Customs Service Plan Seeks Lone Integrator for IT Overhaul

By Nick WakemanA $2 billion U.S. Customs Service project to modernize its computer systems is the latest in a new breed of contracts to hire a single systems integrator to coordinate and manage complex information technology overhaul efforts.The project, which is still in the draft stage, will concentrate on the systems that global traders use to ship their goods into and out of the United States daily. "The government needs to look to new ways to modernize and streamline operations," said James Flyzik, chief information officer for the Treasury Department, the parent agency of the Customs Service and the Internal Revenue Service.Trade groups have been pushing the Customs Service for several years to modernize and coordinate its systems, Flyzik said. The Customs Service's responsibilities include assessing and collecting duties, detecting and intercepting contraband, and insuring that imports meet legal requirements for entry to the United States.Industry executives are watching anxiously the emergence of these big-ticket government efforts to use a single contractor to modernize IT operations as IT becomes more central to agencies' performance.Recent contracts that exemplify this approach include the Internal Revenue Service's Prime Integration Contract, a 15-year contract worth more than $8 billion, and Air Force efforts to outsource management of intercontinental missiles and various command and control systems. In one case, the Air Force wound up with a single point of contact rather than managing 20 or 30 different contractors, one industry official said.The Department of Education's Office of Student Financial Assistance also is looking to the IRS Prime contract as a model for updating its systems, said Greg Woods, chief operating officer for the Department of Education branch that administers student loans. Although a draft request for proposals is not expected to be issued until April 2000 for the Customs project, the effort is drawing the attention of many large systems integration players. Lining up as possible bidders for the project are: Computer Sciences Corp., Electronic Data Systems, Litton-PRC Inc., Lockheed Martin Corp., Logicon Inc., Science Applications International Corp., TRW Inc. and Unisys. Customs is using the IRS Prime contract, won last year by CSC of El Segundo, Calif., as the model for its efforts, government officials said. In the past, agencies often could reach in-house to perform upgrade and modernization functions, but the government now faces "a shortage of IT skills and people," Flyzik said. "It is not that we don't have good people, we just don't have the depth."The premise of these projects is relatively simple: The government hires a single integrator, who then coordinates a wide range of projects, such as updating networks, migrating to new systems and revamping processes. The integrator's No. 1 task is to ensure that the resulting systems work together and that processes are streamlined.Few of the companies expected to seek a role on the Customs project would discuss their strategy because it is so early in the procurement process. "We are discussing things internally" and plan to bid either as a prime or a subcontractor, said J. Patrick Ways, senior vice president for civilian business development at CSC."This is definitely one we are interested in," said Philip Odeen, executive vice president and general manager of TRW Systems and Information Technology Group in Reston, Va."If this is going to be a single award and really be an enterprisewide solution, then it hits at our strong points," said Ron Oxley, vice president of federal marketing at PRC of McLean, Va.To build complex IT systems successfully, "you need good program management, and the best way to do that is to have a large single award contract," Oxley said.The advantage of this approach is that it gives the agency a single point of contact and one contractor rather than dozens of contractors to manage, Ways said.That contractor, in turn, manages a slew of subcontractors and, in some instances, can even run competitions among subcontractors to see who wins a task order, government and industry officials said.The Department of Defense, especially the Air Force, has been promoting a concept called Total Systems Performance Responsibility, industry officials said."To say we want to hire a systems integrator is using too mild a term," the Education Department's Woods said. "We are trying to hire a modernization partner."Using the General Services Administration schedule rather than a separate contract vehicle, Woods said he hopes to hire a partner by the end of the year. Woods declined to put a price tag on the three-year project.But not all in industry are convinced that agencies are going to flock wholesale to using a single integrator to coordinate a wide of range of IT projects. Edward Hogan, vice president of marketing for Unisys Federal, said he sees agencies acting as their own systems integrators and relying on task order contracts and the GSA schedule to build their systems.Agencies using this approach often will hire a contractor to perform independent validation and verification testing to make sure the systems being built can operate together, he said."We are finding there is a mixed market out there," said Dick Fogel, director of business development for Lockheed Martin Information Systems.Funding issues can work against hiring a single systems integrator to oversee a long-term modernization project, he said. "You can't do everything at once, so you need a good strategy," Fogel said.The approach that the IRS Prime has taken, and that Customs and others are emulating, is to have an overarching blueprint that breaks the project down into smaller pieces, Flyzik said."It is a way of managing risk," he said. "You break it down and build it in modules."For this to work, it is critical that the agency and the contractor form a partnership, Woods said. To form this partnership, "you have to give the contractor a charter that explicitly gives them responsibility," he said. "In the past, responsibilities have been ambiguous."