That's a win-win for Virginia. Not only can outgoing Democratic Governor Mark Warner--who harbors 2008 presidential aspirations--hold himself up as a protector of jobs within the state, Virginia also gets-gratis--additional infrastructure that could help attract more IT work to the area through Northrop Grumman. Virginia is agreeing to pay more than would be the case if some of the 900 outsourced state jobs were placed in, say, India, but it's getting a good bit in return from the contractor.
My sense is that this may have been a deal breaker for IBM, which bid aggressively on the Virginia contract. IBM is spending big money to beef up its facilities in India, and I doubt the company had much interest in pouring new concrete in Virginia.
The question now is whether this deal becomes a model for other states-most of which are facing increased demands for IT-driven services--from Homeland Security initiatives to e-health projects--while trying to balance budget deficits. The politically smart message to services vendors from other governors and state CIOs might be this: Sure, we'll pay a premium to keep our jobs here, but if you want our business you can pick up some of the tab.