Raytheon looks to sell IT pacts

The Air Force Desktop V contract the latest in a decadeold series of contracts that helped propel the Defense Department into the PC age has been put on the block by its prime contractor, which is shopping it to a collection of resellers and manufacturers. Raytheon Corp., which acquired the fe

The Air Force Desktop V contract— the latest in a decade-old series of contracts that helped propel the Defense Department into the PC age— has been put on the block by its prime contractor, which is shopping it to a collection of resellers and manufacturers.

Raytheon Corp., which acquired the federal PC and workstation reseller business of Hughes Data Systems as part of a multibillion-dollar acquisition of Hughes Aircraft Co. earlier this year, has little interest in low-margin, commodity-type PC contracts such as Desktop V, according to industry sources. The company does not even want to keep the higher-margin Air Force Workstations contract, also managed by Hughes Data, which is now called Raytheon Data Systems.

"Raytheon wants to sell big-ticket Defense electronic systems with hefty margins, and [it] has no interest in the nickel-and-dime PC and workstation business,'' said one industry source who is familiar with Raytheon's efforts over the past two months to shed these business lines.

Although a Raytheon spokesman would neither confirm nor deny that the company has put its computer resale business on the market, industry sources confirmed that a number of companies have talked with Raytheon about acquiring Desktop V, Air Force Workstations and other federal vehicles, including contracts with the Patent and Trademark Office and the National Institutes of Health's Electronic Computer Store II.

Micron Electronics Inc., a major PC supplier on Desktop V, has emerged as the most likely suitor for Desktop V, followed closely by Federal Data Corp., which has a reseller agreement with Compaq Computer Corp., which is Raytheon Data's other PC supplier. Intergraph Corp., industry sources told FCW, has all but locked into an agreement to acquire the Air Force Workstations contract. Other long-shot bidders for Desktop V include Government Technology Services Inc. and Vanstar Government Systems, the source said.

Raytheon's efforts to spin off its commodity computer contracts have been complicated by the liabilities each carries vs. low industry estimates of the contracts' market values.

Patrick Gallagher, former sales vice president of the now-defunct Zenith Data Systems Inc., which also held a Desktop V contract until the Air Force Standard Systems Group canceled it, said the Raytheon Desktop V contract "only has one more year to run, and a good sales organization could do $60 [million] [to] $90 million in business.''

But, Gallagher added, the real question about the Raytheon Desktop V contract, which has only one year of hardware sales left, is: "What will go to the bottom line? This is not a margin-rich contract.''

George Fuster, president of International Data Products Corp., which received the go-ahead last year as the Desktop V small-business contractor, said the liabilities of the Raytheon Desktop V contract— including requirements for worldwide software and maintenance as well as free software upgrades for the next three years— outweigh any revenues that could be gained in one sales year.

Because of the liabilities, "Raytheon should pay someone who wanted to take it over," Fuster said. "I would not take it over unless they paid me.''

The liability issue also has clouded the sale of Air Force Workstations to Intergraph, FCW has learned, with Intergraph insisting that Raytheon legally accept responsibility for liabilities such as warranties as part of any deal. The possibility exists that Raytheon may ultimately decide to hold onto the contracts in an attempt to generate enough revenues to cover those liabilities.

Raytheon has felt pressure from the Air Force to internally revitalize the computer contracts or find buyers with the experience and the will to effectively market and support the two vehicles.

The Air Force "buys a lot of heavy Raytheon iron, and the company knows it has to do the right thing for such an important customer,'' one industry source said. "Right now, I think Raytheon is trying to figure out the best way to lose the least amount of money on DT V and [Air Force Workstations].

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.