Kentucky stays SAS course

Officials look to boost contracting dollars with changes

Kentucky's Strategic Alliance Services

Full-service partners

American Management Systems Inc.

Deloitte Consulting

IBM Business Consulting Services Inc. (formerly PWC Consulting Inc.)

TRW Inc.

Unisys Corp.

Niche partners

Analysts International Corp.

Anexsys LLC

Covansys Corp.

EER Systems Inc.

GovOne Solutions LP

(formerly GovConnect Inc.)

Intelligent Document Management Solutions Inc.

Lexmark International Inc.

Maximus Inc.

Oracle Corp.

Science Applications International Corp.

Kentucky's CIO Aldona Valicenti: "We wanted Kentucky to be more of a partner than just a buyer of service, where our directions, standards and architecture would be better understood."

Olivier Douliery

The concept of open communications helped contractors better understand the required work, says Arvind Malhotra, Covansys' vice president of public services.

Robin Nelson

Kentucky state officials are sticking with an innovative contracting approach, despite apparent difficulties getting widespread use of the program since it was established three years ago.

Kentucky state agencies, or cabinets as they are called, have been required to use the Strategic Alliance Services contract to purchase all information technology services. Yet for at least one-quarter of those purchases, agencies have requested waivers to go outside the contract, said Aldona Valicenti, Kentucky's chief information officer. For this reason, state officials are modifying contract requirements before the contract is re-bid later this year, she said.

Kentucky agencies have spent $24 million for 15 information technology projects under the SAS contract since it was established in 1999, state officials said. This is a relatively small amount of the state's overall spending on IT services. For example, the state spent more than $180 million on information technology in fiscal 2000, of which about $60 million was for IT services, according to the market research firm Federal Sources Inc. of McLean, Va.

The SAS contract is a statewide contract that enables agencies to buy IT services from pre-qualified contractors more quickly and competitively than through the traditional request for proposal process. The 15 companies that won places on the contract are approved to receive requests, much like task orders, for IT projects.

The SAS contract includes five full-service companies and 10 niche companies. To purchase IT services outside the contract, state agencies must submit a waiver for approval by the state CIO.

As state officials prepare to re-bid the contract, they will be studying the reasons they granted the waivers for certain IT services and whether those tasks or projects can be handled by contractors under the next SAS contract, Valicenti said. In some cases, the full-service partners did not have a experience or capability in a particular area, she said.

"Our intent is to take what we did and see how we might refine it," she said.

State officials are considering at least two major fixes to the contract. One is to expand the number of full-service partners. The other is for state officials to designate specialty areas for the niche partners, rather than allowing those companies to designate the areas themselves, said Terry Thompson, executive director of the Kentucky Office of Administrative Services.

Thompson said the state doesn't want to expand the number so much that "we can't manage the process."

Despite the low numbers the first time around, Kentucky officials said the SAS approach still provided many benefits to the state, an assertion supported by analysts and industry officials.

The fact that Kentucky is re-bidding the project indicates "they like the overall approach," said Tom Davies, senior vice president of the market research firm Current Analysis Inc. of Sterling, Va.

The intent of the contract as originally envisioned was to allow the state to speed up the contract process, obtain more innovation and cultivate a partnership with industry, Valicenti said.

"We wanted Kentucky to be more of a partner than just a buyer of service, where our direction, standards and architecture would be better understood," she said.

The state can now award an IT services contract in 30 to 45 days rather than nine to 18 months, she said.

One of the chief benefits to Kentucky is that it can rely on the participating contractors to use compatible architecture and standards on each project, said John Goggin, vice president and director of government strategy for the market research firm Meta Group Inc., Stamford, Conn.

"If the agencies go out and do their own RFP and use their own [methodology], then it just continues the silo approach," he said.
Bob Campbell, global senior partner for the public sector at New York-based Deloitte Consulting, said the SAS contract is another example of a commercial best practice which Kentucky has successfully adopted.

Other commercial best practices Kentucky has embraced are the development of detailed business cases to support technology investments and change initiatives, using commercial technology across several agencies and adopting business process re-engineering to drive change, he said.

The only major criticism voiced by contractors participating in the SAS contract is that state officials need to better ensure that all agencies understand the advantages of the contract and are capable of writing SAS requests.

Some agencies did not take advantage of the approach because they don't fully understand the process, said Vibhas Chandrachood, senior director of the public-sector transportation practice and manager of the Kentucky account for Covansys Corp., Farmington Hills, Mich.

"Everyone should have jumped on the bandwagon, but not everyone did that," he said.

Covansys, a niche partner on the contract, was hired by the Kentucky Revenue Cabinet for the Revenue Evaluation and Decision Support project, he said.

But other company officials had no qualms about the process. George Schwartztrauber, a senior principal with American Management Systems Inc., Fairfax, Va., who oversees the company's Kentucky account, said the SAS contract "has worked well for us over the years. We're big fans of the process."

AMS has received SAS requests from a number of state agencies, including Environmental Protection, Families and Children and Transportation, he said.

One key advantage, contractors said, was that companies only had to qualify for the contract once. Another was that the state encouraged informal discussions throughout the request process about the scope of work and possible solutions.

The concept of open communications helped contractors better understand the required work, and helped both parties reduce risk typically associated with IT services projects, said Arvind Malhotra, Covansys' vice president of public services.

The opportunity to have informal discussions "resulted in better responses and better overall procurements," Schwartztrauber said.

The SAS contract has been garnering substantial attention from other states, which are studying ways they might adopt aspects of the approach, Valicenti said.

If other states were to adopt the SAS model, it would allow them to deal with only the most serious and experienced bidders rather than having to winnow out large numbers of unqualified companies, Malhotra said.

"In every procurement you have a lot of noise in the system," he said. "This takes the noise out." *

Staff Writer William Welsh can be reached at

About the Author

William Welsh is a freelance writer covering IT and defense technology.

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