The Bigger, Better DEIS II

Government contracting broke new ground earlier this month when it awarded to six integrators and 245 subcontractors the gem of indefinite-delivery, indefinite-quantity contracts to date -- a $3 billion contract with a five-year life cycle and a sweeping mission to provide integration services for the Department of Defense and other government agencies.

The Defense Enterprise Integration Services contract, DEIS II, will have a ceiling of $2.5 billion for the Department of Defense and $500 million for other federal agencies. Awarded by the Defense Information Systems Agency, Arlington, Va., DEIS II will enable the DoD to attain global interoperability by linking the Defense Information Infrastructure and the Global Information Infrastructure.

Same agency, same six integrators, same contract. So what's new? For starters, try 188 new contractors from the earlier DEIS contract awarded by DISA in 1993. Of the 245 DEIS II subcontractors, 142 or 58 percent fall under the small-business categories of small, small-disadvantaged or woman-owned small businesses. They also include historically black colleges and universities. On DEIS II, 20 percent of all contract monies will go to these small firms. This figure eclipses the 12 percent number on DEIS.

The proliferation of small business participants on DEIS II is a clear marker of how the face of IDIQs has changed drastically in the span of three years.

The six winning prime contractors are: BDM International Inc., McLean, Va.; Boeing Co., Seattle; Computer Sciences Corp., El Segundo, Calif.; Electronic Data Systems Corp., Plano, Texas; Lockheed Martin Services Corp., Bethesda, Md.; and Unisys Corp., Blue Bell, Pa. Each company has 32 to 48 subcontractors, a number that dwarfs the mid-teen average of the earlier DEIS contract.

"On DEIS II, the role of the integrator is to work with the capabilities of multiple companies. Working with 39 other players on our team alone, our best strength is not in working as a team of individual companies. It's found in working as a single virtual company," said Ray Davis, program manager at Unisys Federal Systems, Falls Church, Va.

Government and industry officials said that DEIS II costs are comparably lower than other large contracts like DEIS, INFOSEC (Information Security) and the Department of Transportation's ITOPS (Information Technology Omnibus). Other industry observers noted, however, that the $935 million ceiling for DEIS reached up to $1.15 billion by 1996. "We anticipate DEIS to reach its ceiling and close by FY 1997 in October," said Betsy McDonald, a DISA spokeswoman. DEIS II, which has a five-year life cycle, could begin as early as October, McDonald said.

In addition, DEIS II "has been a much faster procurement," said Otto Doll, federal program manager of Input, a market research firm in Vienna, Va. It took only four months from release of the request for proposal to contract award -- which DISA officials called unprecedented for a contract of this magnitude.

Clearly, small disadvantaged businesses have found DEIS II sweeter the second time around. In the earlier procurement, 30 of 75 subcontractors were small, small-disadvantaged, woman-owned small businesses or historically black colleges and universities. The overall percentage of subcontractors has grown from 55 percent on DEIS to 58 percent on DEIS II.

"We try to gather the best talent available regardless of where it comes from," said Jim Cassity, senior vice president of BDM Federal, McLean, Va. BDM will partner with 33 other companies, including HCI Technologies Inc., Reston, Va., a small disadvantaged business.

"As government contracts get bigger, it's tougher for small businesses to go after them by themselves. Procurement practices now provide an environment where small businesses can compete," said Rodney Martin, president of HCI, which partnered with BDM on the earlier DEIS team.

Unisys, which exceeded the original DEIS requirement that 12.5 percent of the work to small disadvantaged businesses by including such partners on 25 percent of all work, anticipates a similar rate of involvement on DEIS II, said Davis.

Unisys, which earned $108 million on the first DEIS contract, ranked fifth overall among the six primes in terms of contract revenues. Unisys is poised to rake in somewhere between $400 to $500 million on DEIS II, said Davis.

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