Hot Contract Vehicles: Today and Tomorrow

By John Makulowich


As more and more of the Internet, intranets and extranets mesh seamlessly with the fabric of corporate business, these high-technology communication tools will redefine dramatically relationships between government project managers and contractors as well as vendors and end users.

And the transformation in business transactions is only likely to deepen in the foreseeable future.

A case in point is the Federal Technology Service. One of four major units in the General Services Administration, FTS' primary mission is to provide federal agencies with access to cost-effective information technology and network products, services, contracts and solutions.

FTS does this not only by wholesale buying and reselling, but also by offering other agencies support in the procurement process. It also partners with the GSA's Federal Supply Service in the area of technology, according to Richard Ferguson, an IT and telecommunications specialist in FTS' Office of Strategic Planning and Business Development .

In the case of partnering, FSS manages the GSA schedules, the method by which an agency purchases information technology products and services when it knows what it wants and has the needed in-house contracting and technical expertise.

"When agencies need technical or contracting assistance, ordering and billing support and the involvement of an objective third party, the GSA Federal Technology Service is best suited to meet their needs," said Ferguson, who responded to queries for this piece.

FTS and FSS are working together on a customer information outreach campaign to demonstrate how GSA can meet an agency's technology requirements in both procurement support and the Federal Supply Schedule.

With visions of a turnkey contract operation, GSA now can provide coordinated, integrated solutions through FTS, FSS and the GSA Public Building Service in those cases where the federal customer needs real estate, office space and leasing, office supplies and furniture as well as IT and telecommunications technology.

In the finest tradition of today's business schools and courses in Branding 101, FTS positions its activities into three so-called umbrellas: smart government, connected government and AnyWARE, Tools for the 21st Century.

These umbrellas identify and establish strategic markets and messages that play to FTS' strengths and differentiate FTS from its competitors, which include other agencies and contract vehicles, according to Ferguson. They also spotlight challenges that federal staff face, such as connected government or problems like Y2K.

And the FTS categories do it in a way that gives agencies a framework for dealing with these issues. The umbrellas offer a solution, such as a specific FTS product or capability, or ways to handle problems generically.

The sources of the concepts under each umbrella are numerous, from the need to reinvent government, the National Partnership for Reinvention, the Government Performance Results Act and the Information Technology Management Reform Act.

On the vendor side of the marketing equation, Logicon Inc., a Northrop Grumman company in Herndon, Va., is one contractor that, so far, has successfully navigated the changes in contract thrust and focus. It has already won three of seven tasks awarded by the GSA in its Generation II Answer Program (Applications 'n Support for Widely-diverse End User Requirements). The Answer initiative's mission is to provide flexible, responsive, easy-to-use and cost-effective IT services for federal agencies.

In late March, the company announced its award of a task order for the Fleet Numerical Meteorology and Oceanography Center with a potential value of $50 million over five years. A week earlier, it had released news of its award for the Los Angeles Air Force Base Integrated Network Contract valued at more than $7 million.

The third task, won in January, was an IT services contract for the Pacific Rim. The initial contract, for two years with eight one-year options, has a potential value of $1 billion over 10 years. Under it, Logicon will perform requirements and design research, analysis and definition, system development, software maintenance and facilities management support services for business, scientific and engineering applications.

The multiple award, indefinite delivery, indefinite quantity contract with 10 prime contractors carries a potential value of $25 billion over 10 years. Available to all federal government agencies and Department of Defense units worldwide, the effort covers a range of services over the complete IT life cycle. And GSA brings to bear a full team of IT managers who market the contract.

Jackie Barker, Answer program manager for Logicon, finds appealing the reward of additional business to those contractors who are proactive in promoting their qualifications to different agencies. She sees harbingers of the types of contracts the government will let in the future in Logicon's current work.

For example, Barker thinks contractors will begin to see more activity in software development for business and science applications as the government continues to downsize.

The Defense Department "is trying to contract out as much as they can," she said. The Clinger-Cohen Act of 1996 has been very positive in reforming IT, she said, as have the Government Performance Results Act and the Information Technology Management Reform Act in terms of working the business case for the government.

"Staff are now seriously questioning whether or not this particular activity is a good business for the government to get into. The Air Force is considering whether to use the Answer contract for voice communications," said Barker.

What she especially likes about the Answer contract is its duration. The 10-year time frame "makes it a lot easier to hire and gives us an opportunity to be proactive as opposed to just reacting," said Barker.

Echoing her sentiments about the future in government contracting and taking them a step further is Stephen Rohleder, Andersen Consulting managing partner of Americas Federal in Washington. His responsibility includes the federal market in the United States and Canada.

