Navy to Overhaul Contract Culture

By Dennis McCafferty

Staff Writer

A U.S. Navy initiative that could lead to an overhaul of information technology procurement efforts servicewide is on a fast track, with pilot programs set to begin by fall in Oahu, Hawaii, and Norfolk, Va.

The Navy's Information Technology for the 21st Century initiative, dubbed IT-21, will cover computer and telecommunications product purchases and leases for both shore and sea-based operations, including PCs, local area networks, wide area networks, hubs, routers and voice and video technology. It's a logical extension of procurement reform, officials say.

"Right now, it's a huge deal,'' said Lauren Steinkolk, a database director who tracks Navy technology contracts for Federal Sources, a market research firm in McLean, Va. The IT-21 initiative could eventually be worth billions of dollars, she said. "It's everything the Navy is buying ... [and] it's a whole new way of doing it. ... The old contract guys, the people who did every program for the last 25 years, have owned everything and said when to trash it. This is changing that way of thinking.''

Navy officials are quick to say that IT-21 isn't a new program commanding billions in spending. Instead, it's a shift in thinking with regard to the way information technology is purchased. New contracts with extensive bidding processes are out. Under the initiative, industry will take a greater role in deciding what technologies and equipment are needed to satisfy the Navy's operations requirements.

In the past, technology acquisition was done on a piecemeal, base-by-base level. Navy officials who strongly support IT-21 envision naval bases where buying a computer is as simple as buying any other product needed for day-to-day life. Although many of the details about IT-21 are still to be determined, the fundamental concepts have been decided, Navy officials say.

Meanwhile, Navy staff will take advantage of lease options and fee-for-service purchase options through existing contracts or the U.S. General Services Administration schedules, speeding up the process of getting technology in place.

With the pilot programs, Navy officials will examine the concept for the next year to see how it works. For example, IT-21's fee-for-service provision is meant to improve purchases of technology by ensuring that the technology that is on employees' desks is no more or less than needed to do their jobs. If this and other concepts are successful, the Navy will seek to expand IT-21 to other regional operations within the next several years. Additional congressional funding will likely be sought as well, officials say.

The pilot programs should begin before October in both Norfolk, the Navy's Atlantic hub of shore and fleet installation, and Oahu, where the Pacific fleet is based and where the Defense Department oversees a large unified command, Navy officials say.

Interest in IT-21 is high among information technology companies. More than 150 industry representatives turned out for an IT-21 forum May 2 at Ft. Belvoir in Fairfax County, Va.

Marvin Langston, acting Navy chief information officer, has been an active proponent of IT-21, likening computers to an office light bulb: Both are products that don't have to be owned or controlled in-house. And both should be replaced quickly when they no longer serve a useful purpose.

When mainframes dominated spending, it made sense for defense agencies to take ownership of technology, said Cmdr. Steve Vetter, whom Langston has put in charge of the initiative. Now, PCs with a two-year life span are in vogue and technology is treated like a commodity. This has set the stage for a concept like IT-21.

Even with the approval of the big-name players in military contracting, officials supervising IT-21 say outsourcing information technology Navy-wide will mean convincing sometimes resistant decision-makers in the Pentagon and Congress that it can work.

"It's breaking a lot of molds: that the military owns and discards everything itself," Vetter said. "We need to change a lot of minds.''

IT-21 will at first not require new contracts, as existing or pending contracts are designed with enough flexibility to pilot the initiative. Those contracts are likely to include the Defense Enterprise Integration Services II, or DEIS II, a potential $3 billion contract awarded in July 1996 to Bethesda, Md.-based Lockheed Martin Corp., El Segundo, Calif.-based Computer Sciences Corp. and a number of other prime contractors; and the Voice, Video and Data contract, or VIVID, an estimated $1.5 billion vehicle that is expected to be awarded in July.

Navy officials say the outsourcing effort's smooth transition will depend upon the continued presence of a strong industry partnership.

"We think there can be a strong relationship where the responsibilities are well-defined, where the accountability for action is clear and those involved respond well,'' said Langston, at a recent federal procurement conference in McLean, Va.

Said Emmett Paige Jr., the former assistant secretary of the Department of Defense, who spoke of his own computer streamlining efforts at the same conference: "We'll see how it all turns out. Some say outsourcing is just beginning. I hope that's true.''

Many officials on the "industry technical team'' that has provided consultation with the Navy on IT-21 represent the big players: Computer Sciences Corp. and Lockheed Martin; Plano, Texas-based Electronic Data Systems Corp.; Seattle-based Boeing Co.; Stamford, Conn.-based GTE Corp.; and Armonk, N.Y.-based IBM Corp. The companies also have a big stake in defense contracts that could pave the way for the initiative.

Those taking part say they aren't getting any special favors by taking part. But they admit that they're on a consultant list that many companies want to be on.

"I think it's a significant deal,'' said Terry Schechinger, group director for business development for Computer Sciences Corp., which is also a potential subcontractor for VIVID. "It's one of the most exciting innovations the Navy has embarked upon. I've never seen so much support, from the four-star level and with the CIO. It's something the Navy has needed for a long time.''

Dave Drake, manager of business development for Lockheed Martin's services group, was more cautious about IT-21's potential for widespread change. But he was encouraged by the Navy's efforts.

"What we're doing is building on the first things that came out after acquisition reform,'' said Drake, whose company is also seeking business with the VIVID contract. "Each one goes a little bit further. ... The big change now is the elimination of the closed door. Partnership, and allowing exchange on a commercial basis, is what it's about now. It used to be that they couldn't talk to you at all when it came to a procurement. Now, that's not the case.''

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