FAA mulls Corn pact's recompete

The Federal Aviation Administration has taken the first step to recompete the $508 million Computer Resources Nucleus (Corn) contract an outsourcing pact awarded to Electronic Data Systems Corp. in 1992.

The FAA recently released an initial screening information request (SIR) through which the FAA will prequalify candidates for a potential procurement. According to the SIR "[The FAA] is considering conducting a procurement for the replacement of its existing contract for data processing services the Corn contract." Vendor responses to the SIR are due Tuesday.

Under Corn EDS is responsible for running the FAA's administrative applications which are housed in EDS' Plano Texas data center.

Corn's five-year base period will expire in early February the contract calls for five one-year options in addition to the base period. The FAA's interest in recompeting the pact midstream appears to be based on the potential for obtaining more favorable pricing. "We heard that this [SIR] was coming out and we've been told that they are trying...to validate that they are getting the best price possible " an EDS spokesman said.

FAA officials were unavailable to comment on their rationale for potentially recompeting Corn. In 1994 an FAA official said Corn would save the agency $50 million over 10 years.

Mark Hodges senior vice president of G2 Research Inc. a Mountain View Calif. market research firm said it is relatively rare for an organization to change outsourcing vendors. But he added that customers call in a third party to evaluate pricing in about 20 to 30 percent of outsourcing projects. And midcourse renegotiations take place on virtually all outsourcing deals he said.

The FAA's SIR is not a formal request for bids in the sense that technical and cost proposals will be submitted. The SIR says only that prequalified vendors will be considered for a "potential procurement." But the document also notes that the "government reserves the right to forgo a procurement and to satisfy the requirement via a government source."

For example the Transportation Department's Information Technology Omnibus Procurement includes seven prime contractors offering systems and facilities management services.

Vendors tracking the potential recompete include Litton/PRC Inc. Unisys Corp. and Computer Sciences Corp. which was the losing bidder on Corn. "If the FAA is serious about restructuring the Corn procurement as outlined in a recent screening information request CSC is interested in pursuing the opportunity " said Pat Ways vice president of business development in CSC's Systems Group.

The EDS spokesman said the company would also be interested in competing "if they decide to go forward with the procurement.

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