GSA Seat Management Winners and Losers

Key Bidders Lose $10 Billion GSA
Desktop Outsourcing Services Contract

By Nick Wakeman
Staff Writer

Bidding too high is the likely reason why four notable companies were shut out when the General Services Administration awarded its highly anticipated Seat Management contract July 1.

GSA awarded eight contracts under the nine-year, $10 billion contract vehicle for agencies to outsource desktop services, but missing from the list of winners were the Boeing Co. of Seattle; Computer Sciences Corp. of El Segundo, Calif.; Electronic Data Systems Corp. of Plano, Texas; and Lockheed Martin Corp. of Bethesda, Md. Only one other company, Artel Inc. of Reston, Va., an 8(a) firm, did not win a contract from the field of 13 bidders.

"It's surprising because of the scale and depth GSA wanted," said one industry source who asked not to be identified. The Seat Management contract will be used by agencies that want to buy desktop services, including help desk, technology refreshment, training and maintenance, the way utilities like telephone service and electric power are purchased. The contractors also will help assess infrastructure needs.

Winning the Seat Management contract were: EER Systems Inc. of Seabrook, Md.; FDC Technologies Inc. of Bethesda; IBM Corp. of Armonk, N.Y.; Litton-PRC Inc. of McLean, Va.; MultiMax Inc. of Largo, Md.; Science Applications International Corp. of San Diego; TechServ LLC (a joint venture headed by DynCorp of Reston); and Wang Government Services Inc. of McLean.

Executives with Boeing and EDS declined to comment on why their companies did not win. CSC's spokesman John Gulick said the company will continue to pursue desktop outsourcing business as a prime contractor on NASA's Outsourcing Desktop Initiative contract, awarded June 19. The company declined to comment on the Seat Management contract.

But Lockheed Martin officials complained that the weight given to price increased after the bids for Seat Management were submitted.

"We expected technical and management expertise to be weighted No. 1 and No. 2, with cost being No. 3," said Kevin Greene, business development manager for Lockheed Martin Information Support Service, the division that bid on Seat Management. "Cost had to have moved up higher on that list."

Wanda Smith, head of GSA's Seat Management office, declined to comment on why some companies won and others lost. "We are still doing debriefings," she said.

The awards were made based on a best value criteria, which was described in the request for proposals, she said.

Cost also apparently torpedoed CSC's bid. Andrew Sung, an analyst with the market research company Input of Vienna, Va., said he was told the price tag on CSC's bid was double the highest winning bid.

"We are thinking they all bid too high, and that is why they didn't win," he said.

The loss for EDS is the second significant miss in recent months. The company lost the $264 million Defense Travel System contract to TRW Inc. of Cleveland in May. EDS has filed a protest of that award.

The fact that Boeing and CSC did not win Seat Management is particularly interesting because both bid and won on ODIN, which is a similar multibillion-dollar contract, said Robert Deller, an analyst with Market Access International Inc. in Chevy Chase, Md. "I'm not sure why they would have lost," he said.

DynCorp, FDC and Wang won both ODIN and Seat Management. All seven bidders on ODIN won contracts, which is what many industry sources said they expected to happen with Seat Management.

"That just seems to be the trend [with large contracts]," said one industry official.

Lockheed Martin's Greene said the company is still committed to pursuing outsourcing of desktop services as a market. Losing Seat Management will make that goal tougher but not impossible, he said.

"Losing hurts, but it doesn't mean we are out of the picture," Greene said.

The company plans to modify its GSA schedule and its Tactical Enterprise Solutions blanket purchase agreement with the Navy to offer more desktop outsourcing services through those vehicles. Lockheed Martin also is pursuing the Department of Transportation's Information Technology Omnibus Procurement II contract as a prime contractor. That contract will have desktop services as one of its offerings, Greene said.

GSA's Smith said her office will be holding kick-off meetings with the eight winners this week. Her office also is continuing its marketing efforts by briefing agencies on what Seat Management has to offer, she said. GSA itself is working on a task order to use Seat Management internally, she said.

Marketing efforts might need to be stepped up, said Deller, who has interviewed IT policy-makers at more than 20 agencies. "There is a lot of interest, but there are a lot with a wait-and-see attitude," he said.

Deller said he expected the use of the contract to be light in the first year, but it might start to pick up toward the end of the second year.

"The use of the contract is up in the air right now," said Thomas Meagher, an analyst with the investment banking firm Ferris, Baker Watts of Washington. But his biggest concern is profitability. "I'm not sure how aggressively the contract was bid, but I have to believe the profit margins are going to be tight."

GSA Seat Management Winners and Losers

Made the Cut:
EER Systems Inc.
FDC Technologies Inc.
IBM Corp.
Litton-PRC Inc.
MultiMax Inc.
Science Applications International Corp.
TechServ LLC (a joint venture headed byDynCorp)
Wang Government Services Inc.

Missed the Cut:
Artel Inc.
Boeing Co.
Computer Sciences Corp.
Electronic Data Systems Corp.
Lockheed Martin Corp.

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