Government uses single source for PCs and support
By Dan Gottlieb -- Purchasing, 7/15/1999 2:00:00 AM
The idea started in the private sector--turn to one source to supply hardware, software, and support for desktop computing. The federal government has, since late last year, been trying out this concept, which it calls "seat management," for outsourcing its entire personal computer (PC) requirements.
According to government information technology (IT) officials, seat management looks to become "the wave of the future." Many agencies traditionally have outsourced portions of their desktop procurement and IT support. What's new about seat management is that agencies can outsource procurement, asset management, user training, and servicing in one package for a fixed cost depending on number of seats and service level desired. (See box). The contractor, for example, owns and provides hardware and software, services it with help-desk, on-site, and other types of support, ensures interoperability, and installs new technology as it becomes commercially available.
The government has not had enough experience (the contract vehicles just came into being a year ago and the first buy-ins late last year) to calculate cost savings. From preliminary estimates, however, the costs are well below estimates that typically range anywhere from $5,000 to $10,000 annually for the total cost of ownership (TCO) of provisioning a desktop user. Under seat management, the cost ranges from $2,000 to $4,000 annually per seat, depending on the level of service and the user power requirements. The existence of the seat management contract opportunity--GSA has pre-selected competitively a list of suppliers--is that it stimulates agencies to look at the TCO of their desktops, according to Christopher Wren, program manager for the government's seat management services at the General Services Administration (GSA).
Mark Hagerty, program manager for nasa's outsourcing desktop initiative (ODIN) agrees. Even though nasa did not do a TCO study before opting for seat management, Hagerty explains, "We certainly did a business case analysis." This included adding up the costs of buying hardware and software, procurement, maintenance, upgrading, and to some extent estimating the so-called shadow costs--"like calling Johnny down the hall to help with the computer."
But IT managers and suppliers see more benefits than simple cost savings. "What's driving people to seat management is the movement to get more out of government employees and to allow them to perform their primary mission instead of managing computers," says GSA's Wren. Another factor, says nasa's Hagerty , is that seat management shifts some of the risks from the government to the contractor. "We want to use outsourcing as a means to meet present and future technology needs, and be able to be better planners, to know what our costs are by having a fixed, monthly cost for the desktop." Other factors include the desire to increase interoperability of computers across the agency and to avoid the "tremendous difficulty" of hiring and retaining experienced IT staff.
One IT industry source sees seat management contracts in the federal government growing conservatively to a $300-million annual business in the next three years. Some major contracts already awarded, include:
- National Aeronautics and Space Administration (NASA). Its headquarters and launch and support centers have a contract with OAO Aerospace Systems Group, which covers about 30,000 seats, or approximately 60% of the agency's users.
- General Services Administration--a contract with Litton/PRC covering 2,500 seats initially, with plans to extend it to 14,000.
- Health Care and Financing Administration (HCFA) for about 14,000 seats, with the supplier selection expected shortly.
Despite the buy-in to seat management at these agencies, many are taking a "wait and see" approach. Both government and supplier IT managers agree that the sell takes a lot of education.
Mat Oxford, Litton/PRC vice president for seat management services, says that once a contract is in place, "it is a large transition effort that has to be well planned." In the short term, he says, it involves just finding out what an agency has, and then defining true requirements down to specifics.
From the agency IT management perspective, the movement to a single-source supplier covering multiple tasks and types of users has required a balance between flexibility and control.
Flexibility is key
At NASA's Jet Propulsion Laboratory (JPL) in California, for example, IT deputy manager Richard Green explains how his lab approached fashioning a contract. JPL had two objectives, Green explains. "One was not to tell the supplier how to do it, but rather to service each person with a computer on their desk with the applications needed to do the job. The second was to avoid describing in any detail the technology base to be used."
After 17 months with 100% of JPL's desktops covered, have the promised benefits of seat management been realized?
"Yes and no," says Green. "Our customer satisfaction remains pretty high and we're quite pleased with the help desk." The rough spots: "We've had some degree of difficulty in getting the technology refresh done," he says. One of the problems in this area is that the technology changes so quickly. JPL has a provision for the contractor to cycle in technology upgrades within 12 months of commercial availability. "It's a bit of a challenge still--by the time you look over the catalogue and say 'this product looks promising,' do a feasibility study, and say 'Let's get people trained and go with it,' something better comes along."
Another wrinkle that JPL has worked on is setting a seat price. The original approach, which the agency has backed away from, was to ask for one price to fit all hardware and service combined. The idea was that the suppliers which chose to bid would average out the cost of low- and high-end users, who obviously have different platform power needs. Instead, JPL has gone to a separate price for the service component and is looking at whether the service component should vary with the type of computer.
Contract oversight
When the government turns over desktop management to a contractor, it attaches some strings, oversight, and compliance incentives. Both the nasa and GSA contracts have performance metrics built in with financial consequences. In JPL's case, the metrics are collected and maintained by the contractor, but are subject to audit. During the initial installation period, the metrics are set up but the penalty provisions do not apply. GSA contract officer Gabrielle James says its service level agreement (SLA) calls for refreshment of technology every one, two, or three years, depending on the type of user. The IT manager for each organization within GSA determines the power and service requirements. Agreed service levels, such as response time on service calls, are automatically monitored by software. GSA receives credits on its bills if the performance is below the standard. At JPL, if certain performance metrics are missed in a particular quarter, the credit is 10%. The contractor usually decides that fixing the problem costs less than giving up the 10%, according to Green.
Organizational resistance
To make desktop outsourcing a success, certain barriers have to be overcome. As Phil Davis, vice president at OAO Aerospace Systems, the nasa contractor, explains: "It's a new concept. There are pockets of resistance, because you're dealing with a personal computer, and users take the 'personal' literally. They feel that they're giving up control, when the reality is they are getting better support and service. This involves working with users and managing their expectations beforehand, explaining how the contract works."
One benefit of seat management--that it can reduce the transaction load on purchasing--also can be perceived as a threat, Davis adds. "We've seen that agencies treat this in different ways. Some reduced or eliminated the IT purchasing function, rolling it in under desktop outsourcing," he explains. In other agencies, however, OAO has "worked with the customers to streamline the process" so that purchasing is still involved in approvals and selection. This is done, for example, by providing the catalogue of products and services online and setting up EDI links to approval systems.
What is 'seat management?'
Seat management gets its name from the structure of the contract pricing--a set price for supplying and managing one seat or desktop times the number of seats. There can be different levels of service and a scale of seat prices, depending on the type of user. Some of the main benefits touted and reported by IT managers for this umbrella contract approach are that it:
- Provides a single source for hardware, software, networks, and telecommunications, thus avoiding the "circle game" usually inherent in computer troubleshooting--one supplier blames a part of the system that was provided by a different supplier.
- Reduces purchasing, disposal, and other administrative costs.
- Transfers risk of desktop ownership, such as obsolescence and Y2K problems to the contractor.
- Gives managers a better handle on desktop automation and more time for them and staff to focus on primary mission tasks.
Under GSA's seat management services contract the suppliers have a "hunting license" to market to individual government agencies. Aside from Litton/PRC and OAO Aerospace Systems, suppliers under the GSA and NASA
(which is offered to agencies other than NASA) include prime contractors such as Boeing and IBM, as well as team contractors. For further information about suppliers and the structure of the program, visit GSA's Web site at www.gsa.gov.
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