Northrop Grumman filed a lawsuit against the state of Virginia in May over contractual disagreements. The state countersued in June. Virginia Information Technologies alleges the global security company is responsible for delays and costs in canceling a $2.4B contract. The VITA countersuit cites “inadequate knowledge transfer” and “NG’s refusal to perform necessary transition activities, and payment disputes.” The Virginia Joint Legislative Audit and Review Commission plans include disentanglement from Northrop Grumman and a transition to multiple contracts with new providers. JLARC reports a list of project overages:
IBM mainframe: FY17 payments to date $1.2M over projected expenses
Messaging: FY17 payments to date $1.7M over projected expenses
Potential for additional state liabilities, subject to outcome of legal dispute ($9M–$11M)
Withheld monthly messaging payments
Disputed transition charges
Other withheld payments
Governor McAuliffe issued Executive Order 71 charging NG with a technical failure that disrupted the state’s Department of Motor Vehicles.
On Saturday, September 2, 2017, information technology equipment managed by Northrop Grumman failed, causing interruptions to the electronic services provided by the Commonwealth’s data center. This disruption greatly impacted the ability of many Virginians to renew their driver’s licenses and other documents.
A breach of contract can occur when a party fails to perform on time, does not perform in accordance with the terms of the agreement, or does not perform at all. Breach of contract claims by one party or the other may result in litigation. Parties may also file reciprocal claims, as in the case described above. In this type of litigation, contract disputes expert witnesses are retained to determine whether breach of contract elements are present. They are experienced in business interruption, contract fraud, nonpayment claims, and economic damages. These experts provide an informed and impartial business analysis to the court.