Virginia to spend big on IT

Virginia Gov. Mark Warner has approved a potential $300 million, seven-year contract with CGI-AMS for a complete overhaul of the state’s executive branch business processes and systems. Company officials said an overhaul could save Virginia hundreds of millions of dollars.

The award announced today is the second major information technology contract that Virginia has awarded in as many months. In November 2005, Northrop Grumman received an initial contract that could lead to a 10-year, $2 billion investment in transforming the state’s executive branch IT infrastructure.

As with that project, the CGI-AMS contract could eventually provide managed services to Virginia. The first order of business, however, will be to put together a requirements package, which would determine how much work will be outsourced and what will remain in-house, said Caroline Rapking, a CGI-AMS vice president.

That study will take about a year to complete, she said.

But some low-hanging fruit can be plucked immediately, Rapking added. The first phase of the agreement, which includes $30.5 million already in the governor's budget recommendations, will create improvements in tax and nontax collection systems and in federal cost recovery to ensure that the state is receiving all the money it is due through federal reimbursement programs, she said.

Through the Virginia Tax Partnership, a project in which CGI-AMS already works with the Virginia Department of Taxation, the state benefited by collecting more than $300 million in previously uncollected tax revenue. It continues to generate about $72 million a year.

Future work will look at ways to upgrade and modernize business processes such as accounting, payroll, personnel management and travel, and to eliminate duplicative systems.

A survey completed in May 2005 found that Virginia spends about $308 million a year for 26 business processes handled by 250 systems in 46 agencies. Extrapolated across the entire executive branch, including education, the total cost of doing business is more than $400 million a year.

CGI-AMS has estimated a potential savings in staffing, license fees and maintenance costs alone of about $125 million for the seven-year contract.