Army plans ITES2 contracts for services

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"ITES gains speed"

Army officials plan to award contracts for performance-based information technology services next year as a

follow-up to the service's IT Enterprise Solutions (ITES) program, according to Kevin Carroll, program executive officer in the Army's Program Executive Office for Enterprise Information Systems (PEO-EIS).

Officials will release the ITES2 request for information in November and the request for proposals in January 2005. They will award the contracts next April or May. ITES2 will cover performance-based IT services, unlike the first $1 billion ITES contracts awarded last year, which covered both IT products and services, Carroll said.

He said Army IT and contracting officials "haven't busted the ceiling" on the services portion of the ITES procurement under contracts awarded last year. But he said they likely would hit the $500 million limit sooner than expected if contracts already awarded continue during the next five years.

Carroll did not disclose the spending limit for ITES2, but industry officials said it could range from $2 billion to $5 billion. Army IT and contracting officials will discuss that in upcoming meetings, he said.

However, the $500 million limit for the hardware portion of ITES should hold, Carroll said, speaking last week at an Industry Advisory Council meeting.

Through June, ITES awards for products totaled $32.5 million. ITES services contracts totaled $16.8 million, but with options, that number could reach $152.8 million. Army officials expect to award 16 additional ITES services task orders worth $50.7 million.

The program helps Army officials

better manage IT assets enterprisewide, conduct performance-based contracting and support soldiers waging the war on terrorism.

Rumors started circulating in May that Army officials would conduct the ITES2 procurement. Carroll confirmed at an Army IT conference in June that officials have discussed it and the requirements could be released this fall.

The decision to create ITES2 comes nine months after Army officials awarded the first ITES products and services contracts. Northrop Grumman Corp. received the first ITES task order in March, for a six-month, $175,000 project to update U.S. Military Academy computers to Microsoft Corp. Windows 2000 and newer operating systems and Active Directory — a nonperformance-based deal.

Army officials said they had hoped

the first ITES would generate more performance-based work, which would encourage managers to seek creative industry help with achieving Army IT goals. But Carroll said Army officials were unable to convert many IT managers to the new way of doing business. "It was not what we hoped," he said.

This time, Carroll said Army IT and contracting officials will meet with command leaders to better communicate and educate them on the advantages of performance-based programs. "We didn't have the customers on board," he said.

Carroll previously said PEO-EIS officials erred by not putting higher financial ceilings on ITES. He took responsibility.

Col. Tom Hogan, PEO-EIS' project manager for enterprise infostructure, the organization's top enterprise IT program official, also previously said Army IT and contracting officials "learned our lesson" from the first ITES procurement and acknowledged they "have to do something new."

Analysts criticized Army IT officials for not putting higher dollar limits on ITES. They said the service cannot do anything enterprisewide for $1 billion over a five-year period.

Army IT officials admitted they took a cautious approach to ITES because it represents their first attempt at a servicewide, performance-based contract. They said they also wanted a low public profile after congressional, industry and media scrutiny of other military enterprise IT procurements and programs including the Navy Marine Corps Intranet.

But Army officials said ITES' popularity demonstrated the need for enterprisewide projects and industry-devised IT solutions, and gave service officials experience in managing a performance-based contract.

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