Boeing Realigns to Reap Rewards

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Boeing Realigns to Reap Rewards

Professional services unit will spearhead push for more IT business

By Nick Wakeman
Staff Writer

Boeing Information Services bagged several big contract wins in 1996, including two multibillion dollar defense efforts - Defense Information Systems Network Support Services and Defense Enterprise Information Services - and the National Institutes of Health's Chief Information Officers Solutions and Partners contract.

Those wins are feathers in any company's hat, but for Boeing they also are keys to doubling or tripling its information services revenues, which totaled $350 million in 1996, company officials said.

Boeing created a professional services unit earlier this month specifically to better manage lucrative indefinite-delivery, indefinite-quantity contracts with multiple winners, said Harold Olson, vice president of the new unit.

Officials at the Vienna, Va.-based division of Boeing Co., Seattle, knew that winning these contracts is only one step toward a successful contract. To capture task orders under these contracts, winners compete against one another.

"Winning the contract means getting a license to market for task orders," said Dennis Groh, Boeing Information Services vice president for business development.

Boeing needed the flexibility to market itself to win those orders and to shift resources within the unit to perform different tasks under the contracts, said Olson.

"This kind of work requires the ability to move resources around," he said, because the demand for task orders within a contract will ebb and flow. When one contract slows down, Boeing must shift workers to a busier one, Olson said.

The business development unit will pursue the original contract win and then provide the marketing services to win task orders under the contracts, Groh said. "We used to just win the contract and move on to the next one," he said of the business development unit.

Other IDIQ contracts under Olson's purview include the Defense Financial Integrated Systems Services contract. Boeing is also a subcontractor to Unisys, Blue Bell, Pa., on the Department of Transportation's Information Technology Omnibus Procurement; and is on the Lockheed Martin Corp. team for the Defense Message System, a huge electronic messaging network being built for the U.S. military.

Olson said he expects the popularity of these types of contracts to increase because they give agencies flexibility and speed in buying infotech services.

Shifting the division's structure is a good move if Boeing wants to pursue these contracts, said Wolfgang Demisch, an analyst with BT Securities, New York. "You need a much more flexible tool," he said. Defense contracts are becoming more service oriented. "Boeing is adapting to that reality," Demisch said.

Boeing also wants these contracts to translate into more federal civilian work and state and commercial contracts, Olson said.

The company has already had success leveraging contracts within the U.S. Defense Department from one project to another, he said. For example, under the first Defense Enterprise Information Services contract, Boeing did work for the Defense Financial Accounting Service, which in turn helped it win the Defense Financial Integrated Systems Services contract, Groh said.

The company also had a $2 billion piece of building the Defense Information System Network. So it is now pursuing the civilian version - the Post Federal Telecommunications System 2000, which should be awarded by October 1997. That contract could be worth up to $800 million if Boeing is the sole winner.


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