On the eve of reporting that it returned to profitability in its second quarter, Digital Equipment Corp.'s fortunes got another boost with a contract win potentially worth $1.5 billion from the Department of Veterans Affairs. The one-year contract has options for another four years.
"It's the one you dream about," said Digital's Geoffrey Stilley, vice president of federal personal computer sales and marketing for the Maynard, Mass.-based company.
The Veterans Affairs' Procurement of Computer Hardware and Software contract, called Peaches, is the largest win in the company's history, he said.
Under the contract, the agency can spend about $988 million over five years; another $494 million is delegated for other agencies to use the contract to purchase equipment and services.
Sysorex Information Systems, Fairfax, Va., a systems integrator, is the other winner of the contract and will be competing with Digital for task orders under the contract.
"All of us at Sysorex are
honored by the confidence placed in us by VA for this very significant, long-term program," Sysorex President Carleton Jones said in a statement announcing the award.
Veterans Affairs plans to use the contract to bring its information systems into a network environment. Work will include health-care automation, electronic commerce, document imaging and wireless technologies.
Digital plans to keep most of the equipment and integration work in-house, but will subcontract things such as printers, monitors and certain software work, Stilley said. "It is too early to tell how much [will go to subcontractors]," he said.
The contract will let Digital leverage its Windows NT capabilities, Stilley said. "NT is built all through this bid," he said.
The win should send two signals, Stilley said. "This proves to Digital that my group can win large procurements, and it lets the market know we are here," he said.
The Greenbelt, Md.,-based federal division is waiting to hear about awards on five other federal contracts, which should be announced in the next four to seven months, Stilley said.
"We are committed to NT, and with our solutions and hardware, we are going to give the government value," he said.
Work on the contract is likely to begin in April, Stilley said. The contract was awarded Jan. 14 but still must pass a 10-day protest
"I'd venture to say that there will be protests filed," he said. "The procurement is just too big."
Fourteen companies counting Digital and Sysorex bid on the contract, Stilley said.
Veterans Affairs would not identify the losers, saying such information is not available while the contract is still in the protest period.
While the contract is a positive sign for the company, it will not be a panacea for Digital, said analyst David Wu of Chicago Corp., New York. "It is encouraging, but I would rather [Digital] tell me their European business is turning around."
Digital reported Jan. 16 second quarter earnings of 15 cents a share and net income of $31.9 million, an improvement from the first quarter when the company
reported losses of 48 cents a share and net income loss of $74.7