For Accenture, winning is just the beginning

Firm faces many challenges as it takes on U.S. Visit project<@VM>Accenture weathers salvo from the Hill<@VM>Tips from the pros

Key U.S. Visit drivers are, from left, Department of Homeland Security manager Jim Williams and Accenture program manager Eric Stange.

Rachael Golden

"These things have got to fall into place right away, or you'll have a long startup time that's chaotic."

Jim Flyzik, partner at Guerra, Kiviat, Flyzik and Associates Inc., a Washington consultancy for firms that want to do business with the federal government.

By Roseanne Gerin

Winning the Homeland Security Department's multibillion-dollar U.S. Visit contract May 28 ? one of the largest federal IT projects ever ? is just the start of the battle for Accenture LLP.

Now, the global information technology services and consulting company and its team of 29 subcontractors must build the U.S. Visitor and Immigration Status Indicator Technology system to track the entry and exit of foreign visitors at more than 400 air, land and sea ports of entry.

This difficult task is made even more challenging by the high profile of the project. Among those watching are the General Accounting Office, Office of Management and Budget, Congress, airports and other transportation organizations, the media, the U.S. public and foreign travelers.

Some congressmen have already swooped in, attacking the award to Illinois-based Accenture, arguing that its parent company is incorporated in Bermuda to avoid paying U.S. taxes ? a charge Accenture denies.

"Accenture has got an uphill battle. Because of congressional oversight, it will be under a magnifying glass," said Tom Arnsmeyer, vice president for security and infrastructure solutions at Northrop Grumman Corp. of Los Angeles, which was a subcontractor on Computer Sciences Corp.'s team for the U.S. Visit bid. CSC and Lockheed Martin Corp. lost to Accenture as U.S. Visit's prime contractor.

The project has a ceiling of $10 billion over 10 years, although DHS officials said it is doubtful the ceiling will be reached. CSC and Lockheed Martin declined to comment for this article.

Accenture is executing task orders, finalizing subcontract work and waiting for the government's decision about which technologies to use to build the system, company officials said.

Besides intense scrutiny, Accenture faces several potential pitfalls with deploying U.S. Visit, experts said.

The U.S. Visit project needs a strong program management structure with appropriate governance for risk management and accountability, they said. Senior decision-makers at DHS and Accenture must see eye to eye on how the contract will be managed, who will be responsible for what and how the budget will be dispersed.

"These things have got to fall into place right away, or you'll have a long startup time that's chaotic," said Jim Flyzik, partner at Guerra, Kiviat, Flyzik and Associates Inc., a Washington consultancy for firms that want to do business with the federal government. Flyzik is a former chief information officer of the Treasury Department.

Service-level agreements and mutually agreed-upon evaluations of the contractor's work also are needed so both parties can meet their objectives, experts said.

The Transportation Security Administration's Technology Managed Services Program contract with Unisys Corp. of Blue Bell, Pa., is an example of a big IT project that went smoothly, Flyzik said. Unisys and the agency made service-level agreements that specified project objectives, time frames and milestones.

A process is in place for regular reviews of U.S. Visit to ensure "that the program stays on track in terms of deliverables, issues and budgets," said Jim Williams, director of the program at DHS.

Accenture also must be prepared to handle the monumental task of implementing major fundamental technology changes, experts said. The company will have to provide a robust system that integrates older networks and solutions that have been in place for years as well as include new technologies.

The problems that EDS Corp. ran into with the Navy-Marine Corps Intranet project are a good example of the risks integrators face with complex projects, said Harris Miller, president of the Information Technology Association of America, an Arlington, Va., trade association for the U.S. IT industry.

Instead of dealing with the three or four software programs the Navy said it had in place before the project began, EDS found dozens, he said.

"Accenture will probably find some surprises, and it may be more of a spaghetti bowl of technologies to deal with," Miller said.

Some observers predicted that Accenture will run into problems implementing U.S. Visit because DHS has not decided which technologies to use, although Accenture has outlined its recommendation in its contract proposal.

