Hot Government Contracts Give Companies
By Nick Wakeman
ustomer service, ease of use, quick turnaround times. That is the mantra of today's popular indefinite delivery-indefinite quantity contract vehicles.
Government and industry officials sound like they are reading from the same script when they describe why contracts, such as the General Services Administration's Federal Systems Integration and Management (FedSIM) or the Department of Transportation's Information Technology Omnibus Procurement (ITOP), have taken off and reaped hundreds of millions of dollars for prime contractors.
According to data compiled by the market research company Federal Sources Inc. of McLean, Va., five current IDIQs that are open to all government agencies have each generated more than $390 million in sales so far. Through early April, GSA's FedSIM was at the top of the list, with $639 million worth of task orders awarded since the systems integration and support services contract started in December 1995. ITOP was second with $607 million.
NASA's Scientific and Engineering Workstation Procurement II (SEWP II) had $581 million in task orders; the National Institutes of Health's Chief Information Officer Solutions and Partners (CIOSP) contract had $402 million in business; and coming in at $391 million was the Defense Department's Defense Enterprise Integration Services II (DEIS II) contract.
These contracts were all awarded between December 1995 and November 1996. Each contract has variations on similar and familiar themes - flexibility, breadth and convenience.
An Integrated Solution
FedSIM has been especially popular for bigger task order contracts, says Tim McCurdy, acting director of FedSIM for GSA. Most task orders have been for more than $10 million. The biggest, $87 million.
"We put together an integrated solution for our clients," he says. The contract can be used by any government agency looking to do nearly any type of systems integration work, he says.
The work being done under FedSIM falls into broad categories, such as software management, business process re-engineering, data communications, satellite communications, systems integration and acquisition support. Most of the task orders are coming in the systems integration category, McCurdy says.
Task orders are turned around quickly. McCurdy says the average turnaround is between six and eight weeks. "That is very attractive," he says.
Cost is another positive attribute for the contract. Unlike many other vehicles, GSA does not charge a percentage of task order value as a service fee for using FedSIM, McCurdy says.
|Federal Systems Integration and Management Center (FedSIM)|
|Contracting agency: ||General Services Administration|
|Awarded: ||December 1995 to eight contractors|
|Value to date: ||$639 million in task orders|
|Contract covers: ||Software management, data communications, business process re-engineering, systems integration, acquisition support|
|Information Technology Omnibus Procurement (ITOP)|
|Contracting agency: ||Department of Transportation|
|Awarded: ||May 1996 to 17 contractors|
|Value to date: ||$607 million in task orders|
|Contract covers: ||Business process re-engineering, life-cycle management, telecommunications support, network support and software engineering|
|Scientific and Engineering Workstation Procurement II (SEWP II)|
|Contracting agency: ||NASA|
|Awarded: ||November 1996 to 13 contractors|
|Value to date: ||$581 million in task orders|
|Contract covers: ||Hardware, software and services related to workstations and workstation support.|
|Defense Enterprise Integration Services II (DEIS II)|
|Contracting agency: ||Department of Defense|
|Awarded: ||July 1996 to six contractors|
|Value to date: ||$391 million in task orders|
|Contract covers: ||Integration services, business process re-engineering, modeling and migration to new applications |
|Chief Information Officer Solutions and Partners (CIOSP)|
|Contracting agency: ||National Institutes of Health|
|Awarded: ||August 1996 to 20 contractors|
|Value to date: ||$402 million in task orders|
|Contract covers: ||Systems integration, outsourcing, telecommunications, security and year 2000 services|
Instead, GSA charges an hourly rate, which he says has been a big draw for the larger task orders because the fee based on an hourly rate often is much less than 1 percent. One percent generally is the standard fee.
"When you are getting to the $50 million to $60 million range [for a task order], [the service fee] cost becomes a major factor," he says.
FedSIM's popularity also has gotten a boost because of the eight contractors vying for work under the contract, says Al Picarelli, a vice president and partner at Booz-Allen Hamilton of McLean, Va.
In addition to Booz-Allen, other winners include: Advanced Technology Systems Inc., McLean,Va.; Computer Sciences Corp., El Segundo, Calif.; Science Applications International Corp., San Diego; SRA International Inc., Fairfax, Va.; VanDyke & Associates, Bethesda, Md.; and VGS, McLean, Va.
When subcontractors are included, there are more than 50 companies the government can draw from, Picarelli says. "That's a rich cadre of contractors."