Not only does he see technology commoditized, but he see a shift to what he terms value-based contracting and shared-benefits contracts.

"If you rewind the clock five years, you see a significant amount of progress, not just in procedures, but more importantly in the culture and the buyers of federal services," said Rohleder.

"You see more emphasis on performance and people talking about value in terms of what am I getting for my IT investment," he said. "Part of the reason is Clinger-Cohen and procurement reform."

At least culturally, he said, we are at a plateau, a rest stop, having pushed hard in the office and in the board room with cultural and policy changes. The next wave of procurement reform, he thinks, must embrace real value.

"Government agencies are very interested in changing the paradigm of hours times rate to what you, as a contractor, are going to give them. The question now is how are you going to change my processes and improve my people," said Rohleder.

While he said agencies have a ways to go in opening themselves to the changes that technology can spark, one positive example he cites is the Internal Revenue Service. There, the introduction of business leadership and new practices funneled down into the agency. He thinks the culture of the agency will shift to addressing how it can adopt new business models to make it more successful.

"Technology for technology's sake is not going to improve things. You must change processes, educate your people and modernize your technology to deliver real value," Rohleder said. "What does it mean to add value? It means offering real, tangible benefits, streamlining processes and ultimately making it easier for the public to interact with government."

Over the next five to 10 years, he said, there will be pressure for government to deliver services with a new paradigm, basically mass customization. Pushing that change could be the discretionary time and income that 55- to 65-year-olds will have and the demands they will make for government services to be delivered via electronic formats, such as the desktop and kiosks.

Vendors helping with this change likely could work under value-based arrangements. The business model translation goes like this: If we can improve your operations, save money, deliver more benefits, we will put a portion of our compensation at risk and share in those benefits.

In the past, Rohleder said, there were time and materials or fixed-price contracts. In the valued-based arrangement, you align incentives between the government and the contractor. Thus, the government wants certain outcomes, and the vendor has capital at risk to make sure those outcomes result, a win-win situation for both parties.



Blanket Purchase Agreement

A simplified ordering procedure (see Federal Supply Schedule) used when a continuing need exists for products or services. A blanket purchase agreement for products is useful to standardize on a set or suite for interoperability and integration. Among its disadvantages is it isn't a contract and cannot be used to modify the basic federal supply schedule terms, conditions or product selection.



Federal Supply Schedule contracts

One of two preferred sources for supplies and services for IT requirements (see Financial Management Systems Software Mandatory Multiple Award Schedule Contracts Program). Using the federal supply schedule contract is optional and covers a range of equipment, supplies and services. It offers contracts with more than 6,000 vendors of more than 4 million products. Almost every commercial product and major service provider is available under GSA schedule and teaming of schedule contractors is allowed for "total solutions."



Financial Management Systems Software Mandatory Multiple Award Schedule contract

One of two preferred sources for supplies and services for IT requirements (see Federal Supply Schedule). Using this contract is mandatory for "core financial management" software and related services and support.



Full and Open Competitive Source Selection

All responsible sources are allowed to compete. There are numerous techniques, such as invitations for bids and two-step invitations for bids, among others. However, most source selections of IT requirements are acquired under negotiated procedures. Among the advantages are that it can be tailored to address specific agency requirements, providing a solution-based, best-value selection. Source selection decision can be made using "best value" criteria and the agency maintains control of contract administration. On the downside, the single award provides no means of retaining effective competitive pressure for modifications or changes. If the contractor fails to perform, there are few acceptable options.



Government Credit Card

Formally called the governmentwide commercial purchase card, this may sometimes be used for purchases of commercially available equipment, supplies or services. Not an acquisition technique, the credit card can be used with other acquisition methods, for example, for micro-purchases. The purchase card can be used to order from federal supply service contracts, place a task or delivery order or make payments when the contractor agrees.



Governmentwide Agency Contract,

Indefinite Delivery, Indefinite Quantity,

Multiagency/Agency Contract

These are existing contracts that offer a selection of products, services and contractors. Generally, these are awarded to multiple contractors. This pool competes for individual task orders under a streamlined "fair opportunity" process. There are dozens, if not hundreds, of these vehicles, and there is a cottage industry of agencies that actively market their awarded contracts of this type. Most of these contracts serve a particular purpose and contain special terms and conditions. These contracts generally contain provisions for price reductions, technology refreshment (substitutions of newer products) and the collection and application of past performance to fair opportunity competitions.



SOURCE: This brief summary of selected contract types in use for IT acquisitions by federal government staff was compiled from information available through the General Services Administration Office of Information Technology and prepared by SIGNAL Corp. and Acquisition Solutions Inc.