CIO-SP tests buying practices
- By Elana Varon
- May 18, 1997
When the National Institutes of Health awarded 20 contracts for its Chief Information Officer Solutions and Partners (CIO-SP) program last August it began an aggressive test of how federal agencies and vendors would take to commercial practices promoted by procurement reforms.
Nearly nine months later agencies are choosing CIO-SP slightly more often than comparable integration services vehicles run by other agencies although some other contracting programs have generated a higher dollar value in sales.
And the vendors that have reaped the bulk of the business are those that have most heartily embraced private-sector marketing practices introducing their solutions to potential customers even before competitive task orders hit the street.
So far the government has spent $124.7 million on 133 awarded tasks with CIO-SP vendors according to sales figures released by NIH last week. Sales through the Defense Enterprise Integration Services program and the Transportation Department's Information Technology Omnibus Procurement two other high-profile multiple-award task order programs awarded earlier last year have generated $151 million on 131 tasks and $97 million on 112 tasks respectively.
NIH reportedly only included awards that had been completed as of late April leaving out tasks for which funding had not been formally obligated. Vendors have reported different numbers because they included tasks for which they have been selected but which had not been funded at the time NIH compiled its statistics.
The most successful vendors have been those who have promoted the contracts most aggressively to customers throughout the government. NIH spent only $14.6 million on CIO-SP task orders second to the Defense Department whose orders have totaled almost $79 million.
According to NIH OAO Corp. Greenbelt Md. has captured the most business from CIO-SP so far winning tasks worth $24.6 million. OAO's senior vice president Bob Lohfeld attributes his company's success to its business strategy.
"We give our customers the option of multiple vehicles " Lohfeld said. "[But] we prefer the one that will give the most expedient solution. The [CIO-SP] contract really plays to our core capability."
Jeffrey Westerhoff vice president and CIO-SP program manager at SRA International Inc. said the popularity of CIO-SP stems from its ease of use. "What is easiest and what goes through the smoothest is what they will tend to migrate to " said Westerhoff whose firm has won the most tasks through CIO-SP and has the second highest sales. "It's not so much what you want it's what your customer wants."
Companies that have not made many sales through the program agree that it is because they have not pushed the vehicle with customers.
"It's an educational process not just [for] our customer base but [for] our sales force " said Janet Montague the marketing director at Cordant Inc. which has picked up three small task orders. "You have to go back to basic selling " she said.
That emphasis on the needs of end users - the public-sector version of the commercial axiom that "the customer is always right" - was a central tenet of procurement reforms enacted over the past four years. Agency procurement offices and the General Services Administration are competing with each other to deliver information technology products and services the quickest.
"I think all of these multiple-award schedule contracts are a tremendous benefit to the taxpayer and make for a lot more efficient government " said L. Reynolds Cahoon head of the Office of Human Resources and Information Services at the National Archives and Records Administration which used three vehicles to buy equipment and services for a $4.6 million Electronic Research Catalog project launched last month.
NARA used CIO-SP to hire Universal Hi-Tech Development Inc. Rockville Md. to develop the software for the project.
"We examined a number of those available multiple-award contracts to determine which one was the most suitable for our requirements " Cahoon said. "In the case of the electronic-access catalog we found the CIO-SP contract met our requirements best."
Nancy Bienia assistant to the director at the Office of Child Support Enforcement's (OCSE) Division of Program Operations said the ease of purchasing from CIO-SP "saved" her agency last fall when Congress gave it a month to obligate $23 million for a new computer system to track down parents who failed to pay child support. "We're in an era where the public and Congress want action and they want it now. Before it would take a year to get a contract through."
OCSE hired Science Applications International Corp. subcontractor Lockheed Martin Corp. and SRA for two tasks worth a combined total of $15 million. At first Bienia and Cahoon said they knew little if anything about the companies they eventually chose and they considered numerous vendors' proposals. But it is unclear whether such examples are the exception or the rule for CIO-SP awards.
Under federal regulations NIH must provide contract holders with a "fair opportunity" to capture business but agencies have more discretion as to which vendors they consider than they do in a traditional procurement. Critics of CIO-SP have questioned how much NIH - which vigorously helps vendors promote the program as a whole - would challenge buyers who tried to steer awards to favored contractors.