"We would make those decisions as needed within the [program's] time frames," Williams said, adding that DHS has looked at radio frequency technologies and discussed a rollout.

DHS has decided that radio frequency technology will be a major part of the U.S. Visit program, although the agency is still working on development details and related policy issues.

One criticism of the U.S. Visit program is that DHS has not defined requirements for its different stakeholders, such as seaport and airport authorities, and how they will interact with the new system, Northrop Grumman's Arnsmeyer said.

"This will be a major challenge for the Accenture team, coupled with the disparate cultures of the Homeland Security Department," he said.

Williams said the program office is working closely with all stakeholders about systems and procedures. He said the program already operates in 115 airports and 14 seaports as of January, and will be in 50 of the nation's busiest land ports of entry by December.

Using the system that's in place, border guards have stopped more than 500 foreign travelers and either denied them entry or let them in after further background investigations.

A third challenge is communication with various parties involved in or monitoring U.S. Visit. Communication must be frequent and thorough, experts said.

Other federal IT megaprojects have stumbled because contractors failed to communicate to all levels, especially with the agency rank-and-file, they said. For Accenture, this task will be an even a greater challenge, as the company must deal with the various and diverse agencies that comprise DHS.

When Northrop Grumman, for example, took over the INS Teams project, an IT services and support contract for the former Immigration and Naturalization Service, from the U.S. unit of Getronics NV of the Netherlands in 2002, the company realized that many agency employees didn't know about the vendor change, Arnsmeyer said.

Northrop Grumman had to inform about 50,000 INS workers and its own employees about the contract, its benefits and the scheduled changes, Arnsmeyer said.

The company sent e-mail updates to the agency's senior management, held face-to-face briefings in the agency's regional offices, held a one-week indoctrination program at its offices in Virginia, conducted two town-hall meetings with junior agency staff and with its own employees and periodically sent out newsletters with project status reports.

"We spent the first three or four months doing nothing but communicating to them," Arnsmeyer said.

But while agency heads give such projects their blessings and support, convincing lower-level employees, who usually resist change, is another matter that contractors underestimate, experts said.
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Eric Stange, Accenture's managing partner for defense and homeland security and program manager of U.S. Visit, said that under the government's direction, the company will have an experienced team of change management professionals to work on understanding the issues, developing communication strategies and providing post-implementation support.

Keeping Congress informed of program progress and hitches is the other part of the communications equation. Having a rapid response system in place to address problems as they arise is crucial, industry professionals said.

Accenture has "to be careful, because they don't want to look like they're running up to the Hill to protect their customer, but they must keep [Congress] informed of good news and bad news," Miller said.

DHS and Accenture officials have a "comprehensive international and domestic communications and outreach program in place" to keep interested parties informed about U.S. Visit, Williams said.

The experts agreed that most of the possible problems Accenture may encounter can be avoided. But "there is no magic bullet to solve them," Miller said, "other than to be aware of them and be upfront about them."

Staff Writer Roseanne Gerin can be reached at rgerin@postnewsweektech.com
By Gail Repsher Emery

Efforts to deny Accenture Ltd. the U.S. Visitor and Immigrant Status Indicator Technology contract because the company is incorporated in Bermuda failed in the House when part of an amendment to the Homeland Security appropriations bill was struck down on a technicality.

One part of an amendment offered by Rep. Rosa DeLauro (D-Conn.) was struck June 18 after Rep. Tom Davis (R-Va.) raised a point of order.

The amendment would have prohibited the Homeland Security Department from placing orders on task- and delivery-order contracts with any contractor incorporated in a foreign country for tax purposes. The amendment would have forced the department to recompete the U.S. Visit contract.

Davis said he protested the provision because it would change law in violation of House rules.

Under the U.S. Visit contract, Accenture is to build a system that will track the entry and exit of foreign visitors to the United States. The five-year contract has another five years in options and is worth at least $10 million and as much as $10 billion. It was awarded May 28.

