On a roll

Officials at Computer Sciences Corp. credit two decisions for the companys

blistering growth in the federal information technology arena: sharpening

their focus on value-added services such as performance contracts and consolidating

federal operations in 1998.

The El Segundo, Calif., company won more than 90 percent of the civil

federal dollars on which it bid in its fiscal 2000, which ended in April.

The firms federal operation is humming along this year, with total federal

revenue up 17 percent for the first quarter.

CSC, which has pulled in sizable contracts to modernize IT systems for

the Internal Revenue Service and the Army, plans to bid on $28 billion worth

of federal IT contracts during the next 33 months.

CSC ranked second on Federal Computer Weeks list of the top 20 systems

integrators, based on federal IT revenue posted during the governments

fiscal 1999, which ended last Sept. 30. CSC accumulated $514 million in

federal contracts during that period, up from $351 million the previous

year, according to research firm Eagle Eye Publishers Inc.

"They have learned how to adapt to market needs in the federal government,"

said Ray Bjorklund, vice president of consulting services at Federal Sources

Inc., a federal marketing and research firm. "They reflect on what they

do well in the federal government and keep building on that rather than

trying new service areas."

CSC learned one important lesson after the company lost out to Andersen

Consulting last year for a contract to modernize the Education Departments

student loan- processing system. Andersen edged out CSC by committing to

specific performance improvements.

But CSC bounced back and used the same tactic to snag the Armys $681

million logistics modernization contract; the company tied a portion of

its payment to performance metrics.

"We have to go in and be more value-driven as opposed to telling them

how great a systems integrator we are and how many times weve done this

before," said Pat Ways, senior vice president of business development for

CSCs Civil Group.

Another key to the companys current success, CSC officials said, was

its move in May 1998 to consolidate the companys four federal divisions

into two. Of the divisions that emerged from the restructuring, one focuses

exclusively on civil work and the other on Defense Department work. This

allows the company to focus on customers instead of getting caught up in

internal disputes over who works on which contract, Ways said.

"It used to take the government two years to buy anything, so you had

time to spend on internal problems," Ways said. "Now, the government buys

things in 30 days. Its really important that you know your client that

youre intimate with your client as far as what their problems are and where

theyre going instead of waiting for [requests for proposals] to come


For the companys first quarter of fiscal 2001, which ended June 30,

civilian federal government revenue was $647 million, up 30 percent from

a year ago. Major civilian wins this calendar year include a $68 million

contract from the Federal Aviation Administration to develop an automated

digital communications system for pilots and air traffic controllers and

a contract to support facilities operations at NASAs Stennis Space Center

in Mississippi.

CSCs Defense Group has also bagged several big wins this year, including

a Defense Information Systems Agency service contract worth $300 million,

a $200 million contract for information services to support U.S. forces

in Europe and a $250 million contract for support services at the Air Force

Space Command. Defense Group revenue for the first quarter of fiscal 2001

is up 10 percent from last year.

CSC will continue to ramp up its Pentagon business as the military outsources

more tasks such as upgrading legacy systems, said Austin Yerks, senior vice

president of CSCs Defense Group. Also helping CSC snare contracts is its

track record of hiring federal workers whose government jobs are eliminated

as it did with the Army logistics modernization contract. "We were very

successful in transitioning about 205 [Army] people into CSC," Yerks said.

This strategy of moving federal employees to its own payroll as part

of outsourcing sets CSC apart in the federal IT arena, according to Bjorklund

at Federal Sources. "The notion of a "soft landing really, really puts

them in good stead. Its something that seems to differentiate them from

all the other contractors."

Bjorklund said CSC has been adept at "finding those kind of commercial

best practices and figuring out how to sell the same solutions to the federal


Yerks agreed with Bjorklund that CSCs commercial practice provides

a vast well of resources for the federal group to tap.

"I have a huge technology and resource engine behind me," he said. "You

dont have to have an e-business center of excellence. Its embedded in

this engine I fall back on. We can adapt to the new technology trends that

we are seeing. We dont build airplanes. We dont build submarines. We stick

with our niche."

Harreld is a freelance writer based in Cary, N.C.


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