"We are seeing some pretty good head-to-head competition " said Marie Monsees NIH's CIO-SP program manager. "We had one that was a very very small project less than $50 000 and there were 11 proposals. I would never have expected that kind of response."
Long Arm of Marketing
Monsees said however that NIH has not yet put together any statistics on the competitiveness of the contracts. Anecdotally it appears that the vendors who have garnered the most business from the program are those most adept at identifying potential customers and convincing them to make their purchases through CIO-SP.
"The vast majority of the tasks we have are tasks we have marketed to the customer " said Terry Holtman the CIO-SP program manager at Unisys Corp. Unisys to date has picked up 10 tasks through the contract and it ranks sixth in sales.
NIH distributes every task order to all CIO-SP vendors and contractors are free to decide whether to bid on them. But many of the work statements - vendors say the majority - indicate that the customer prefers one or more companies for the work. "My sense with the preferred-source stuff is that the contractors really like it " Monsees said.
Although nonpreferred firms will still try for an award vendors say much of the time they will not. They consider the group of preferred vendors to make up a "short list " and they will pass on the task.
"You can make a decision that even though someone else brought that work to the table you might unseat them but it's highly unlikely " said Harry Siegel national account executive for health systems at GTE Corp.
"Does that mean the vendor has the better solutions and prices or does the vendor have the better marketing group?" asked Bob Dornan senior vice president of Federal Sources Inc. McLean Va. and a frequent CIO-SP critic. Federal Sources is a subcontractor to CIO-SP vendor SAIC.
It is a hard question to answer. Steven Kelman administrator of the Office of Federal Procurement Policy said procurement reform "envisions a streamlined commercial-style form of competition. As in any marketplace some people who think they have something to show a customer that the customer may not have thought of...are going to [win] sometimes."
However he said "If I were an agency IT manager I would be very grateful that this vehicle existed that allowed me to get competition in a streamlined way. It would be foolish not to take maximum advantage of those opportunities."
CIO-SP dark horse garners large slice of businessBY ELANA VARON
When agencies launched multiple-award contracting programs such as Chief Information Officer Solutions and Partners (CIO-SP) small businesses questioned whether task orders to large firms would replace the small procurements - often set aside for them - that formed the basis of their federal business.
But one small company Universal Hi-Tech Development Inc. (UHD) Rockville Md. contends that CIO-SP has provided it with opportunities it would never have pursued in the past. The company which is slated to graduate from the Small Business Administration's 8(a) contracting program this year had captured more than 10 percent of sales from CIO-SP as of last month according to statistics provided by the National Institutes of Health. UHD ranked fourth behind more-established vendors OAO Corp. SRA International Inc. and Computer Sciences Corp. with $13.2 million in task orders.
"We always have trouble booking work against big companies but [on CIO-SP] we have as much power as the biggest companies on the planet " said Steve Grimaldi director of UHD's Advanced Systems Division.
In fiscal 1995 UHD had revenues from federal contracts of $9.6 million according to the 1996 edition of the High Technology Small Business Sourcebook. The Department of Health and Human Services was the firm's largest customer that year.
Grimaldi said competing for task orders is less expensive than pursuing individual procurements. "I have to pick and choose my targets very very carefully " he said. "I can go after them now because the cost is smaller. And if I don't win the waste is smaller."
All CIO-SP primes have to direct some of the work they win to subcontractors which include numerous small businesses. But NIH does not set aside any task orders especially for the few small firms that hold prime contracts under the program. Other than UHD those firms include Sytel Inc. Bethesda Md. which is also an 8(a) company Digicon Corp. also of Bethesda and Intermetrics Inc. McLean Va.
Intermetrics ranks just behind UHD with $10.9 million in CIO-SP sales although business development director Jim Benbow said the firm did not compete for CIO-SP as a small business and still qualifies as one in only a few task areas.
Though NIH has not reported any task-order awards for Sytel program manager James Collins said the firm has won three as of last week worth a total of just more than $1 million. He said the company is satisfied with its sales through CIO-SP so far.