Federal Market Reforms Draw Developers and Integrators Closer
High-stake contracts bolster complex partnerships
As integrators look to begin working even more closely with product developers in the aftermath of recent procurement reforms, both players must work harder to complement one another and bring value to the contract -- before and after it's won.
"Our belief is that developer/integrator teams are going to be more the case when it comes to putting together partners on these large government contracts," said Lee Cooper, vice president of business development for Unisys Federal Systems Division, which, conversely, is a hardware manufacturer and a large-scale systems integrator located in McLean. Best value, he said, is extremely important in winning these awards, and developers who can complement a low price with some type of value-add such as sales or marketing support will have an edge.
As government looks more to the systems integrator to be the prime on these new types of large, governmentwide, multivendor IDIQ contracts to help defray administrative costs and improve competition, a strong and united integrator/developer team becomes paramount not only to winning the initial contract but to winning business after the award, industry experts note.
"Government has created for itself a kind of supermarket where they can go to one place and buy an enormous amount of product and service," explained Jim Carroll, vice president of Universal Systems Inc., a Rockville, Md.-based developer of work flow and document management software, as well as a systems integrator. "It's done that way for government's benefit. But frankly it encourages integrator/developer teams, as it provides a developer with channel opportunities that it might not otherwise have. An integrator is able to aggregate under them specialized expertise and quality products that provide for a broad range of clients."
Still, the relationship between the two players is complex and must be approached with the same level of concern and care that any other sensitive alliance would dictate.
Past integrator/developer partnering arrangements have possessed unique problems: Integrators have been known to dump developers immediately after an award or to take a large share of any added business won exclusively by the developer; product manufacturers, on the other hand, have been guilty of not providing the necessary long-term technical support, failing to keep their products refreshed or hiking product prices after an award.
It's just like any other type of relationship, which works best when there is trust, respect and good up-front communication involved," noted Brooke Smith, director of business development within the Applied Management Group at USI, which is currently providing both products and services to the National Institutes of Health's ImageWorld and Chief Information Officer Solutions and Partners contracts, worth $100 million and $1 billion, respectively.
The key is knowing what each player wants from the other and delivering on that. Integrators, for example, want a developer who can not only provide a quality product that meets the contract requirements but add value beyond the product, including the willingness to provide resources for such tasks as writing the proposals and helping with sales and marketing efforts.
"Product knowledge and the services that go along with it really make a developer stand out, because there are a number of vendors who are just in the business of selling their product," said Jim Francis, vice president for Computer Data Systems Inc., a systems integrator in Rockville, Md., which recently won the Department of Transportation's Information Technology Omnibus Procurement contract, worth $1.13 billion over seven years.
The onus for success, however, is squarely on the systems integrator who as prime contractor on large, multivendor contracts must make certain that they attract companies with "best of breed" products and keep everyone happy. The best way to do this is to work hard at being a good prime contractor that developers want to work with, said Cooper, which means allowing members of the team to chase after business on their own, letting them reap the rewards of wins, and negotiating and spelling out expectations up front.
The prime contractor also has more responsibility to research its subcontractors' past performance, thanks to the government's recent procurement reforms. In fact, some requests for proposals now require that 60 percent of the evaluation weight be placed on a company's ability to meet cost and schedule requirements on contracts dating back as far as three to five years. To deal with this new issue, Unisys, for example, now has its director of quality run surveys on a developer's government customers to determine how well they are able to fulfill contractual obligations. CDSI not only asks for references from its prospective partners, it checks up on them. "Nowadays, procurements can be lost easily if you have subcontractors with problems," said Francis.
In the end, developers and systems integrators say that government budget, time constraints and market realities dictate that it's time for the two to team up to deliver effective and valuable solutions.