Hot Contract Vehicles: A Saturated Market

New Interior Telecom Deal Among Few GWACs on Horizon<@VM>Top Contracts<@VM>Top Users

Jeffrey Westerhoff

Louis Ray

Noreen Centracchio

An Interior Department organization is getting ready to release a request for proposals for a new contract that would allow federal agencies to purchase end-to-end telecommunications services.

The Minerals Management Service hopes to release the request for telecom services some time in November, said David Sutfin, the chief of procurement operations.

Sutfin said the intent of offering a governmentwide contract, or GWAC, is to give agencies a vehicle for customizing their telecom and networking services to create a solution that covers local service, long distance, wireless, video, networking and so on.

The General Services Administration handles long distance through its FTS2001 contract and local service through its Metropolitan Area Acquisition contracts. Vendors on one contract must apply to provide services on the other contract, and GSA has strict requirements for the breadth of services that must be included.

The new contract, not yet dubbed with a catchy acronym, came about after Interior Department officials discussed with agencies their interests in buying individual telecom services from a range of vendors. Meetings with telecom providers showed there was industry interest for providing that type of a la carte menu, too.

The Minerals Management Service has not settled on how much this new contract might be worth. "What we know right now is that telecom within the government is a $2.75 billion need, and we're hoping to provide some element of that," Sutfin said.

This prospective GWAC is one of the few new contract vehicles on the federal horizon. At GSA's Federal Technology Service, for example, the only initiative in the works is a proposal to establish a GWAC directed to companies located in Historically Underutilized Business (HUB) Zones, said Keith Sandridge, director of the Center for Acquisition Planning and Review in the FTS office of IT solutions. This vehicle would be used to create a national contract, but the vendors could be located in any zone.

"It would be a broad range of IT services," Sandridge said. "The way we plan to approach it, we'd select about seven national product codes ? we've done market research on how many HUB Zone firms offer those ? and there would be multiple awards for each of the products."

Another GWAC of note is the Defense Information Systems Agency's Encore contract, once known as Defense Enterprise Integration Services III. This is not a new opportunity but a recompete of the DEIS II contract.

The request for proposal was released Oct. 14 for this seven-year, multiple-award contract worth up to $2 billion. Encore will provide a wide range of systems integration services, such as migration strategies, assessment support, integration engineering and prototyping and testing.

Federal agencies are using GWACs with increasing frequency. The 60 largest contracts of this type had a combined revenue of more than $13.3 billion in fiscal 2000, according to market research firm Federal Resources Inc., McLean, Va.

Of those 60, Federal Sources found that Schedule 70, the information technology schedule, and GSA's Management Operation and Business Improvement Services contract accounted for about 67 percent of total spending on those contracts.

Industry and government officials attribute the slowdown in new governmentwide contract vehicles to the flood of GWACs and other agencywide contracts in recent years.

"I think we in industry and government have saturated the market," said Jeffrey Westerhoff, vice president and director of governmentwide acquisition contracts with SRA International Inc., a privately held government systems integrator in Fairfax.

FTS' Sandridge agreed. "We always look at [new products and services to offer], but the reality is that we created our GWACs with very broad scopes," he said. "Right now, we have a broad spectrum of GWACs that can cover virtually anything in the IT field."

For instance, the Environmental Protection Agency said in October that its recompete for telecommunications and computing support, a five-year, $259 million contract announced in November 2000, will be fulfilled using the Millennia contract. Millennia recorded contract obligations of about $138 million in fiscal 2001, Sandridge said.

"What you see a lot of on Millennia is larger projects. [When you] talk about estimated value, it's actually a much bigger value because it stretches out over several years," he said.

Louis Ray, president and chief executive officer of Materials Communication and Computers Inc. in Alexandria, Va., agreed there are enough contract vehicles available for a government agency to address its IT needs. "Unlike the early 1990s, today there is more contract capacity than the government has funding," he said.

