Am I Next? Virginia cancels Northrop Grumman IT services contract - mass layoffs.

Northrop Grumman will be laying off 350 employees at the Commonwealth of Virginia’s datacenter in Chester, Virginia.

The layoff decision is based on the Commonwealth of Virginia’s decision to terminate Northrop Grumman’s multi-year, multi-billion, sole-source contract one year early due to a contentious relationship between Northrop Grumman and the Virginia Information Technology Agency (VITA) which oversees the provision of IT services to the state’s 63 agencies. 

It is not known how many of these employees may be rehired by SAIC (Science Applications International Corp.) who will serve as one of Virginia’s new contractors for supplying and coordinating IT services. 

According to Northrop Grumman’s spokeswoman, Jenna Gregory, the layoffs were due to the VITA’s decision to terminate the contract. “As a result of VITA’s decision to issue on May 18, 2018 an early termination notice of the contract between Northrop Grumman and the Commonwealth of Virginia, Northrop Grumman issued a Worker Adjustment and Retraining Notice (WARN) to state officials on Thursday, June 14. ,” noting that Northrop Grumman is “undertaking efforts to place impacted employees in other positions.”

The contract, legally contentious at times, was terminated one-year prior to its expiration. It appears that Northrop Grumman sued VITA for $10 million for an alleged breach of contract and VITA countersues with a $300 million claim for alleged poor performance. The case is still pending and is most likely to be solved at the expense of Virginia’s taxpayers who are expected to pick up the approximately $67 million costs to wind-down contracted operations. Optimistically,VITA believes that these costs may be recaptured from its new vendors. Unlikely since any such recovery is simply added to the taxpayer’s tab.