Contract Watch

BAE moves to new IT service model with Treasury win

Approach uses best practices of seat management, commercial models

For 10 years, BAE Systems Inc. has provided information technology services to the Treasury Department under the General Services Administration’s Seat Management contract. The company also recently won Treasury’s new seven-year, $325 million replacement IT Infrastructure Managed Services contract.

“IT IMS is not seat management, although its predecessor was,” said Thomas Sechler, BAE vice president and general manager of civilian solutions. “I think of seat management as a kind of state-of-the-art, service-level agreement-based IT infrastructure management contracting method from about a decade, a decade and a half ago. It’s been replaced by the emergence today of true managed IT services.”

Make that true managed IT services for federal government. The commercially based model, developed during the past 10 years by big commercial integrators, would not work in government, Sechler said. Agencies “get stuck in this inflexible commodity-based straitjacket and can’t get the real benefits of IT managed services.”

The BAE model, Sechler said:
  • Substitutes contractor capital investment for government capital investment in management facilities, including network and security operations centers, a service desk and all equipment, such as desktop PCs, BlackBerrys, storage-area networks and data centers.
  • Guarantees a fixed price for seven years, which offers an agency chief information officer predictable operating expenses.
  • Includes rigorous service-level agreements and financial penalties for missing them.
  • Can be customized to each agency’s environment.
“Probably the most important objective,” Sechler said, “which is exactly opposite from normal commodity, commercial-based objectives, is that we design for extreme flexibility and extreme scalability. Those are the points that government demands and very rarely gets out of IT managed services.”

For example, when Treasury created the new Office of Financial Stability to administer the Troubled Asset Relief Program, BAE focused on being flexible enough to meet customer needs, Sechler said. “The foundations, the amount of bandwidth and redundancy, resiliency and capacity and the underlying solution are already there,” he said. “So we can take it in amazing directions without straining. That’s the power of managed services.”

Without commenting on this specific contract, said Stan Soloway, president of the Professional Services Council and a Washington Technology columnist, “there is in general an evolution in the whole IT space, not just seat management, toward more integrated solutions,” with the expectation that they will deliver more effective solutions, significant economies in scale and greater flexibility.

The flexibility of BAE’s managed services for Treasury expands to include new technology, Sechler said. A virtual model office lets agency managers see how changes in technology could affect their workplace. An e-commerce-like Web site lets customers place specialized orders that BAE delivers in days with no paper involved.

“We believe we’ve created a custom version of managed services based on the best practices of seat management and commercial IT models — but really beefed up, tailored to the federal market and customized to each customer,” Sechler said.

To Soloway, it all sounds “not unlike some things that have been tried in the defense arena with lead systems integrators in which you have one contractor that’s responsible for ensuring that all the others perform.”

Like those efforts, he said, “it requires good strong management on the government side and, no matter how good a relationship you may have, protections written into the contract on both sides so if things start to go south, you have some options.”

With 10 years together — Treasury Seat Management began in October 1999 and expires this October — BAE and Treasury likely know each other well, and, Sechler said they have rigorous agreements with penalties and incentives built in.

“But even with incentives and protections built in, you’re wise to also have some capacity to maintain some competition so that the pencils remain sharp,” Soloway said.

BAE has no problem with that, Sechler said. “We believe that this is going to be a model that not only will Treasury be ecstatic about but also that it’ll be one that we’ll ultimately have a lot of success with.”

About the Author

Sami Lais is a special contributor to Washington Technology.

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