But Ray said there is a change in the consistent growth of indefinite delivery, indefinite quantity umbrella contracts. These include FTS' Millennia, Millennia Lite and Answer; the National Institutes of Health's CIO Solutions and Partners II, known as CIOSP II; and NASA's Scientific and Engineering Workstation Procurement II, known as SEWP II.

Sandridge said the Answer GWAC was his agency's leading vehicle in fiscal 2001, with $419 million obligated against the contract. Its second largest GWAC was its 8(a) multiple-award contract issued through its small business development center. Through August, the 8(a) contract totaled about $261 million in obligations. The Small Business Administration's 8(a) program helps small, minority-owned businesses through preferential contracting opportunities.

A continuing trend in contracting is the ever-growing use of GSA's Federal Supply Service vehicles: the IT schedule, the professional engineering schedule, Management Operation and Business Improvement Services and scientific schedules.

"The schedules are a very flexible acquisition vehicle that have a ... breadth of scope and flexible pricing," said Carolyn Alston, assistant commissioner for acquisitions at Federal Supply Service. "Blanket purchase orders are used against schedules instead of having to establish individual agency contracts."

The popularity of this approach is reflected in the volume of orders booked under all the schedules, she said. IT schedule orders in fiscal 2001 reached $10.8 billion, dwarfing all other GWACs. GSA's Management Operation and Business Improvement Services broke the $1 billion mark. Even the engineering schedule, which Alston said is just a year old, recorded $300 million in orders.

While the Federal Supply Service is thought of as the hardware side of GSA, Alston said 66 percent of orders on the IT schedule in fiscal 2001 were for services; collectively, 57 percent of orders across all the agency's contracts were for services.

Like many contractors, Anteon Corp. has made a concerted effort to get on as many federal vehicles as possible. Noreen Centracchio, senior vice president of the Fairfax, Va., company, said Anteon is a prime contractor on all of the major contracts.

"We set a policy a long time ago that our clients' needs drive which contracts we use, [and] we've used them very, very effectively," Centracchio said.

GWACs will be used more as agencies look for a fast and efficient way to buy IT products and services as they respond to the Sept. 11 terrorist attacks, Centracchio said.

"What we've seen so far is that several task orders have been 'fluffed up,' " she said, meaning they have been made larger than expected. "It's purely my opinion only that what we will see is the increased use of GWACs and schedules, [where acquisition] is much quicker ... than in the full-blown procurement process."

Top Contracts
FirmContract TotalPercent of Total
1. GSA IT Schedule$8.1 billion60.7%
2. GSA Broadband
Distance Learning Services
$1.0 billion7.5 %
3. GSA MOBIS$879.0 million6.6 %
4. NASA SEWP II$450.8 million3.4 %
5. GSA Answer$296.8 million2.2 %
6. GSA FEDSIM$287.7 million2.2 %
7. Defense DEIS II$251.6 million1.9 %
8. Treasury TIPSS$192.9 million1.4 %
9. Navy Super Mini$140.0 million1.1 %
10. Transportation ITOP$139.0 million1.0 %
All others$1.6 billion14.2 %
Total$13.3 billion100.0 %
Based on contract obligations for fiscal 2000.   Source: Federal Sources Inc.

Top Users
DepartmentContract TotalPercent of Total
1. GSA$4.2 billion31.2 %
2. Navy$1.7 billion13.0 %
3. Army$1.6 billion12.6 %
4. Air Force$1.4 billion10.3 %
5. DISA$540.5 million4.1 %
6. Treasury$489.7 million3.7 %
7. Justice$390.0 million2.9 %
8. DLA$376.0 million2.8 %
9. VA$326.6 million2.5 %
10. NASA$289.6 million2.2 %
All others$1.9 billion14.8 %
Total$13.3 billion100.0 %
Based on contract obligations for fiscal 2000. Source: Federal Sources Inc.

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