Public-Private Partnerships – Setting the Trend in Virginia

1. Public-Private Partnerships – Setting the Trend in Virginia Caroline Rapking Vice President, Consulting Services, CGI Presented to NASACT August 14, 2007 © CGI GROUP INC. All rights reserved

2. I Was Asked To ……. • Speak about the history and background of Public Private Partnerships in IT in the Commonwealth of Virginia • Give a status on the Virginia Enterprise Application Program (VEAP) Public Private Partnership • Lay the groundwork for the Jerry Simonoff to present the status of the IT Infrastructure Partnership in the Commonwealth

3. What I Would Like To Ask You To Do ……. • Please consider that: • Necessity is the mother of invention • There really are three branches of government, and at least two of them count at all times • You need to spend money to make money • AND FINALLY • They always say time changes things, but you actually have to change them yourself. • Andy Warhol, The Philosophy of Andy WarholUS artist (1928 - 1987)

4. Necessity is the Mother of InventionThe VA Tax Partnership Program • Virginia’s Joint Legislative Audit and Review Committee (JLARC) completed a study in 1993 recommending that Virginia Tax modernize their IT systems • Data Entry, Remittance, Microfilm, and Mail Opening Equipment were Obsolete and Beyond Repair • Technology Platform was an Obstacle to Routine Maintenance and Meeting Customer Expectations • Cobol/IMS/Mainframe Platform • No User Facing Components; No Ability to Add Channels • Difficult to Maintain and Enhance • Costly to Operate on Mainframe • Data Processing Professionals Difficult to Attract and Retain

5. Necessity is the Mother of InventionStrategic Drivers for VA Tax Partnership • Decision – Embark Upon a Project which would modernize both the operations and systems of the Virginia Department of Taxation in order to: • Meet New and Increasing Demands for Service • Increase voluntary compliance by making it easier for taxpayers to comply with tax laws • Preserve the Commonwealth’s revenue system • Improve operational effectiveness

6. 3 Branches/2 Important at Any TimeVA Tax Partnership Formed • Legislation provided for components of the PPTA (Public Private Transportation Action) to be applied to the VA Tax Partnership Program, including: • Private business/Commonwealth partnerships • Benefits/alternative funding sources • Interest payments to private business partner if necessary Competitive RFP released in early 1997

7. You Need to Spend Money to “Make” MoneyVA Tax Partnership • In 1998, the Commonwealth’s Business Partner was selected (AMS at the time), and the VA Tax Partnership was formed. • The Business Partner received no payments from the Commonwealth until benefits began to accrue from increased collections (beyond baseline) • At one point in time, the Business Partner had incurred $50M of cost without payment from the Commonwealth • Benefits fund was “topped off” two years earlier than business case predicted (2004 v. 2006)

8. Results!VA Tax Partnership In the eight years of the partnership, the improved processes and systems have generated: • Over $231M in additional tax revenue • $94.9M in Tax Amnesty revenue (above the $231M noted above) • Correspondence Response time reduced 54% • Auditor Productivity up 10% • 95% of refunds issued in 12 days or less, refund interest reduced by $3.6M

9. Necessity is the Mother of InventioneVA Procurement System • In 2000, the Commonwealth of Virginia found itself with: • Multiple and duplicative procurement “systems” • Desktop applications • Automated purchasing systems • Manual processes • Resulting in the inability of the Commonwealth to: • Share information and data • Promote cooperative procurement • Provide for application of consistent practices and procedures • Leverage its buying power to obtain best value for $ spent • Take full advantage of the latest technology to maximize the value of its procurement process • And forcing the business partners of the Commonwealth to: • Register with many state agency, institution and public body purchasing offices • Access a variety of physical and Internet information sources • Become familiar with a myriad of individual agency, institution and public body forms and procedural requirements

10. 3 Branches/2 Important at Any TimeeVA Procurement System RFP • In 2000, the Commonwealth issued an RFP for a new procurement system, requesting that alternative business models be proposed • Sometimes there’s a fourth branch of government – the institutions of higher education – and they agreed to participate in the procurement as well. • Business Partner selected to provide procurements services on a hosted basis. • Agreement was for payment to the Business Partner through subscription fees and “transaction” fees assessed to each purchase order (%ge of order capped).

11. May 2002 eVA becomes the biggest in the nation, over $100 Million in procurements November 2000 AMS and Virginia begin work July 2007 eVA has processed over 1.3 M orders representing $12.2 B in spend March 2001 eVA Live! First online orders sent May 2000 Governor's executive order launched the program You Need to Spend Money to “Make Money”eVA Timeline eVA TIMELINE

12. Results!eVA – March 2001 – July 2007 • 1,319,764 Orders Placedthrough eVA • $12.2 Billion Spent through eVA • 5 Million Items Available in eVA •   983  Catalogs Available in eVA • 171  Agencies Using eVA • 492  Localities Using eVA • 32,652 Vendors Registered in eVA • 12,626 Individual eVA Users 

13. Results!eVA – March 2001 – July 2007

14. 3 Branches/2 Important at Any TimeLegislative and Executive Branch Actions • July 2002 - HB519 – Provides sole procurement authority for IT to DIT (predecessor to VITA) • Sept 2002 - IT Strategic Plan (issued by Commonwealth Secretary of Technology) Calls for: • Implementation of VITA (Jerry will explain) • Implementation of improved Enterprise Application Systems • July 2003 -- HB1926 – Authorizes Public/Private Partnership Proposals for IT projects

