Quest for the Best: Strong Partners Draw Many Suitors
Quest for the Best: Strong Partners Draw Many Suitors
By Nick Wakeman,Staff Writer
A fluid federal marketplace where systems integrators face stiffer competition for a medley of contracts and vehicles has companies scrambling to line up niche partners that can make or break their bids.
The speed of technological change is adding to the sense of urgency in recruiting top-notch partners, industry analysts and executives said. And some companies are finding themselves in the enviable position of rejecting all but the best offer.
Gelco's Government Network, a unit of Gelco Information Network Inc., Minneapolis, was "literally invited to talk with five to six integrators" to be a part of their Defense Travel System team, said William Shively, executive vice president of the government unit in Reston, Va.
Gelco, which managed $35 billion in expenses for its 2,500 customers in 1997, ended up on the team of TRW Inc. of Cleveland, which was named the winning bidder in May for the Department of Defense's potentially lucrative contract to devise a paperless travel management system.
But the credit for landing Gelco, the privately held market leader in travel re-engineering for government and commercial organizations, goes to executives of former systems integrator BDM International, which was purchased by TRW for $1 billion last December.
"We were looking for a partner. What we saw in the BDM environment was a strong relationship" where Gelco could work with, rather than for, a company, said Shively.
Initially worth $263.7 million, the DTS contract marks what some government officials and Gelco executives have called the most ambitious travel re-engineering project in history.
The core of the fully automated, commercial off-the-shelf system is Gelco Travel Manager, an end-to-end travel management solution the company helped develop in partnership with the government.
Rounding out the TRW and Gelco DTS team are American Express, Oracle Corp., Sun Microsystems, G2 Software Systems Inc., HCI Technologies Inc. and MCR Federal.
"New types of partnerships are developing between systems integrators and specific types of vendors," said Renny DiPentima, president of federal systems for SRA International Inc. of Fairfax, Va.
His company has partnerships with a variety of enterprise resource planning software vendors, such as Oracle, PeopleSoft, Baan, Tivoli and Ariba.
Wang Global of Billerica, Mass., has taken a similar tack by forming strong alliances with Dell Computers, Microsoft Corp. and Cisco Systems Inc., said John Flynn, senior vice president of Wang's government division.
Those partnerships are focused on networking and desktop computer services, which is Wang's primary market, Flynn said.
"The high rate of change in technology causes a high rate of change in the customer's infrastructure," Flynn said. "So you need deep-rooted, strong alliances [with the companies developing the technology] as a discriminator."
"Companies need to form well-rounded teams to compete," said Brian Haney, director of research at Input, a research company in Vienna, Va.
Trends such as consolidation, fewer but larger government contracts and the government's desire to buy solutions such as outsourcing, not just products and services, are driving the need for more formal relationships among companies, Haney said.
At the same time, integrators are still concerned about maintaining their tradition of vendor independence, said Ron Oxley, acting senior vice president for marketing at Litton-PRC Inc. of McLean, Va. "It is kind of a dilemma," he said.
Integrators want to build a solution set, but a partnership that is too long term can affect a company's objectivity, he said.
Nonetheless, PRC has formed alliances with a variety of companies, such as Hewlett-Packard, Sun Microsystems, PeopleSoft, Lucent, Oracle, Cisco Systems, Netscape and AT&T, he said.
But PRC has to be very careful how it deals with those partners, because those companies can be tough competitors with each other, he said. PRC doesn't try to sell a Sun product to a traditional HP user, Oxley said.
"We try to isolate our customers that have always used one product or another," he said.
Having a strong team in place potentially can influence the direction the government might move in, said Input's Haney.
"The team can spark an interest, and they can market themselves even before the procurement hits the street," he said.
SRA's DiPentima said his company's ties with the ERP vendors came about in part because those companies were looking for inroads to the government market.
Enterprise resource planning software is gaining favor at all levels of government because it can be deployed quickly compared to custom-developed systems, DiPentima said.
"The strength of the ERP people is that they really understand the packaged software and how to put it in place," he said. "The strength of the systems integrator is that we really understand the customers and their problems, and we have the ability to compete in the federal marketplace."
While companies continue to put teams together to pursue specific procurements, such as TRW and Gelco on the Defense Travel System, many companies are looking beyond one contract.
For example, Northrop Grumman Corp. of Los Angeles formed a joint venture with ICF Kaiser Inc. of Fairfax, Va., and Wackenhut Corp. of Palm Beach Gardens, Fla., to win the 10-year, $2.2 billion NASA and Air Force Joint Base Operations and Support contract.
The government is using the contract to outsource operations and administration at the Kennedy Space Center and the Air Force's 45th Space Wing, which includes Cape Canaveral Air Station and Patrick Air Force Base, both located in Florida.
The team just won the contract in August, but is already on the prowl for other outsourcing work, said Robert Koch, director of corporate communications for Northrop Grumman.
"Partnerships are one of our main strategies" as the company moves forward, he said.
While there are factors pushing companies to work together, there are some countervailing factors pushing them apart, especially for small businesses, said Robert Dornan, senior vice president of market research firm Federal Sources Inc. of McLean, Va.
Many small businesses that rushed to join teams of larger contractors pursuing huge indefinite delivery, indefinite quantity contracts are becoming disenchanted because the large prime expects the subcontractors to drum up business for the prime, he said.
"The primes aren't working for them anymore," Dornan said. Because of this, he said, small companies might not be as quick to join teams.
The proliferation of IDIQs and the GSA schedule also can discourage teaming, because "everyone has a vehicle, so the government can go [directly] to who they want," DiPentima said.
But this much is clear: for larger task orders teaming is a must. As DiPentima put it: "No one company can do everything."
Relationships are important because companies face more competition and a faster marketplace, said Dornan.
"You no longer have two years to see an opportunity coming down the pike and put your team together," he said.