Seat management fuels leasing trend
The General Services Administration accelerated the government's move toward leasing information technology when it issued last week a draft solicitation for desktop outsourcing worth an estimated $9 billion and announced new leasing schedule contracts.
GSA's Federal Supply Service last year began allowing GSA schedule contract holders to offer leasing in which agencies would pay to use computer equipment but not actually own it.
The new program proposed by GSA's Federal Computer Acquisition Center (Fedcac) would take leasing one step further by offering desktop outsourcing - also known as seat management - in which the government not only leases equipment but relies on contractors to manage it as well.
John Ortego deputy assistant commissioner of GSA's Information Technology Integration service and acting director of Fedcac said he believes federal agencies will be willing to spend billions of dollars during the next 10 years on seat management.
The draft RFP calls on vendors to manage operate and maintain agencies' desktop systems servers and local-area network infrastructure. Besides providing hardware software and connectivity services vendors will be required to offer asset management installation maintenance design and installation services help-desk support and training according to a memo issued by Fedcac.
Ortego said the government spends about $10 billion a year on desktop automation. He predicted that the seat management program would be able to grab about $9 billion of that over a contract span of eight years although he added that the figure represented "a very rough estimate."
The agency will award at least two contracts with at least one set-aside for a small business. GSA expects to award the contracts by March 1 1998. Contracts will run eight to 10 years and task orders will run no longer than three years at which time GSA may renegotiate or recompete them.
The draft RFP said seat management services will help agencies keep abreast of the latest technology obtain consolidated support services reduce the need for in-house expertise reduce the cost of IT ownership establish a common operating environment and match tools and software to mission requirements.
Fedcac is likely to encounter competition from sister organization FSS where the number of contractors offering leasing services continues to increase. Bill Gormley assistant commissioner for acquisition at FSS said the agency has awarded leasing schedule contracts to nine vendors as of last week and has "about a dozen additional offers in-house. That indicates that vendors have accepted the program."
Gormley said Fedcac may be marketing its program to a different base of customers but he said agencies will eventually be able to achieve similar objectives by using the schedules. "Seat management is basically when the government doesn't take ownership or assume liability for equipment or software - basically outsourcing its IT solution to a vendor " he said. "We haven't marketed [schedule leasing contracts] that way but all of the ingredients are there."
Although some schedule vendors with leasing contracts said they already have customers most are unwilling to publicize the deals out of fears of tipping off competitors about potential business leads. Only one company BTG Inc. has formally announced a task order: a three-year $17 million arrangement with GSA's Federal Acquisition Services for Technology (FAST) programs in the agency's Greater Southwest and Heartland regional offices.
Carlos Villar director of the FAST program in the Heartland region said the two regions negotiated the contract to lease database system software licenses and maintenance from BTG on behalf of the Air Force which will install the software at 180 locations worldwide. He refused to reveal the brand name of the software saying that could harm GSA's bargaining position in future negotiations for similar deals.
Charles Hales director of the Greater Southwest FAST program said in a prepared statement that the regions were able to obtain better than 80 percent savings over published schedule prices for leasing the software and close to 50 percent savings for maintenance services.
Mary Souther vice president of strategic programs at BTG said the Air Force made a business decision to lease the software because it would allow the service to upgrade its systems on a wide scale without a huge up-front investment. By choosing a leasing option the service was able to obtain volume discounts she said.
Besides BTG companies holding leasing schedule contracts include AT&T Systems Leasing Amdahl Corp. Comdisco Inc. Electronic Data Systems Corp. Force 3 Inc. L.A. Systems Inc. Severn Companies Inc. and Vion Corp.