No more pencils, no more books

Perot Systems takes control of Education support

Perot Systems goes to the head of the class

Perot Systems Government Services began courting the Education Department more than three years ago because it's a department that outsources much of its noncritical, back-office work, which the commercial world does, said Mark Blevins, senior vice president of operations at Perot Systems Government Services. Blevins oversees all Education contracts.

"We really believed we could sell our commercial capabilities to the department," he said.

The company gained a foothold in the department in 2005 when it won the Education Data Exchange Network contract (EDEN), an $18 million award to manage a centralized, Web-based system of elementary and secondary education data from 52 state education agencies.

Perot Systems GS won two more Education contracts in September 2006. The Virtual Data Center was a performance-based award to create a single computing environment for hosting and processing financial aid for the Federal Student Aid programs. It has an expected value of $213 million over 10 years. At the time, the VDC award was the largest in Perot Systems GS' history.

The other award was the Integrated Partner Management contract, a $16.8 million fixed-price software development award that provides the system and data required to maintain and manage information and risk associated with 6,800 U.S. and 600 foreign institutions of higher education. It also manages 3,200 lenders and guaranty agencies that collectively provide $85 billion annually of federal student aid to more than 10 million students.

EDNet followed those three, and Educate is the latest award.

? David Hubler

At a glance

The Utility for Communications, Application and Technology Environment contract, or Educate.

Awarded to: Perot Systems Government Services

When: October 2007

Value: $400 million

Duration: 10 years

Terms: Contractor owns and operates hardware and software required to maintain the contract, in what is known as a contractor-owned, contractor-operated model.

Services to be provided: Desktop and help-desk support, e-mail, disaster recovery, and network, communications, multimedia and printer services.

Perot Systems Government Services is doing well in school thanks to a $400 million outsourcing award from the Education Department that gives the company full control over a variety of information technology support programs.

Perot Systems won the Utility for Communications, Application and Technology Environment contract, known as Educate, in October. It was the fifth award the government contractor has received from the department in less than three years.

Educate reflects a new outsourcing model, said Mark Blevins, senior vice president of operations at Perot Systems, who oversees all Education contracts. With this award, the department is moving from the widely used government-owned, contractor-operated model, or GOCO, to a contractor-owned, contractor-operated environment, or COCO.

With previous contracts, Education has owned much of the IT software and hardware that contractors maintained and operated. That was the model, for example, of the recently concluded $176 million Education Network contract, or EdNet, which was designed to improve services to the public and lower costs through IT integration.
"Educate represents a completely different contract, a completely different vehicle," said William Vajda, chief information officer at the department. The new contract expands the scope of the EdNet support services.

BROAD RANGE OF SERVICES

As the smallest Cabinet-level department, with only 4,000 employees, Education is in an advantageous position to introduce new ways of doing business, Vajda said. But it is not the first government entity to adopt the COCO model. The Housing and Urban Development Department and the National Security Agency have used it, and so have Virginia, Texas and San Diego County, Calif.

Education "wanted a single service provider accountable for all IT components," Blevins said. "We're doing all their network work outside of the [General Services Administration] Networx contract. However, we did select one of the Networx providers, Verizon, as our partner in performing that service."

Under the COCO model, the department "won't own their phones, their cell phones, their BlackBerrys, their [software] licenses. Everything will be owned by Perot Systems," Blevins said. "It's our job to manage that. They don't pay us for owning those assets. It's a service-level agreement."

Perot Systems and its contractor team ? which, in addition to Verizon, includes Accelerated Solutions Inc., of Alpharetta, Ga.; ATS Corp., of McLean, Va.; and several other small businesses ? will provide a broad range of services to more than 5,200 users in Washington and 10 U.S. regional offices. Those services include desktop and help-desk support; e-mail, network, communications and multimedia services; disaster recovery support, as well as printers and other hardware items and maintenance.

That will allow Education to focus on its core mission of providing educational services to students, parents and teachers without the added burden of also managing IT and other noncore services, said Jerry Alexandratos, IT operations and maintenance services director at Education's Office of the Chief Information Officer.

Alexandratos said in December that the department was about three weeks into the new contract model. "So far it's been good. Obviously, we're working through the typical hiccups you have with any transition. But nothing major, no unexpected surprises."
However, not everyone sees COCO as ideal. "There are inherent problems," said Mark Amtower, partner at government consulting firm Amtower and Company. "If there is noncompliance and the vehicle is terminated, first, the government has to start over at ground zero. Second, who owns the data and what can be done with it?"

Also, he added, "all COCOs are inherently noncompetitive." COCOs are bundled contracts, in which many small requirements are consolidated into a vehicle too large for some small or midsize companies to compete for.

Courtney Fairchild, president at Global Services Inc., a government contracting consulting company, said there are many reasons to support contract bundling as an efficient and cost-effective method of procurement. But the COCO model also significantly diminishes competition.

"If the projects were broken out and competed separately, that would allow for a greater field of competition and greater number of bids," she said. "The contract-bundling decrease in competition is most detrimental to small-business contractors that have the expertise and possibly even lower rates to perform on smaller pieces of the work that have been bundled into a contract that likely only a large business can handle."

Fairchild said bundled contracts such as Educate include small-business subcontracting requirements. "However, this does not guarantee that small businesses will be able to participate in bidding or win as many opportunities as they might have if the smaller IT contracts within the Education Department were not bundled for the next 10 years," she said.

Education employees also have had a mixed reaction to Educate, Alexandratos said. "It runs the entire gamut from people who are truly ecstatic to see us go to a more optimized IT model to detractors who say, 'This is not the way we've done it in the past, and change is bad.' " Nevertheless, he added, support is growing daily as the program starts to show signs of success.

FINISHING THE PUZZLE

Vajda said he wants Educate to be fully operational this month. Perot Systems will manage the contract from its Plano Technology Center at its Texas headquarters, which also runs some of the world's largest hospital and bank systems.

"Eventually, [Education] will have all of their systems and applications running in a single facility, which is pretty much unheard of in the federal space at this point," Blevins said.

Jim Ballard, former president of Perot Systems Government Services, said Education deserves credit for being one of the first federal agencies to adopt the COCO model. Although agency officials realized a number of years ago that it was inefficient to have employees manage computers, printers and networks when they should be working on improving education and processing student loans more quickly, red tape and other delays have prevented a complete outsourcing turnover, he said.

Ballard said the department "may be the only agency in the government right now that has really, truly outsourced its nonmission areas into an area that is driven by performance-based requirements [and] service-level agreements. They're not worried about where the next printer, where the refresh for the PC is, or who has the next set of [communications] lines to come into the building."

David Hubler (dhubler@1105govinfo.com) is an associate editor at Washington Technology.

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