CSC Team Rides Home Advantage to Success

By Steve LeSueur Staff WriterThe home-field advantage can work in business as well as sports. The Pennant Alliance team headed by Computer Sciences Corp. used its connections with the local community to help garner a proposed seven-year, $644 million technology outsourcing deal in San Diego County.CSC and its partners, including Science Applications International Corp., Pacific Bell and Lucent Technologies Inc., employ more than 11,000 county residents, with an annual local payroll of nearly $600 million. They also account for more than $70 million annually in purchases from local businesses. CSC's headquarters are in El Segundo, Calif., about 100 miles north of the county; SAIC's corporate base is San Diego."They called themselves the hometown team and certainly indicated that they were committed to this area," said Walt Ekard, chief administrative officer for the county. The Pennant Alliance, which received the highest technical score in the county's evaluation of vendor bids, also submitted the lowest price, he said.The County Board of Supervisors meets Oct. 26 to vote whether to approve a contract agreed to Oct. 8 by the Pennant Alliance, which beat teams led by Electronic Data Systems Inc. of Plano, Texas, and IBM Corp. of Armonk, N.Y. The contract calls for the alliance led by CSC to manage the county's information technology systems, including data centers, desktop computers and telecommunications. If approved, it will be the most ambitious IT outsourcing deal by a state or local government.County officials are looking for the Pennant Alliance not only to take over IT services and functions, but also to help the county modernize its technology and transform the government."The goal is to move online every county service that we possibly can," said Tom Boardman, the county's chief technology officer who will oversee the work of the vendors.Boardman outlined a three-step process for transforming the government:?During the first year of outsourcing, the county intends to replace its telecommunications infrastructure. ?Then it will replace its major software systems, such as human services, payroll, property tax, financial and accounting systems, some of which are decades old.?With these improvements in place, the county will be in position to develop online applications serving residents, businesses, and employees.The Pennant Alliance will save the county nearly $90 million for the work it performs over the seven years, according to county estimates. But even more important is the expertise that the vendors bring to the planned modernization effort."This is not a core competency for us," said Ekard, asserting that it would be extremely difficult, if not impossible, for the county to maintain state-of-the-art IT systems on its own.While a government would not select a vendor based simply on its local presence, industry officials said this often can tip the scales in favor of a particular company or vendor team. Local governments like companies with whom they already have relationships and that have a vested interest in the community, said Rishi Sood, a principle government analyst with Dataquest, a research arm of the GartnerGroup of Stamford, Conn. "Having a local presence makes a difference," he said."In general, there's a home-court advantage," agreed Tom Davies, senior vice president for Internet services with Federal Sources Inc., McLean, Va.Consequently, when competing for contracts, systems integrators not only tout their technical skills but publicize their connections with local partners, too. EDS, for example, teamed up with San Diego-based Qualcomm Inc. and with Cox Communications Inc., an Atlanta company that employs 1,600 people in the region; IBM emphasized in its press material that "all members of the IBM team have had a long-standing presence in San Diego County: An estimated 6,000 employees of the team live and work here." Ekard and Boardman both stressed that the Pennant Alliance was selected on the strength of its technical qualifications and low bid. But county statements announcing the selection of the Pennant Alliance also pointed to the vendors' many connections in the region.These connections probably helped it in the rating system used to rank the competing vendors. The Pennant Alliance, for example, scored higher than the other teams in its cultural fit ("management and work style") with the county, said Boardman. In addition, the large number of local employment opportunities with CSC and SAIC made these companies more attractive to county workers who want to stay in the region. The Pennant Alliance also offered the county's IT employees a generous employment package, county officials said. All current employees will be guaranteed two years employment in San Diego County with either CSC or SAIC, immediately will receive a 7 percent pay raise and be eligible for profit sharing and bonus plans."Our hometown team of CSC, SAIC, Pacific Bell and Lucent Technologies stands committed to a partnership with the county to deliver proven business solutions, provide career enhancements and benefits for the county's professional IT work force, and keep jobs in San Diego County," said Richard Jennings, CSC vice president and lead executive of the Pennant Alliance, after the contract win.Some employees still oppose the outsourcing plan, but most are expected to join CSC or SAIC, officials said. Approximately 290 county employees have the option of transitioning to the vendors.The county's five board members are expected to approve the contract when they meet. "We have been in close contact with the board and their chiefs of staff all through the process, and they've been extremely supportive," said Boardman. "We're not expecting any surprises."If the board approves the work, then federal and state regulators will review the proposed contract to ensure that there will be no disruption of services in federal and state programs administered by the county. These include food stamps, Medi-Cal benefits and foster care services. The federal review process can be slow and frustrating for state and local governments anxious to begin work, but county officials are hoping to get approval by mid-November for their contract. If so, the Pennant Alliance would begin its work Dec. 13. XXXSPLITXXX-San Diego County officials learned an important lesson from the outsourcing fiasco in Connecticut: Do not let the process drag out."Schedule slip is death," said Walt Ekard, chief administrative officer for the county. Connecticut began its planned $1.4 billion project in December 1996, when Gov. John Rowland (R) announced his intention to outsource the state's information technology services. Although proposals were first submitted in May 1997, political and bureaucratic obstacles slowed the process until Rowland finally decided to terminate the project in June 1999.In contrast, San Diego County has been moving steadily toward its objective since issuing a request for proposals in February. Except for a recent two-week delay, the project has stayed on schedule, said Ekard. San Diego officials were able to strike a deal with prime contractor Computer Sciences Corp. of El Segundo, Calif., after only about a month of negotiations.Even before the Connecticut project was canceled, advisers had told San Diego officials that holding to the schedule was critically important. "They said, 'You've got to keep it moving, you've got to keep the vendors interested or they'll walk away,' " said Ekard.San Diego County's planned $644 million outsourcing deal with CSC's Pennant Alliance is larger than Pennsylvania's $500 million contract with Unisys Corp. of Blue Bell, Pa., to consolidate and outsource the state's data centers. Both contracts are for seven years.With an annual budget of $2.6 billion and 17,000 employees, San Diego County is larger than many state governments. County officials know that other governments are watching to see whether outsourcing can bring the planned transformation of government."If we're unsuccessful with this, then governments will sour on it," said Ekard. "But if we succeed like we expect, then there will be a great market for outsourcing."? Steve LeSueurXXXSPLITXXX-Computer Sciences Corp., El Segundo, Calif.Science Applications International Corp., Pacific Bell and Lucent Technologies Inc.$644 million over seven yearsResponsible for data center operations, applications services, telecommunications, desktop operations and local area networksWork slated to begin Dec. 13, pending approval of the contract by the County Board of Supervisors and by federal and state regulators.