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Virginia: Restructuring of VPA and VIT Underway

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The board of commissioners of the Virginia Port Authority (VPA) on May 28 approved a long-term restructuring plan aimed at creating an even more efficient, responsive, competitive and customer-focused port. 

The resolution, which was approved unanimously, authorizes the officers and staff of VPA and its terminal operating company, Virginia International Terminals, to do the work necessary to implement the reorganization. 

"Based on a multi-month detailed analysis and critical introspection conducted by leaders from both VPA and VIT, the state’s secretary of transportation and attorney general, private attorneys and consultants, a plan to restructure VPA and VIT was developed and today the agency will begin to execute that plan," said William H. Fralin, Jr., chairman of the VPA board. 

Planning for this project started last year. The board’s action acknowledges the work that has been done to this point and formalizes the larger effort going forward. 

"I want to make clear that this is not a workforce reduction effort: VPA and VIT each went through that exercise four years ago," Mr. Fralin said. "Rather, this collaborative effort sets out multiple goals: streamlining operations, creating efficiencies, improving communications, speaking to the market with a unified voice and eliminating duplication where possible to name a few." 

The restructuring will take between six months and a year to completely implement. The resulting savings are estimated at between $3 million and $6 million over 12 months. 

"As we leverage our advantages to move this port forward, this restructuring will insure that VPA and VIT are managed and operated as one entity, not two," Mr. Fralin said. "The soon-to-be-named permanent executive director & CEO of the VPA will have complete oversight and responsibility for both organizations. One unified management structure will incorporate the executive teams of VPA and VIT. Wherever possible, corporate departments and functions such as H.R., accounting and procurement will be unified. In all cases, a consistent and renewed emphasis will be placed on customer service." 

The restructuring plan has these goals: 
  • Centralize port operations under the direct oversight of the VPA to align the economic development of the state with the efforts of the port. 
  • Streamline port operations and create efficiencies, eliminating duplicate levels of effort and administration between VPA and VIT. 
  • Use savings from streamlined operations for: 1) infrastructure improvements and 2) increased economic development activity (port growth). 
  • Improve communications, collaboration and cooperation between VPA and VIT through the elimination of structural barriers and alignment of goals and objectives between the organizations. 
  • Improve service through increased personnel specifically focused on service and especially trained in the areas "where our customers need us most." 
  • Unify VPA’s message to stakeholders. 
Work completed to date: 
  • Private letter ruling requests have been submitted to the Internal Revenue Service to confirm the income exclusion under Internal Revenue Code of both VIT and Hampton Roads Chassis Pool II (HRCPII) following the conversion of VIT to a single member LLC that is wholly owned by VPA. 
  • A due diligence review of the finances, internal controls and operations of VIT. 
  • Human resource teams from both VPA and VIT are normalizing benefits for both organizations; meetings have begun with the review of retirement benefits. 
  • Procurement teams from VPA and VIT have been given similar direction. Based on the new procurement authority in the Code of Virginia, VPA staff is preparing a revised set of procurement policies and procedures.  VIT will adopt similar independent procurement guidelines once approved by the board. 
  • Immediate retirement incentive plan documents have been prepared by VPA and VIT staffs for dissemination to eligible employees of both organizations. 
  • Discussions among senior management regarding effective staffing and strategic planning, both in the short-term and long-term, are underway. 
  • VPA staff is developing plans to utilize the VPA’s new Industrial Development Authority powers to create new economic development opportunities outside the gates of the port. 
  • Creative approaches to financing future capital outlay projects are being developed for input, discussion and approval of the board. 
 

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