloud model, that cost to capital is spread among hundreds of thousands of organizations and compute power. So, it really does provide a lot of economic flexibility from a hosting standpoint and the key for us was having one provider that’s responsible for managing all of it,” McClendon said.

By 2016, the state had reduced the age of its servers to 60 months or less and its PCs to 36 months or less. But the move to consolidation or, more recently, to the multiservice model, has been challenging in both states. Not only must equipment be kept up-to-date, but individual agencies must also come to the table to help forge informed decisions on technology change — and then, service providers must deliver on their promise, to cement the buy-in to such a “different” model, he said.

“But when you’re working in a modernized environment that has very strong change control processes, planned-out activities – again, we’re running the state like a major corporation would run their IT operations. Where things are planned, there’s budget to do not only the essentials, but to make improvements, and we work collectively with agencies who introduce innovation,” said Rhodes, who is also GTA executive director.

The CIO noted that Georgia — which has an RFP out for a security operations center to monitor “activity across all service lines” — has realized a roughly 20 percent cost savings based on its current size by adopting the new model, funding one of its larger investments in cybersecurity.

“It’s been a march to consolidation, and now we’re here, we’ve realized there’s a better model. Getting the stakeholders on board with that is not trivial because it’s tens of millions of dollars to make any changes. And that’s not small money,” said Moe, who has articulated his plans to two governors and General Assemblies on VITA's behalf.

The vision, the Virginia CIO said, is that in two years, his state will have fully adopted the multisupplier model, giving agencies greater visibility into what they’re buying, what services they receive and how much they cost.

“Economies of scale is a big thing,” Moe said, citing the principle as foundational for the creation of VITA. “Because IT is becoming more and more of a commodity service."

Contacted by GT, a Northrop Grumman spokesperson said in a statement: “Northrop Grumman continues to partner with the commonwealth and VITA for the effective transition of services to new vendors.”

Theo Douglas is assistant managing editor for Industry Insider — California, and before that was a staff writer for Government Technology. His reporting experience includes covering municipal, county and state governments, business and breaking news. He has a Bachelor's degree in Newspaper Journalism and a Master's in History, both from California State University, Long Beach.