Northrop agrees on $5M tab for computer outage

Northrop Grumman Corp. has agreed to pay $4.748 million in financial compensation and operational improvements to the Commonwealth of Virginia for losses incurred by the computer outage in August 2010 that affected several state agencies, including the Department of Motor Vehicles, Gov. Bob McDonnell (R) announced today on his website.

In addition, Northrop Grumman has agreed to put in place a corrective action plan that addresses the findings and recommendations in the independent third-party audit report.

Virginia Secretary of Technology Jim Duffey, who negotiated with Northrop Grumman on behalf of the commonwealth, said the financial package includes monthly invoice credits over the next 24 months totaling $1.908 million. This represents the entire amount of direct costs incurred by the commonwealth as a result of the disruption, according to the May 19 statement.

The defense contractor also will spend $2.09 million for operational improvements on database backup, storage systems, system monitoring, database monitoring, network monitoring and capacity management.

Northrop Grumman also will implement and pay for "point in time" or "snap/clone" technology to protect the data held by the state, and will address additional recommendations made in the review of the outage.

These remedial actions are valued at approximately $750,000, according to the announcement.

Northrop Grumman previously paid $250,000 for the cost of the independent third-party audit performed by Agilysys, bringing the company's total expenses to slightly under $5 million.

On Aug. 25, 2010, a key hardware component owned and operated by Northrop Grumman at the state data center failed, and subsequent delays in restoring operations caused a significant impact to operations at several state agencies, especially DMV. Outages affected 13 percent of the commonwealth's executive branch file servers and 26 of 89 executive branch agencies. Of those 26 agencies, 16 reported a financial impact due to the outage, the governor’s announcement states.

Northrop Grumman Corp., of Los Angeles, ranks No. 2 on Washington Technology’s 2010 Top 100 list of the largest federal government contractors.