Fed Workers Try On Private SectorIn 'Landmark' CSC Outsourcing Deal

Fed Workers Try On Private Sector In 'Landmark' CSC Outsourcing Deal

By Nick Wakeman
Staff Writer

The contract "clearly provides an opportunity
for federal employees to ease into the private sector and
successfully complete their government service on a
very positive note." Milton Cooper, president of
Computer Sciences Corp. federal sector
Computer Sciences Corp. has nabbed a small but significant outsourcing contract from the National Security Agency that marks the first time the government will transfer employees to the private sector as an integral part of a project.

"This is a landmark contract," said Milton Cooper, president of CSC's federal sector, based in Falls Church, Va.

The Breakthrough Program contract was awarded Aug. 19 and is valued at $10 million over three years. That number would rise to $20 million if options for two more years are exercised.

Under the contract, CSC will maintain daily computer system operations and provide services involving development support for software enhancements, configuration management, hardware and software installations and upgrades and other customer support.

But the contract also calls for CSC to hire about 40 NSA employees as its own. The money NSA saves from these salaries will pay the cost of the contract.

If no employees are recruited by CSC, there will be no funds to pay for the contract, an industry source said. While the contract's success relies on recruiting NSA staffers, recruitment should not be a problem, the source said.

NSA held a job fair for the contract about a month ago, and nearly 700 potential applicants showed up. "It is clear this Breakthrough contract demonstrates that the Department of Defense continues to take a leadership position in innovative approaches to achieving added savings and benefits for the taxpayer," said Stephen Tate, chairman of the NSA strategic direction team.

If the early phases of the contract are successful, the number of employees that can be hired away from NSA might go up, the source said.

The contract is the first one where federal employees are being transferred to the private sector as part of an outsourcing contract, said Linda Cohen, an analyst with the market research firm Gartner Group of Stamford, Conn.

"It is a very significant deal," Cohen said.

The fact that an intelligence agency is making that move also is significant, she said.

"If the intelligence community is willing to outsource, then that sends a message to everyone else that it makes it hard for them to justify not doing it," Cohen said.

"We are going to see more of these," said Lesley Kao, an analyst with the research firm G2R Inc. of Mountain View, Calif.

The federal government is following the lead of state and local governments, which have been transferring employees to the private sector for some time now, according to Kao.

G2R estimates that federal and state and local outsourcing will rise from $11 billion in 1997 to $24 billion in 2002.

In order to attract NSA employees, Computer Sciences will be offering hiring incentives and other benefits such as full federal salaries, according to a company statement about the award.

A National Security Agency employee can join Computer Sciences or one of its two subcontractors, Data Procurement Corp. of Gaithersburg, Md., or Data Computer Corp. of Ellicott City, Md.

The contract "clearly provides an opportunity for federal employees to ease into the private sector and successfully complete their government service on a very positive note," Cooper said in a prepared statement.

In the statement announcing the award, Cooper said he expected other agencies to watch the contract, a sentiment shared by industry analysts.

"The government is feeling the pressure to become more efficient," said Greg Leikin, an analyst with Frost & Sullivan of Mountain View, Calif.

The contract with National Security Agency is a fixed-price, performance-based contract, where the agency is buying a level of service and not a number of contract employees, according to the industry source said.

The employees who Computer Sciences recruits from the National Security Agency will not necessarily work on the agency's contract, the source said.

The employees will be free to move to other parts of Computer Sciences Corp. if they want, according to the source.

Career flexibility will be a recruitment tool, the source said.

"People are going to see their career possibilities skyrocketed," the source said.

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