Federal Outsourcing Efforts Draw a Crowd

Federal Outsourcing Efforts Draw a Crowd

By Nick Wakeman
Staff Writer

The General Services Administration and NASA will conduct two coveted multibillion-dollar procurements to outsource desktop services on a separate basis but officials from each agency pledged to coordinate the efforts, which could save millions of dollars in administrative costs.

In the latest procurement drama to set industry officials buzzing, officials from both agencies held discussions this fall about combining the two big-ticket contracts before ditching the idea.

Both agencies are taking different approaches to outsourcing, and each was fairly far along in the procurement process, Charles Self, assistant commissioner of GSA's Federal Technology Services, and Skip Kemerer, procurement manager for NASA's Outsourcing Desktop Initiative, told an industry outsourcing conference Nov. 20-21 in McLean, Va. The event was jointly held by the Fairfax, Va.-based Armed Forces Communications & Electronics Association and Federal Sources Inc. of McLean.

GSA's Seat Management contract is estimated to be worth about $9 billion. Estimates for NASA's effort - known as ODIN - range from $3 billion to $5 billion.
Both contracts are for desktop services and will have multiple winners.

The contracts have drawn interest from the Boeing Co., Seattle; Computer Sciences Corp., El Segundo, Calif.; DynCorp, Reston, Va.; Electronic Data Systems Corp., Plano, Texas; IBM Corp., Armonk, N.Y.; Unisys Corp., Blue Bell, Pa.; and Wang Laboratories, Billerica, Mass.

The deadline for filing proposals for the first phase of GSA's contract was Nov. 21. NASA's request for proposals for ODIN was released on Nov. 28. Responses are due Jan. 16.

As part of the agreement to cooperate, ODIN will be a governmentwide contract open to any agency. Non-NASA agencies must go through GSA to use the ODIN contract.

The biggest benefit of cooperating, from Kemerer's perspective, is the knowledge that the agencies will gain from each other. "There isn't a single right way to outsource," he said. Keeping the contracts separate will give more options to potential users, Kemerer said.

Working groups from both agencies are ironing out details on what resources the two agencies will share, he said. NASA and GSA are hoping to save millions in administrative costs, Self said.

"We want to acquire desktop services as a true service, like a utility," Self said. Under both programs, contractors would be paid on a per seat basis.

While the agencies will save money, they could have helped contractors save money too, if they had started working together earlier, said J. Pat Ways, CSC's group vice president for business development. If they had begun working together earlier, he said, the agencies could have shared past performance documentation so contractors would not have to write them twice. "That would have saved the contractors money," Ways said.

As these two procurements prove, government policy makers and systems integrators anxious to expand government outsourcing face many obstacles and thorny issues, ranging from control of the effort, possible savings and the politically charged topic of lost government jobs.

In addition to the efforts planned by GSA and NASA, the Defense Department is eyeing outsourcing as a way to stretch budget dollars and keep up with technology. For example, the Navy is looking at outsourcing as part of its $1 billion IT for the 21st Century program, which will be composed of several contracts.

While these contracts are expected to draw interest among agencies looking to outsource, cultural issues and a fear of the unknown among agencies and employees cannot be ignored, government and industry officials said.

People issues, especially when government workers are being replaced by contractors, are the most significant factor, said Jack Winters, vice president of government industries for IBM Global Services.

"These are serious problems that need to be dealt with in the planning stages [of a project]," he said. "Otherwise you are going to be doomed to failure."

Unions invariably oppose outsourcing because it can mean lost jobs, said John Kost, a senior vice president at Federal Sources and the former chief information officer for Michigan.

Job security should not be an issue because contractors often hire the workers who were doing the job that is being outsourced, Winters said. "We would fail miserably if we didn't pick up the in-house expertise," he said.

But other issues such as benefits and seniority must be worked out, Kost said. The best approach is to keep union and government workers informed and involved in the process because eventually they see the benefits of outsourcing, he said.

Even if the problems are based on perceptions, such as equating outsourcing with loss of control of information technology resources, they must be addressed.

Unisys photo
James McGuirk, president of Unisys
Federal Systems
"Perceptions can become reality," said James McGuirk, president of Unisys Federal Systems, McLean, Va. "The real issues are cultural and the government's mindset."

There also is the matter of the pride of government workers, said Bob Woods, who left GSA Nov. 30 as head of Federal Technology Services, which is overseeing GSA's Seat Management project for outsourcing desktop services. "Industry's sales job has been suspect," said Woods, who is now a consultant with Federal Sources.

The best way to approach government customers is the way commercial customers are won - build a business case and demonstrate why outsourcing saves money or improves services, he said.

"I don't think you tell your commercial customers, 'We are smarter than you and you don't know what you are doing.' That approach turns off potential customers," he said.

In the public sector, people get defensive when this approach is taken, Woods said. "[Contractors] are not packaging this as an opportunity."

In addition to developing the business case for outsourcing, contractors need to know their customers and take a long-term view of projects, said Bruce McConnell, chief of information policy for the Office of Management and Budget's Office of Information and Regulatory Affairs.

The customer in an outsourcing project often is different from other IT projects, he said. "When you are talking about transferring functions to a third party, this decision moves up the food chain," he said.

These decisions are made at the top levels of an agency and can involve congressional scrutiny if jobs leave a congressional district for another area, McConnell said.

"The decision maker is usually not one person," he said.

Policy makers at agencies are promoting outsourcing of information technology as the best way to address shrinking budgets, said GSA's Self.

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