DISA launches $3B tech services pact

The Defense Information Systems Agency last week kicked off the DEIS II procurement, the follow-on to the popular Defense Enterprise Integration Services program.

At $3 billion, DEIS II has three times the contract ceiling of its predecessor and could become the largest technical service contract ever. The original DEIS contract has nearly exhausted its delegation of procurement authority and will soon tap into a $250 million DPA extension. As of Feb. 1, Defense Department and civilian customers had placed $903 million in task orders through DEIS.

DEIS II will expand upon work started under the original DEIS program. DEIS II will offer a spectrum of services from business process re-engineering and systems development to installation and support, according to the project's request for proposals. DEIS, in contrast, was intended to concentrate on migration planning and prototyping services.

"It's a logical extension...to DEIS," said Fred Lyssy, vice president of advanced program support at Lockheed Martin Services Group, a DEIS contractor. "It's become a full-service contract," added William Woodard, vice president of Computer Sciences Corp.'s Systems Engineering Division. "They have expanded the scope to provide the development, implementation and ongoing support that was lacking in DEIS."

Lockheed Martin, CSC, BDM Federal Inc., Boeing Information Services, Electronic Data Systems Corp. and Unisys Corp. hold DEIS contracts. All six companies are expected to bid DEIS II. Proposals are due April 8, with an award slated for July.

Competition Clause

Although it is positioned as a transitional contract, DEIS II differs in one important respect from its predecessor: post-award competition. Government customers—and the contractors hoping to sell to them—will encounter a new task-ordering environment.

On DEIS, customers were free to either compete individual task orders or to choose a preferred contractor without conducting a competition. But with DEIS II, all contractors must be given a "fair opportunity" to compete for task orders worth more than $2,500, according to the RFP. One DEIS team member said competing tasks will lower margins for contractors and drag out project time lines for customers. Task-order competition would also jeopardize a contractor's relationships with longtime customers who, under the DEIS contract, were able to work with the contractor of their choice.

But CSC's Woodard said DEIS II's task competition would not be that much of a departure from the original DEIS. He estimated about 75 percent of the dollar value of CSC's orders generated on DEIS had been subjected to some form of competition. The DEIS II RFP, however, contains exceptions to the competition clause. Customers can forgo competition if the given task is time-sensitive or a follow-on to an earlier project for which there was adequate competition. Customers can also waive competition if the task calls for capabilities no other contractor could provide with the level of quality required or would be necessary for satisfying the contract's minimum ordering requirement.

Some observers said the DEIS II RFP is attempting to provide a balance between competition and efficiency.

Bob Dornan, senior vice president of Federal Sources Inc., said a recent DOD inspector general's report critical of DEIS for not competing tasks should have woken DISA up. With DEIS II, he said, "they are trying to react without imposing onerous procedures and approvals."

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