A part of DeLauro's amendment remains in the House version of the Homeland Security appropriations bill, however. That provision would prevent companies incorporated overseas for tax purposes from bidding on future contracts.

According to Jason Flanary, government affairs director of the Washington trade association CapNet, the provision would violate the World Trade Agreement on government procurement, which prevents the U.S. government from treating foreign suppliers differently than domestic suppliers. He said it could result in layoffs for thousands of U.S. workers.

Davis said the provision was kept in the bill "in the spirit of compromise." His spokesman, David Marin, said "to the extent to which there are concerns about companies relocating overseas in an effort to avoid U.S. tax liabilities ? and Accenture is not in this category ? those issues should be dealt with through the tax code, not the procurement process."

DeLauro tried a different tack later June 18 to block award of the Accenture contract. She proposed another amendment that would prohibit the Homeland Security Department from spending any appropriated funds to carry out any contracts with companies headquartered in other countries for tax purposes.

The amendment was defeated by a 221-182 vote. Thirty members did not vote.

Accenture spokesman James McAvoy said company officials are monitoring the legislation that remains and are educating members of Congress about Accenture's corporate structure. He said Accenture is not incorporated overseas for tax purposes ? an "inverted domestic corporation" ? a fact that DeLauro disputes.

"They don't have employees in Bermuda. They clearly operate in the United States. They pay taxes on their business done in the United States, but they don't pay taxes on their profits that they make off U.S. contracts," said DeLauro spokeswoman Lesley Sillaman.

McAvoy said: "Accenture pays taxes on its U.S. income and does not receive a competitive tax advantage by its ultimate parent being incorporated in Bermuda. In fact, Accenture's effective tax rate for fiscal 2004 is expected to be 34.8 percent."

He said Accenture's 2,500 partners in 46 countries had to agree on a neutral location to incorporate in 2001, and that location was Bermuda.

"The facts are on our side in this debate, and we are confident that Congress will reach the right conclusion," he said.

Staff Writer Gail Repsher Emery can be reached at gemery@
postnewsweektech.com.
By Roseanne Gerin

Accenture isn't the first company to face a potential minefield of problems in taking on a complex government IT project. Here is advice from the trenches.

1. Focus on business outcomes, not technical milestones.

Performance-based contracting with an emphasis on meeting mission objectives is a fairly new concept in government contracting, and it's replacing the "rigid, old-school procurement process," said Jim Flyzik, partner at Guerra, Kiviat, Flyzik and Associates Inc.

With U.S. Visit, "the government can't get hung up on how fast the response time is, but whether it's getting passengers processed in and out of the country efficiently, safely and securely ? so that terrorists will not get in, but visitors will."

2. Understand the budget and set all contractor expectations upfront.

Even after contracts are awarded, agencies often don't have their funding lined up, said Tom Arnsmeyer, vice president for security and infrastructure solutions at Northrop Grumman Corp. of Los Angeles.

When contractor expectations are discussed at the project's start, financing should already be in place, so agency-contractor discussions don't devolve into how the work will affect the agency's budget policy.

3. Have skilled managers direct the agency's end of the project.

"The government's history at managing monster programs is abysmal," said Steve Charles, executive vice president of the Immix Group, a McLean, Va., government business consulting firm. "Too often, the doers are promoted to management, and they just don't have the skills to successfully manage big projects."

4. Spread the message within the agency that U.S. Visit is a priority.

Too often, when IT projects of this size begin, agency workers believe that the technology change merely means new computers for everyone, said Harris Miller, president of the Information Technology Association of America in Arlington, Va. But such megacontracts are business process re-engineering projects with changes that must be enforced throughout the organization.

5. Keep Congress informed.

When problems arise with contracts, agencies often "keep insisting [to Congress] they're on the Good Ship Lollipop," Miller said. But in the end, work complications usually end up costing more money..

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