A Kinder, Gentler Treasury Procurement Office

It's business as un-usual at the Treasury Department's various procurement offices these days. A new IT strategy sees procurement officials actually fostering a close "relationship" with vendors with calls for open communication, honesty and trust -- virtues to be sure, but ones generally more closely associated with Oprah Winfrey than, say, the Internal Revenue Service.

"Quite simply, they're a joy to work with," says Alan Lawrence, vice president of business development for GTSI, which last year won the Treasury Department Acquisition I award, worth $3.9 million.

Things were not always so sunny with this group. Before 1990, the Treasury Department employed a traditional, distant, hard-nosed approach -- a strategy that Welch admits "just doesn't work."

That fact was brought to light with the IRS, in particular. In the 1980s, the agency, which today performs the bulk of the Treasury's infotech procurement activities, including all major telecommunications systems and PC buys, was protested on almost every information technology acquisition and lost about half of those.

Greg Rothwell, assistant commissioner for procurement at the IRS, began to implement changes when he was hired in 1990. After much research and discussion with industry, the IRS instituted the "Full and Open Communications Policy," which included several different goals, including increasing communication with vendors and re-engineering the procurement process to suit the dynamic characteristics of information technology solutions.

Other innovations include flexibility clauses that allow technology refreshment, contracts of shorter duration, intense competition, benchmarking for procurement officials and allowing Treasury employees to use credit cards to buy more quickly and easily from the GSA Schedule.

The Treasury Acquisition Institute, located in Oxon Hill, Md., was established in the early 1990s for the express purpose of training procurement employees in the new culture, including customer service and diversity skills. All procurement chiefs now sign a pledge to do all they can to improve the process. The result of such measures has been dramatic. Since the changes were instituted, for example, the IRS has conducted 58 contracts with just 7 protests (on 4 different procurements) and only one loss. "It's a pretty phenomenal turnaround," Rothwell admits.

"They have a very helpful open-door policy," says Joe Santamaria, vice president and general manager of information technology for Unisys Federal Systems Division, which has won four infotech contracts in the past year, including the $520 million Service Center Support System and Storage Peripheral Replacement on Unisys Computer Equipment worth $106 million. "They'll call you in, discuss requirements with you, ask you for suggestions and debrief you after the award to let you know where you did well, where you could do better. It makes them very easy to work with."

In fact, the Treasury Department invites discussion at all levels of the procurement process, including before a request for proposal is issued, actually releasing that document in draft format several times before the official document is finalized. Once responses are received, the procurement office asks different companies to come in and present their proposals orally. "We don't just want to deal with paper," Rothwell explains. "We want to be able to listen to what they have to say, be able to ask questions and really understand their ideas. This way, we can basically get a jump-start on the evaluation process."

Afterward, procurement officials debrief the companies, including the winning one, on how they did, pointing out strengths and deficiencies and advice for the next try. "I've never been debriefed after a win," states Lawrence. "But it was very helpful since just because you win doesn't mean you can't improve the next time."

Another prong of the new infotech strategy is integrated teams of technical personnel from the program office, procurement specialists, cost and pricing analysts, and attorneys. This innovative approach, based on the GSA Trail Boss model, has not gone unnoticed within the vendor community.

"At some agencies, the program office and the contracting offices seem to pull against each other," says Santamaria. "But at Treasury, that's not the case. They really do a good job of working together toward a common goal, which makes everything go a lot more smoothly."

The cooperation and openness does not end upon contract award, however. Treasury procurement officials keep close tabs on their contracts and are especially responsive when it comes to adding technology refresh equipment, contractors say. One vendor noted that while a simple PC replacement proposal will often take a minimum of 90 days for approval at other agencies, the Treasury Department manages approval times of three to five days -- even when dealing with more complicated deals.

Nonetheless, all of this happy talk should not lull anyone into underestimating the Treasury Department's steely resolve at keeping its contracts equipped with the latest and greatest products. Its reliance on multiple vendors and overlapping contracts definitely puts the heat on infotech companies to keep up with the times, contractors note.

Before 1990, Lawrence states, single vendor awards allowed a company to keep older technology in place for longer periods of time, but not so with the intense competition inherent in multiple vendor environments. "They were one of the first agencies to jump into this mode, and I think it's paid off well for them because all of us really have to fight to make sure we're on the leading edge of technology."

Self-admittedly, though, the Treasury Department procurement policy is not without its kinks. Rothwell notes that his office still struggles with the issue of clarification, or asking questions once best and final offers are received. And, he concedes, the office doesn't know everything and is still striving for improvement. "We just don't have that attitude," he says. "We have as much to learn from the vendors as they do from us about how to improve the relationship and the process."

For vendors, these recent changes at the department mean that the old ways of doing business are unwelcome. Being a good partner is in; creative pricing models are out. And honesty really does count, as does a straightforward contract proposal.

"To be successful at Treasury, you have to be pretty up front with a lot of things that you wouldn't normally talk to your customers about, such as 'Here's our pricing strategy and here's why we're doing it. Here's our competitor's pricing and here's why we're better,'" Lawrence explains. "You have to be willing to throw away a lot of those old ideas and tricks from the old school of contracting. Otherwise, you'll get laughed out of their office."

Treasury Department Infotech ContractsValueStatus

Data Center Network Operations$6,000Awarded to STI on 9/1/95

Data Center Systems Services$5,000Awarded to Q Systems Inc. on 8/31/95

Treasury Enforcement Communication Sys. Maint.$12,000Awarded to KCM Computer on 1/1/96

Data Center Facilities Management$23,000Awarded to Advanced Management Inc.

Telecommunications Services$56,000Awarded to Sprint 5/12/95

Source: Input