RACE for ITOP Dollars Starts Out Slowly

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RACE for ITOP Dollars Starts Out Slowly

By Nick Wakeman

In the children's fable of the tortoise and the hare, the rabbit jumps out to a quick start but ultimately loses to the steady, consistent turtle.

For the winners of the U.S. Department of Transportation's billion-dollar Information Technology Omnibus Procurement contract, the start has been slow but the real payoff is expected in the later years of the indefinite-delivery, indefinite-quantity award.

Most of the activity under the ITOP contract, which is worth about $1.1 billion over seven years, has been in the information systems engineering work segment, agency officials said. Task orders for the other principal work areas have been slower to come to fruition.

Seventeen companies won the right to compete for task orders under ITOP. Any federal agency can use the contract to order infotech work, but they must pay a fee for service to the Transportation Department.

Among the large companies that won ITOP, Science Applications International Corp., San Diego, has been the busiest with systems engineering work potentially worth $19 million, including options.

"It is going extremely well," said James Hooper, SAIC program manager.

Approximately $73 million has been parceled out between July and December 1996, agency officials said. That includes $63 million for the information systems engineering segment, said Richard Lieber, Transportation's principal for task acquisition services.

The agency has awarded $11 million for systems facility management work and another $2 million for systems security.

Other companies have received award dollars in the millions for systems engineering work. Stanley Associates, Arlington, Va., has about $12 million in task orders; and Signal Corp., Fairfax, Va., and Computer Sciences Corp., El Segundo, Calif., have each won $11 million, agency officials said.

The largest portion of CSC's share came in a single $8 million contract the company won for work at Transportation's headquarters, said Kathy Koerner, CSC's ITOP program director. The company has won three other task orders so far.

But companies competing for jobs in the facilities management and system security areas of ITOP are not yet seeing many multimillion-dollar awards.

"The start has not been quite as fast as we had hoped or anticipated," said Stan Hagenhoff, ITOP business manager for Vienna, Va.-based BTG Inc., which won two task orders worth more than $500,000 in the systems engineering segment.

The number of companies awarded contracts in each work segment was determined according to how much money agency officials thought would be spent in each area.

Information systems engineering had the highest number of contracts with nine winners. Facilities management had seven winners and system security had four. However, dollar amounts were not assigned to each section.

Work in the facilities management segment should begin to catch up with system engineering work later in the summer of 1997, especially as the federal government's fiscal year comes to a close, Transportation and company officials said.

"Right now, there has not been much let out of the facilities management area," said Michael Freeman, Northrop Grumman's ITOP program manager. The company's Herndon, Va.-based division has won about $1 million in directed awards (noncompetitive) but is awaiting awards on five competitive requests for proposals.

"We expect to bring in $8 million to $10 million a year," he said.

Booz-Allen & Hamilton, McLean, Va., has won about $600,000 in the system security segment, all in noncompetitive task orders, said Debra Banning, senior associate for Booz-Allen's ITOP system security work.

While she did not project what the company will make from ITOP, Banning said Booz-Allen hopes to reach the yearly maximum of $3 million on noncompetitive awards, which are directly ordered by the agency and are not put out for competitive proposals by the other ITOP winners.

The faster start for systems engineering work is not that surprising, Transportation officials said.

"Facilities management are going to be longer contracts, so it takes longer to identify the needs," Transportation's Lieber said. Most of the money spent so far in that section has been for needs studies, he said.

Facilities management contracts tend to run on the government's fiscal year, which ends Sept. 30. Transportation officials expect more requests for proposals for facilities management work to start coming out during the third quarter of the 1997 fiscal year.

SAIC's Hooper said his firm expected the systems engineering functional area to see most of the early spending because it deals mostly with client/server environments. Tasks the company has been taking on have included network support, software applications, year 2000 date change problems and database designs, he said.

Unisys Federal Systems, McLean, Va., has won 10 task orders in the systems engineering area of ITOP for $5 million in business, said Mike Swain, program director for ITOP.

Swain said he expects most future contracts to come in about $1 million-a-year bites. "Most of the task orders so far seem too tentative in nature and exploratory," he said.

The early popularity of the systems engineering work reflects what is going on throughout the infotech industry, especially in areas such as network support, use of the Internet and distributed architectures, CSC's Koerner said.

"When we did our analysis of ITOP last year, we thought the majority of work would be in [systems engineering]," she said.

Even companies that haven't reaped much bounty yet from ITOP are singing its praises because of the way it streamlines the award process. The average turnaround time on a task order has been less than 30 days, Transportation and company officials said.

"It takes a tenth of the bid and proposal costs under ITOP [when compared to traditional contracts]," Northrop's Freeman said. Many of the preliminaries of the traditional bidding process, such as showing past performance, were taken care of when winning the overall ITOP contract.

"We can just come in and present a project plan," Freeman said.

"You don't eat up a lot of time and effort in the bidding phase," BTG's Hagenhoff said.

The down side has been educating the technical community within the companies, he said.

"You have to be able to make a bid or no bid decision within 24 hours," he said. "Then you have just nine to 15 days to prepare a presentation. That's a quantum leap."

The low fee for service the Transportation Department charges for other government agencies is another plus companies praised. Depending on how the task order is structured, Transportation charges a fee from 1 percent of the contract value to 4 percent.

Swain called ITOP a second-generation IDIQ because it has a looser structure that allows more freedom than the Defense Enterprise Information System contracts (DEIS I and II), which are first-generation IDIQ multiaward contracts.

ITOP's new wrinkle, according to Swain, is delegated contract authority, which allows the contracting client more control. ITOP also allows multiyear awards, which the DEIS contracts do not.

Third-generation IDIQ contracts will look like the National Institutes of Health's Chief Information Officer Special Procurement, which offers agencies that use it even more control over structuring task orders, Swain said.

All three generations will coexist, he said, because some customers want to retain control themselves while others want more structure. Eventually, there also will be a GSA Schedule for system support services that agencies can draw on, he predicted.

"It will all depend on what [the customer] is comfortable with," Swain said.


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