ITOP II: A Recipe for Success?

By Nick Wakeman, Staff Writer


Department of Transportation and industry officials are hoping the agency's new $10 billion Information Technology Omnibus Procurement will best an already successful model.

Industry officials speculate that as many 30 contractors might win a spot on ITOP II when it is awarded in December. More than 80 companies have bid for a role on the task-order contract.

The first ITOP contract was awarded to 17 companies in 1996 and hit its $1.1 billion spending ceiling in about two years ? five years before expected. To remedy that, the follow-on contract has a $10 billion ceiling over seven years.

But new contract provisions go beyond the price tag and the number of players invited to the game. The follow-on contract has more provisions for 8(a) and small businesses and more flexibility for creating total solutions. It also limits the instances where uncompeted task orders can be used.

Like the first ITOP, it is set up to provide a wide range of services in three functional areas: information systems engineering, information security, and systems operations and maintenance. The task order contract will be open to all government agencies.

Companies awaiting word that they will be part of the pack chasing ITOP dollars include: Booz-Allen & Hamilton; BTG Inc., Computer Data Systems Inc., Computer Sciences Corp., DynCorp and Lockheed Martin Corp. Others are Northrop Grumman Corp., Science Applications International Corp., Signal Corp. and Unisys Corp. All of these companies are on ITOP I except Lockheed Martin.

The biggest difference between the two contracts is the increased provisions for 8(a) and small businesses, said Ellen Melle, a business development manager with Unisys. ITOP II has the ability to run exclusive 8(a) and small business competitions, something that could not be done under the first procurement, she said.

"We wanted to build on the success 8(a) and small businesses had under the first ITOP," said Richie Lieber, director of the department's Transportation Administration Services Center, which runs ITOP. As a result, ITOP II will have at least two 8(a)s and two small businesses in each of the three functional areas of the contract.

Without special provisions, 8(a) and small businesses nabbed 47 percent of task order dollars under ITOP I, he said. "But why not help them get more than 50 percent?"

The provision should bring more business to the contract vehicle because agencies often cannot use set-aside dollars on large indefinite delivery, indefinite quantity contracts, Melle said. Agencies also want to work with fewer contracts, so changes in ITOP II will allow them to meet their small business goals with one contract, she said.

Another important change on ITOP II is the initial procurement's 25 percent limit on the sale of products has been dropped, Lieber said.

"This will make it much more flexible," said Ray Lee, ITOP project manager for CSC. "You will be able to sell the whole solution."

Under ITOP I, an agency usually had to use another contract vehicle to buy products and then ITOP for the services, Melle said. The new contract will allow agencies to purchase more complete solutions, she said. For example, agencies will be able to develop seat management types of task orders if they want to outsource desktop services.

Lockheed Martin, which lost its bid to be on the General Services Administration's $9 billion Seat Management contract, views ITOP as an opening into the seat management market, said Kevin Greene, business development manager for Lockheed Martin Information Support Service.

One reason the first ITOP was such a success was that it was easy to use, Lieber said.The ITOP program office plans to increase its use of e-commerce, for example, having forms filed electronically.

Because of its flexibility, ITOP II won't face stiff competition from the GSA schedule, CSC's Lee said. "ITOP has much more versatility."

"The government customers that used ITOP I are going to use ITOP II," said Barry Kane, executive vice president of Signal Corp. "But it might be hard to attract brand new customers because of all the other vehicles."

Potential competing IDIQs to ITOP II include GSA's Seat Management and the National Institutes of Health's Chief Information Officers Services and Products contracts. But allowing more products to be sold on ITOP might bring more business, Melle said.

The contract has more flexibility to allow for more outsourcing and leasing as part of the task orders, said Andrew Sung, an analyst with market research firm Input of Vienna, Va."The contract is unusual to some extent in that it allows the contractor a lot of freedom to present the best solution," he said.

Lieber said, referring to the proliferation of IDIQ contracts and the growth of services on the GSA schedule: "Sure, there is a lot more competition than when we first started. ... But it is like when the auto industry started; a lot of people jumped in, but only the better ones survived."

Lieber and the ITOP program office also have personal incentives to make the contract succeed ? the office is a fee-for-service organization and gets no appropriations.

"The only way for us to meet the payroll and pay the rent is by charging fees and being efficient," he said. ITOP's contracting office charges a fee of 0.75 percent to 2.75 percent, according to the service they provide. "It's capitalism 101," Lieber said.