Tech Success: Commerce One pulls into SeaPort with time-savings tool

Contract management system pares down acquisition cycle

IT solutions at work

Project: The SeaPort procurement contract

Agency: Naval Sea Systems Command

Partners: Aquilent Inc., Laurel, Md.; and Commerce One Inc., Pleasanton, Calif.

Goal: In order to streamline the procurement cycle, the Office of the Secretary of Defense ordered the military to move 50 percent of its procurements to performance-based contracting by 2005. Moving to computerized purchasing would lower procurement costs and speed the acquisitions cycle.

Obstacle: The Navy had a wide range of contracts supporting its directorates, offices and field activities, but they were not integrated. Services were obtained inconsistently, and contractors were not held to the quality standards that they could have been by using an integrated approach.

Solution: The Naval Sea Systems Command commissioned Commerce One, under a $2.8 million contract, to supply a Web-based procurement system for its $14.5 billion indefinite delivery, indefinite quantity professional services SeaPort contract.

Payoff: The Navy cut the average time to procure services from 270 days to 30 days.

"We want to make sure our solution gets integrated into our customers' environments completely," said George Haro of Commerce One.

Olivier Douliery

The Naval Sea Systems Command has tapped into e-procurement software from Commerce One Inc. to cut its acquisition cycle and move to a Web-based system that allows better tracking of what it buys.

Navy officials adopted the Commerce One software for its $14.5 billion SeaPort contract, which allows Navy offices to obtain services in engineering, logistics, financial and program management. In the nearly two years since SeaPort was awarded, the Navy has cut its acquisition cycle from 270 to 30 days on more than $1.5 billion worth of work procured through the Web-based system.

Navsea, in charge of building the Navy's ships and combat systems, was looking for a commercial solution to move contract bidding and awarding to a Web-based format. To do so, the agency needed to clear out its redundant contracts, overlapping systems and ad-hoc purchasing.

"Most of our procurement development was in word-processing applications. We weren't using any electronic commerce or

e-procurement tools," said Claire Grady, a SeaPort branch head.


While requests for proposals were posted to the Web, responses were returned on paper. When Navsea needed a clear definition of what it was spending in a given area, personnel would have to dig through financial systems and add up the data.

The SeaPort contract served as a test bed for Web-based contracting. Awarded in April 2001, this 15-year, indefinite delivery, indefinite quantity contract allows 21 vendors, including BAE Systems Plc., CACI International Inc., Lockheed Martin Corp., Northrop Grumman Corp. and Vredenburg Co., to offer engineering and other support services to the Navy.

Navsea wanted the system to go live the day the contract was awarded. The office held an industry day, attended by representatives from Ariba Inc., Sunnyvale, Calif., Oracle Corp., Redwood Shores, Calif., and others.

Five vendors submitted bids; Commerce One won the job, worth $2.8 million, in part because it could install the system within the tight time frame, Grady said. Commerce One completed the work in 69 days.

System maintenance has been taken over by Aquilent Inc., Laurel, Md., the government-focused Web-solution provider unit spun off by Commerce One in 2002.

Now, when Navy program managers need services, they can log into the SeaPort site (http://www.seaport.navy.mil) and post the purchase requirements. Evaluators review the proposals via a Web portal, comparing the technical solutions to the original request. A task order is then electronically issued to the winning company.

Using multiple-award contracts "probably made the most substantial reduction in acquisition time, but the electronic commerce tool took it that much further," Grady said.

Overall, an organization can save 10 percent to 20 percent of its procurement costs by using an electronic procurement system, said Albert Pang, director of enterprise applications research at research firm International Data Corp., a division of International Data Group of Boston. In the past, employees made purchases at local supply stores with their credit cards or deliberately overstocked items. The result caused an organization to simultaneously overspend and lose volume discounts.

In this market, Commerce One not only competes with companies such as Ariba and PeopleSoft Inc., Pleasanton, Calif., but also with companies that offer Web-based procurement systems as a service, such as Freemarkets Inc., Pittsburgh, and Global eXchange Services Inc., Gaithersburg, Md. The advantage of purchasing a solution over a service is that a customer will have greater control over how the data is being processed, Pang said.

Founded in 1996, Commerce One of Pleasanton, Calif., focuses on providing business-to-business electronic exchanges. Revenue for the company was $106 million for fiscal 2002, with a loss of $590 million.

Although the company traditionally has focused on serving the private sector, Commerce One has been paying increasing attention to the public sector, said Andy Hayden, senior vice president of global services practice. It frequently partners with government integrators such as CACI and Computer Sciences Corp., El Segundo, Calif.

"We want to make sure our solution gets integrated into our customers' environments completely," said George Haro, a senior account manager covering the company's public-sector efforts. "That helps the primes and partners such as CSC have a complete solution."

Government procurement reform is a growth area, Hayden said. The Defense Department wants to move 50 percent of service procurements to performance-based contracting by 2005. Commerce One has been focusing its marketing efforts on showing military officers how electronic procurement can ease the transition to performance-based contracting, Hayden said. The company has briefed Deirdre Lee, director of defense procurement and acquisition policy for the Defense Department.

"Now, it's a matter of getting the commands below to adopt," Hayden said.

If you have an innovative solution that you recently installed in a government agency, contact Staff Writer Joab Jackson at jjackson@postnewsweektech.com.

About the Author

Joab Jackson is the senior technology editor for Government Computer News.

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