One Year Later, Outsourcing Is Catching On

By Nick Wakeman, Staff Writer

While only three task orders have been awarded under two big-ticket seat management efforts launched about this time last year, a slew of new business is just around the corner, government and industry officials said.

The Health Care Financing Administration is expected to award a task order under NASA's Outsourcing Desktop Initiative (ODIN) contract this month to outsource about 4,000 desktops, industry sources said.

The Air Force and Navy, as well as the departments of Treasury and Health and Human Services, also are considering using either ODIN or the General Services Administration's Seat Management contract to outsource their computers and networks, industry sources said.

Not far behind, they said, are the Air Force Education and Training Command in San Antonio, which may use both GSA's contract and ODIN, and the Naval Air Systems Command, Patuxent River, Md., which is developing a statement of work to use ODIN to outsource as many as 38,000 desktops. Both of these awards could come by the end of the year, sources said.

Much of the outsourcing activity will be smaller, pilot implementations that will evolve into larger projects. For example, GSA awarded a $114 million task order to Litton-PRC Inc. of McLean, Va., in December 1998 for the company to supply and manage 2,600 desktop computer systems over the next 10 years. But that task order could grow to 15,000 seats.

The smaller pilot projects can help government officials figure out how best to implement the concept of desktop outsourcing for their agencies, said Chris Wren, director of special projects and new products at GSA.

"The best thing to do is to take one location, try out the full complement of services and build a business case," he said. "You can work out the bugs, and then roll it out across the rest of the organization."

Both the ODIN and Seat Management contracts are open for all government agencies to use to outsource their desktop computers and related services, including network support and help-desk support. Seven companies won ODIN awards in June 1998; eight companies won Seat Management awards in July 1998.

So far, NASA has awarded a $500 million task order to OAO Corp. of Greenbelt, Md., for services at four NASA centers over nine years, and a $20 million task order to Intellisource Inc. of Vienna, Va., for services over three years at the Goddard Space Flight Center in Greenbelt, Md. GSA has awarded the one task order to PRC.

This summer, the Treasury Department will outsource about 1,600 desktops at its headquarters, and Housing and Urban Development's inspector general's office will outsource about 600 desktops. Both agencies will be using the GSA contract, Wren said.

NASA expects to use ODIN in 2000 to outsource the rest of its desktops, according to Mark Haggerty, NASA ODIN program manager.

Four more NASA centers plus NASA headquarters in Washington have some 20,000 desktops that will be outsourced, he said.

"What we are finding is that it takes about six to 12 months to sell [the concept of] seat management to an agency," Wren said. "Seat management touches more of the enterprise than does the typical IT project."

Communication between contractors and customers is critical, Haggerty said. "A lot of folks don't understand what ODIN is and what it isn't," he said. "But that isn't necessarily a problem. This just hasn't been done before."

Contractors who already have won task orders are finding that fulfilling them requires continually managing expectations.

"You have to go beyond just a pamphlet explaining the program," said Mac Oxford, vice president of seat management services for PRC.

"One of the biggest issues is making the cultural change from the old way to the new way of doing things," said Tor Opsahl, vice president of aerospace and enterprise systems division at Intellisource. Intellisource is managing about 9,500 desktops at Goddard.

Much of the cultural change stems from the use of service level agreements, where agencies pay a set amount of money for a set level of service.

Both contractors and the agencies have to adjust to this model, said Phil Davis, senior vice president of the aerospace systems group at OAO. OAO is managing more than 25,000 seats for NASA.

A service level agreement can include items such as response time from the help desk, the availability rate of the network and how often the technology is refreshed.

"Transitioning from cost-plus or time and materials contracts to a fixed-service price takes some focus to make sure it happens smoothly," Davis said. "I think the ODIN model is perfect, but it is complex."

Contractors face greater pressure to manage their people and resources effectively because they are paid the same amount no matter how many people or hours it takes to provide the service, company officials said.

"We have to take a harder look at staffing, the tools we use and even [the amount of] spare parts we have," Oxford said.

Agencies also have to get used to the idea of not specifying equipment, GSA's Wren said.

"We continue to see the tendency to revert back to the security blanket of specifying the technology," he said. "A lot of our work is getting agencies to understand what is a service-level agreement."

But the concept is catching on, government and industry officials said.

"This is still a work in progress," Haggerty said. "But there have been no show stoppers so far."