Getting It Done

For some time, federal agencies have been chanting the new contracting mantra:"results not resources." The trend — assigning accountability for variousinformation technology services to one vendor — began with desktop outsourcing,or seat management. Now it is extending to end-to-end networks that encompass"last mile" connections, right down to the local-area network, router anddesktop.

To keep tabs on such arrangements, federal agencies have begun usinga relatively new performance-based contracting tool known as a servicelevel agreement.

"SLAs have emerged as a method for making a transition from a government-ownedand -operated environment to a purchased-service environment," said WarrenSuss, president of Warren H. Suss Associates, a consulting firm in Jenkintown,Pa. "As such, it gives agencies a way to establish a comfort level as theymove to an environment where a vendor is taking care of things that thegovernment has traditionally performed." Of course, today's telecommunications environment is far removed from themarket of the late 1980s, when the government often acted as its own telecommunicationsprovider. The reality of the fast-moving 1990s marketplace quickly changedthat mind-set, with the government moving toward contracting out dial-toneand then long-haul service. However, most agencies continued to take a piecemealapproach and buy from multiple vendors.

Now, a further shift has taken hold, with agencies buying frame-relay,Asynchronous Transfer Mode (ATM) and managed network services from a singletelecommunications provider who can do it all — and do it efficiently andeffectively.

"The federal government is really recognizing that they don't have now,nor are they going to have, the expertise to deal in the world of telecommunicationson any level," said Dave Bittenbender, director of network services forComputer Sciences Corp.'s federal sector in Falls Church, Va. "Things aremoving too fast to keep up, and as agencies slim down, one of the areaswhere budget cuts have hit hardest are in the administrative parts of anorganization, which is where the telecommunications shop normally fits."

Frank Lalley, assistant commissioner for service delivery for GSA'sFTS 2001 contract, agreed. "Many agencies just can't afford the number oftalented people that it takes to manage an end-to-end network, so you haveto rely on professionals to do it for you," he said.

The SLA, which gives agencies a tool to spell out services they wantalong with the level of quality they expect, is the linchpin of such hands-offcontracts. In some ways, SLAs have been around for years in the form ofrequirements laid out in a statement of work. The new SLA ups the ante ofthose contracts by including terms that financially reward or punish a vendorbased on performance and customer satisfaction.

The use of the new contracting tool is being driven by new legislation,such as the Government Performance and Results Act and the Clinger-CohenAct of 1996, both of which were designed to link money with agency performance.Two market factors are also at work: the trend toward e-business, and theavailability of new network management and measurement tools that can accuratelyassess service delivery.

"These reporting capabilities can directly link the performance of theIT infrastructure to the level of services," said Richard Ptak, vice presidentof systems and applications management for the Hurwitz Group Inc., an ITresearch firm in Boston.

In practice, service-level metrics are set up ahead of time for eachrequirement. An SLA for network availability would typically require a specificpercentage of network uptime. Other criteria might include network performance(including network latency); network reliability (measured during the courseof a month or a year rather than daily); service availability intervals(involving the installation of service on time); mean time to report a failure;message delivery time; the number of trouble tickets closed; time to completemoves, adds or changes; voice services; multi-media capabilities; and usertraining.

Each criterion would generally have three grades of service — high,medium and low — and be priced accordingly. A high network availabilityguarantee of 99.9 percent uptime, for instance, would cost more per userthan a low network availability of 99.5 percent uptime.

Making a Federal Case

For agencies, the use of SLAs in end-to-end telecommunications contractsoffers several benefits, not the least of which is the stress relief thatcomes with handing over responsibility to a third party and being able toconcentrate on the agency's core mission. SLAs also promise huge long-termbudget savings, as well as the ability for agencies to work on the latestequipment without costly procurements or large upfront capital expenditures.

"What it all means is [that] somebody else gets to worry about upgradesand refresh rates, about what needs to be done to maintain the service andkeep the infrastructure up to where the commercial market is going," saidJoe Cipriano, the Navy's program executive officer for information technology,a planned 350,000-seat end-to-end solution for voice, video and data. "Wewant to let the experts do that for us in the most cost-effective way andlet us concentrate on what to do with the information and how to make betterdecisions faster with the information."