Booz-Allen has pulled in about $200 million from eight task orders through the FedSIM contract, Picarelli says, noting Booz-Allen has done work for the Patent and Trademark Office, Defense Department, Nuclear Regulatory Commission and all branches of the military.
Streamlined procedures also make contractors and agencies want to use the contract, says Michael Fox, a vice president and director of federal business development at SRA. To win a $52 million task order with the Navy, SRA only had to give a two-hour oral presentation, he says. A separate procurement would have taken months.
A big plus for SRA is that contracts like FedSIM lower the cost of cracking new agencies, Fox says, because the company does not have to go through a long and costly procurement process to win business with new customers.
Raising the Ceiling
The best testament that the Transportation Department's ITOP contract is really blazing is a draft request for proposal floated by the agency. The proposal raises the ceiling from $1.1 billion over four years to $10 billion over seven years.
The agency expects the current ITOP to hit its ceiling by the end of fiscal year 1998, Sept. 30, when the contract will be little more than 2 years old. The contract can be used for a variety of services, including business process re-engineering, life-cycle management, telecommunications support, network support and software engineering.
ITOP's success since it was awarded in May 1996 is part of an overall change in the way the government procures information technology, says Dave Berteau, a vice president and operations manager for SAIC, one of 17 ITOP prime contractors.
"The focus [of contracting officers] is on the needs of the customer," he says. "That is really the key to success."
The ITOP contracting officers have won high marks for setting timetables and sticking to them, listening to contractor concerns and encouraging the government customers to define their own requirements rather than ITOP officials dictating to them, Berteau says.
SAIC has won about $180 million of business through more than 30 task orders, he says.
The contract also has been very easy for government customers to use, says James Heath, director of new business for the government unit of GTE Corp., Stamford, Conn.
The ITOP Web site has a user manual "that is like a cookbook," Heath says. The manual gives step-by-step instructions on how to award a task order under ITOP.
Responding to task order requests also is streamlined, "so we can focus on the solutions and the price rather than the procurement process," he says. GTE has won about $125 million in task orders under ITOP, Heath says.
Unlike other IDIQs where nearly all the winning contractors have a license to sell nearly all the same products and services, the competition is somewhat more controlled in NASA's SEWP II contract, which was awarded in November 1996.
While the contract has a broad range of products and services, those offerings are divvied up among the 13 prime contractors with minimal overlap, says Gary Scribner, manager of the NASA contracting team.
The contract has 14 classifications of hardware, software and support services. About eight classifications deal with workstations and servicing and supporting those products, so there is some competition among contractors in those areas, Scribner says.
"[But] the whole idea was that once the contract was competed, the customer could go directly to SEWP and not have to go through another competition," he says.
Because the overlap of products and services under the contract has been held to a minimum, one winner, Unisys Corp. of Blue Bell, Pa., sees more competition from GSA schedule holders and other contract vehicles than it does from other SEWP II contractors, says Julie Frutchey, marketing manager for Unisys' SEWP team.
Unisys holds the networking equipment portion of the contract, she says. She would not reveal how much business Unisys has done under SEWP II.
With competition on the contract curtailed, the various contractors have a closer-than-usual working relationship, she says.
NASA started a marketing campaign to raise the contract's profile among the agencies and "all the SEWP contractors are helping to pay for it," Frutchey says. "NASA has really fostered a good working relationship among the contractors," she says.
Streamlining the Process
National Institutes of Health's Chief Information Officer Solutions and Partners contract and the Federal Systems Integration and Management effort are good examples of how agencies with large IDIQ contracts are becoming entrepreneurial, says SRA's Fox. "They are actively seeking opportunities to get business," he says.
A key to this is streamlining the process of awarding task orders once the contract is in place, he says. "It's not good to entice [other] agencies to use your contract and then make it hard to use," Fox says.
In the case of CIOSP, National Institutes of Health contracting officers have limited written proposals to 10 pages or less, and oral presentations take only an hour. "That makes it very quick and easy to use," Fox says.
CIOSP was awarded in August 1996 and has 20 prime contractors. Work under the contract includes systems integration, outsourcing, telecommunications, security and year 2000 services.
DEIS II, which was awarded to six contractors in July 1996, is being used by defense and civilian agencies looking for integration services, business process re-engineering, modeling and migration to new applications.The DEIS II contract has pulled in about $391 million for contractors like the Boeing Co. of Seattle; CSC; BDM International Inc. of McLean, Va. (now part of TRW Inc., Cleveland); Lockheed Martin Corp. of Bethesda, Md.; Unisys; and EDS Corp., Plano, Texas.