Contracts with a kick

New procurements focus on outsourcing, flexibility and more agency control

"It depends on what you need. They want to have any type of vehicle and methodology available to them so they can get at an investigation in a bunch of different ways." Bob Bratt, Unisys

Rick Steele

"Good past performance is one of the key ways to continue to win the work, but it's not a guarantee." ? Mike Gaffney, Computer Sciences Corp.

Stan Barouh

One of the best ways to get to know your customers is to watch how and what they buy.

In the case of a new slate of government contracts due out this spring, outsourcing and flexibility are very much on the minds of agency executives.

The Transportation, Justice and Treasury departments are among the civilian agencies poised to begin issuing requests for proposals for multimillion-dollar contracts. RFPs will start coming out this month, and awards will follow between May and September.

The hot contracts include a $200 million procurement for the FBI's Integrated Automated Fingerprint Identification System. Justice may make as many as 11 awards for its Justice Management Division that are each worth $140 million. And six contracts from the Internal Revenue Service range from $100 million to $1 billion.

The list was compiled using the contract database of market research firm Input Inc. of Reston, Va. Washington Technology looked at contracts being issued by civilian agencies in their pre-RFP stage. WT did not consider contracts from the defense and intelligence community or the Homeland Security Department.

At the top of the list, the IRS' planned $1 billion contract for seat management services reflects the agency's ongoing attempts to modernize its systems, said David Perara, research program director of information technology indicators and metrics at Government Insights, a global markets research firm based in Falls Church, Va.

"Outsourcing and infrastructure optimization can go hand in hand" to achieve the efficiencies that government now requires, he said.

Agencies such as the IRS are attempting to mirror the commercial market by consolidating infrastructure and reducing costs, Perara said. Under the General Services Administration's seat management services plan, agencies can outsource their desktop computing needs.

Overall, the contracts bear out analysts' findings that agencies are outsourcing more mission-critical work than they once did. The shift, analysts say, is spurred by the impending federal IT workforce shortage caused by an expected rash of retirements and a spending slowdown by federal agencies. Another driver is the Office of Management and Budget's revised Circular A-76, which requires agencies to compete with private contractors for outsourcing work.

According to a report by Input, federal IT outsourcing is expected to increase at a compound annual growth rate of 5.9 percent ? from $13.3 billion in fiscal 2006 to $17.7 billion by fiscal 2011 ? as agencies move from a government-owned, government-operated model to a contractor-owned, contractor-operated approach.

"Government agencies are moving more toward not owning and operating" the IT equipment, said Trina Dinavo, a senior federal market analyst at Input. And A-76 outsourcing competitions bring more solutions to the table and a better overall product, she said, "even though 80 percent of the competitions so far have been won in-house."

Agencies also want outsourcing contracts to remain small, in the $100 million to $200 million range, because "they don't want to go with those mega-outsourcing deals that bring a lot of media attention" and increased congressional scrutiny, Dinavo said. All but two of the contracts on the WT list fall in that price range.

Outsourcing also makes good business sense, especially for agencies with large data processing workloads, said Ray Bjorklund, vice president of consulting services at Federal Sources Inc., a market research firm based in McLean, Va. "They have government employees that could do it," he said, but they need to focus on mission-critical functions that a contractor would not normally handle.

The contracts pending this spring indicate that "agencies are increasingly willing to outsource some of their normal transactional business functions," Bjorklund said.

Agencies also have been exercising more contracting control during the past 18 months, since GSA's overzealous Get It Right program "eliminated one of the fundamental advantages GSA had, which was flexibility and speed of acquisition," said Max Peterson, senior executive of Federal IT Markets, a consulting group based in Highland, Md., that creates integrated marketing and sales programs and develops channel strategies.

The Justice Management Division's professional assistance contracts, or PACs, for the National Asset Forfeiture Program (NAFP) are indicative of how agencies are seeking to regain control and flexibility and also save taxpayer dollars, Peterson said. The PACs support about 40 former IRS and Secret Service investigators and accountants who track assets that individuals and corporations try to hide outside the United States.

BearingPoint Inc. has provided professional services support to NAFP for 11 years, said Steve Lunceford, a company spokesman. The work has involved asset forfeiture investigations, financial services and audit support, he said.

BearingPoint, Maximus Inc. and Unisys Corp. are three prime contractors competing for work under the current contracts.

"During our partnership with the DOJ, we have assisted in improving financial management processes and internal controls and in collecting several hundreds of millions of dollars in seizures, forfeitures and fines for the NAFP," Lunceford said.

Peterson said the new contracts "have four different flavors:" fixed-price; indefinite-delivery, indefinite-quantity; task order; and time and materials. That multiple-award format, he added, gives an agency the ability to award some full and open large contracts and then some set-aside small-business contracts.

The contracts cover the same activities, said Bob Bratt, the partner who oversees Justice contracts at Unisys. But the four contracting types give the department the speed and flexibility it needs to pursue different kinds of cases.

"It depends on what you need," Bratt said. "They want to have any type of vehicle and methodology available to them so they can get at an investigation in a bunch of different ways."

If the Justice Management Division wants only a few investigators for a quick probe of an individual, it might use a time-and-materials vehicle. For a longer investigation into corporate finances, it might opt for a firm fixed-price contract, he said.

"We have been the prime on this for a number of years," Bratt said, adding that Unisys plans to recompete once the RFPs are posted.

Nearly all the contracts on the list are recompetes of existing contracts, suggesting that agencies are doing more advance planning on expiring programs, said Alan Chvotkin, senior vice president and counsel at the Professional Services Council. "That's a good thing," he added.

Almost all the contracts with incumbents are being advertised for full and open competition, meaning those companies will have no special advantage in the future. "These are not going to be sole-source awards," he said. "The agencies are going to see who else can compete and wants to compete. That's a good thing, too."

Treasury's $200 million contract to provide telecommunications switching systems for the IRS was appropriately a firm fixed-price award, he said. "My gosh, there can't be anything more routine than telecommunications switching these days. We've only been doing it since 1894, so you'd think the federal government has it down pretty well," Chvotkin said.

"You would hope something like that would be on a firm fixed-price basis because the agency pretty well knows it needs dial tone and how many stations, and what the requirements are," he said.

Most of the contracts are IDIQs. That would indicate that agencies are less sure initially about precisely what they need, and therefore are more reluctant to post a firm fixed-price award, Chvotkin said. He added that the agencies "seem to be doing it the right way."

The State Department justified its $161 million IT Support Services contract by saying the diplomatic corps "may have a continuing requirement for professional services in support of the development and maintenance of software systems primarily for the Foreign Affairs Information systems."

Computer Sciences Corp. has been the prime contractor since it won the award in 1991 to develop software for State. CSC has prevailed in two recompetes, said Mike Gaffney, president of business development at CSC's federal sector. He estimated that the contract has produced about 100 task orders.

"It's been a good contract for us," he said. "We've won some awards underneath it from small-business offices for meeting our SBA goals."

Gaffney said CSC will compete again, noting that "good past performance is one of the key ways to continue to win the work, but it's not a guarantee."

Associate Editor David Hubler can be reached at

About the Author

David Hubler is the former print managing editor for GCN and senior editor for Washington Technology. He is freelance writer living in Annandale, Va.

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