The benefits are so strong that the Navy had few doubts about buyingservices rather than piece parts when it came time to design its new network.Not only will the massive solution — set to be awarded later this spring— use SLAs to keep track of the vendor's performance, but the contract istruly end to end, extending from regional and long-haul communicationssystems right down to the local-area networks and desktop PCs inside buildings.

"It's kind of like buying a utility, like buying electricity," Ciprianosaid. "We estimated that if we were to go out and buy all the stuff we neededto upgrade our base networks, our desktop computers and our software packagesto make them all interoperable and secure and to bring them up to the performancelevel that we needed with our new efficiency initiatives, we were goingto need an upfront investment of $2 billion to $3 billion, plus significantongoing operation and maintenance costs. We just didn't have that kind ofmoney."

FTS Services

Although the Navy/Marine Corps Intranet has been the most high-profileend-to-end telecommunications contract, it's not the only big telecom systemrelying on new services and SLAs. FTS 2001, which offers long-distance voiceand data services to federal agencies, recently added managed network servicesto its repertoire and replaced its standard grade of service with variousgrades of service, according to Lalley.

The contract has also included a system of financial rewards and punishmentsto motivate its two vendors, Sprint and MCI WorldCom. Meanwhile, GSA isusing SLAs to set formal service expectations for its Metropolitan AreaAcquisitions (MAA) program, which provides local voice and data servicein several cities, and WITS 2001, a $1 billion contract to offer local voiceand data services to federal agencies in the Washington, D.C., area.

Such changes are a sign of the times, said Judy Stevens, manager ofproposal development for Bell Atlantic Federal, which recently won the WITS2001 contract and an MAA awarded for Buffalo, N.Y. With the original WITScontract, GSA owned the switches, and Bell Atlantic was involved only inthe operation and maintenance of equipment. "Now, they're interested morein service than ownership and that's why we're seeing a little more definitionon the service-level requirements," she said. "Which is a good thing, becausethey are much more detailed about what they expect and we know and theyknow upfront exactly what those expectations are."

The FAA is also getting into the SLA game in its FAA TelecommunicationsInfrastructure program. The agency wants to move from paying for telecommunicationsservices per line and owning some telecommunications assets to a strategyof hiring a service provider to manage and own the infrastructure at thelowest cost.

"Ultimately, what we expect to be procuring over time are service categories,"said Peter Challan, FAA deputy associate administrator for air traffic services."On the other hand, the architecture on which that rides is real importantto us."

Getting It Done

Like just about any other contracting strategy, an SLA is only as goodas the time and thought put into it. And it does take plenty of both, especiallyin the telecommunications arena, according to Suss.

"It's very difficult to pull together a sort of unified approach toacquiring telecommunications services, because you have so many differententities that basically have control of different pieces of it today andyou have different financial resources," he said. "It's not an easy transition."

What's more, there are plenty of challenges involved in rounding upthe networking needs of thousands of users and summing them up into a fewspecific requirements.

"In doing our research, everybody told us that you only need a smallnumber of specific SLAs to drive the service, like maybe 5 to 15 total,"Cipriano said. The Navy is still working on narrowing its list, having startedat 200 and gotten down to only 37 SLAs. "Doing that requires the involvementof a broad range of people from all functional areas that are representedwithin the organization."

Another challenge is finding performance metrics that can be measuredproperly. In taking up this issue, the Navy looked at what companies inthe private sector were measuring and what kinds of tools and techniquesthey were using. "That gives you a good starting point," Cipriano said.However, some criteria are not easy to measure. For instance, some NavySLAs that cover security use brand-new measurement techniques that had tobe invented and tested by Navy personnel.

But the most important task that needs to be performed upfront has lessto do with research and technical questions than with basic government culture."Agencies really need to change their view of the contractor," Bittenbendersaid. "You really have to go into a performance-based relationship withthe understanding that you're both in it together. You have to get rid ofthis arm's-length partnership. If you do that, the chances of success aremuch, much greater."

-- Hayes is a freelance writer based in Stuarts Draft, Va. She can be reachedat [email protected].


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