15. “They always say time changes things, but you actually have to change them yourself.” • Virginia Public-Private Partnership Statute (PPEA)56-575.2. • Declaration of public purpose. • The General Assembly finds that: • 1. There is a public need for timely acquisition, design, construction, improvement, renovation, expansion, equipping, maintenance, operation, implementation, or installation of education facilities, technology infrastructure and other public infrastructure and government facilities within the Commonwealth that serve a public need and purpose; • 2. Such public need may not be wholly satisfied by existing methods of procurement in which qualifying projects are acquired, designed, constructed, improved, renovated, expanded, equipped, maintained, operated, implemented, or installed; • 3. There are inadequate resources to develop new education facilities, technology infrastructure and other public infrastructure and government facilities for the benefit of citizens of the Commonwealth, and there is demonstrated evidence that public-private partnerships can meet these needs by improving the schedule for delivery, lowering the cost, and providing other benefits to the public; • 4. Financial incentives exist under state and federal tax provisions that promote public entities to enter into partnerships with private entities to develop qualifying projects; • 5. Authorizing private entities to develop or operate one or more qualifying projects may result in the availability of such projects to the public in a more timely or less costly fashion, thereby serving the public safety, benefit, and welfare. • B. An action under § 56-575.4 shall serve the public purpose of this chapter if such action facilitates the timely development or operation of qualifying projects. • C. It is the intent of this chapter, among other things, to encourage investment in the Commonwealth by private entities and facilitate the bond financing provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 or other similar financing mechanisms, private capital and other funding sources that support the development or operation of qualifying projects, to the end that financing for qualifying projects be expanded and accelerated to improve and add to the convenience of the public, and such that public and private entities may have the greatest possible flexibility in contracting with each other for the provision of the public services that are the subject of this chapter. • D. This chapter shall be liberally construed in conformity with the purposes hereof. • (2002, c. 571; 2003, c. 1034; 2005, c. 865.)

16. Important Virginia PPEA Definitions • "Private entity" means any natural person, corporation, general partnership, limited liability company, limited partnership, joint venture, business trust, public benefit corporation, non-profit entity, or other business entity. • "Public entity" means the Commonwealth and any agency or authority thereof, any county, city or town and any other political subdivision of the Commonwealth, any public body politic and corporate, or any regional entity that serves a public purpose. • "Qualifying project" means (i) any education facility, including, but not limited to a school building, any functionally related and subordinate facility and land to a school building (including any stadium or other facility primarily used for school events), and any depreciable property provided for use in a school facility that is operated as part of the public school system or as an institution of higher education; (ii) any building or facility that meets a public purpose and is developed or operated by or for any public entity; (iii) any improvements, together with equipment, necessary to enhance public safety and security of buildings to be principally used by a public entity; (iv) utility and telecommunications and other communications infrastructure; (v) a recreational facility; (vi) technology infrastructure and services, including, but not limited to, telecommunications, automated data processing, word processing and management information systems, and related information, equipment, goods and services; (vii) any technology, equipment, or infrastructure designed to deploy wireless broadband services to schools, businesses, or residential areas; or (viii) any improvements necessary or desirable to any unimproved locally- or state-owned real estate.

17. Success Breeds Success • Based on the success of Public/Private Partnerships and alternative methods of implementing IT projects in Virginia, two new initiatives were born: • Virginia Enterprise Application Program • Virginia Infrastructure Program

18. Necessity is the Mother of InventionVirginia Enterprise Application Program • Virginia knows that its enterprise systems are outdated and need to be replaced. • Employee productivity is effectively taxed by fragmented, decentralized processes and technology. • Aging workforce creates an impending institutional knowledge loss. • Virginia has the opportunity to continue to demonstrate national leadership through innovation. • Creating enterprise application transformation in a complex, decentralized environment • Alternative procurement model and funding sources are available to support the Program

19. The Virginia Enterprise Applications Program Vision • “To provide the Commonwealth with enterprise-wide, best practice business processes – consistent with Virginia’s position as a Best Managed State and Technology Leader.”

20. Agencies Service Center Service Center Service Center Service Center CoVA Business Applications Center of Excellence (Functional and Technical Expertise within the Commonwealth) Business partner support to supplement CoVA team Benefits Streams will support the Life Cycle Costs of the EA Program CoVA Enterprise ProgramsFuture State Mandates

21. data App App Reports CoVA Data data data App App Migrating to data App App App App data data Reports Data Centric Application Centric VEAP Program Vision

22. VEAP Near Term Focus • Financials Business Processes • Performance Budgeting • Financial Management • Common Reporting Tools • Data Consolidation

23. VEAP Accomplishments • Functional • 8 Future State Business Process documents • To-be business process flows • Business Process and Organizational Impacts • Detailed business requirements • Procurement Assessment / Industry Best Practices • Which Involved Enterprise Wide Participation • 30 Core team members from across the state • 43 Agencies participating in validation workshops • Over 120 agency staff validation future state documents via workshops • Technical • Current state systems architecture • Current state interfaces (integration) • High level conversion requirements • Future State Architecture (conceptual model) • Business Intelligence model / approach • Database, data warehouse & data store • Reporting • Test Strategy

24. VEAP Accomplishments • Change Management • Change Management Plan • Stakeholders matrix development • Change Impact Survey • Facilitator training for functional validation • Implementation training strategy • Project Management Office • Project plan • Project management methodology • Deliverables/work products repository • Risk management and issue resolution process • Data Gathering • Lessons learned from our research • RFP process • Agency interactions and requirements • Agency phasing data

25. Remember What I Asked You To Do? • Please consider that: • Necessity is the mother of invention • There really are three branches of government, and at least two of them count at all times • You need to spend money to make money • AND FINALLY • They always say time changes things, but you actually have to change them yourself. • Andy Warhol, The Philosophy of Andy WarholUS artist (1928 - 1987)