Innovation, tech refresh fuel SEWP II

While so much business for commercial technology has shifted to the General Services Administration schedule, NASA's Scientific and Engineering Workstation Procurement II is proving to be a piping-hot contract, based on a sales report NASA published last month.

According to NASA, SEWP II has done $454.9 million in sales in just 16 months, which is almost as much as its predecessor did in four years of operation. Weekly totals run from $7 million to $10 million, and use is growing, the agency said.

SEWP II contractors and industry observers attribute this success to good contract management, good prices and NASA's innovation in areas such as electronic commerce. People familiar with SEWP II describe it as an anomaly among current indefinite-delivery, indefinite-quantity vehicles. Even though so many customers are buying off the GSA schedule, SEWP II continues to prove a popular vehicle, unlike other IDIQ contracts that have languished in recent years.

"We've watched [sales] grow from 1993 to the present," said Patricia Chilson, the SEWP II program manager for Unisys Federal Systems. Unisys, which did $84 million in sales of networking gear on SEWP I, has racked up

$72 million in business on SEWP II. "The contracting shop is pure excellence. They have been progressive from Day One," Chilson said.

The original SEWP, awarded in 1993 as procurement reform was just getting under way, was a standard IDIQ contract with a small percentage set aside that could be used by non-NASA agencies. That contract did nearly $500 million in business.

From its predecessor, SEWP II inherited a focus on competition and a rigid management not often seen in these days of blanket purchase agreements and multimillion-dollar GSA schedule purchases, observers say. In fact, SEWP II would seem to be capitalizing on both worlds: pre-Federal Acquisition Streamlining Act and post-Federal Acquisition Reform Act.

"FASA's provision of the multiple-award task-order contracts blew the lid off this industry," said Bob Dornan, a senior vice president of Federal Sources Inc. "You could award initial contracts using full and open competition, but once through, you could do anything you please. [The SEWP II contracting office] learned a lot from the first go-round."

But in contrast to other recent governmentwide acquisitions, SEWP is not a catch-all vehicle but one that remains focused on a fairly particular customer base: the scientific and engineering community at NASA.

In that sense, SEWP II is distinct from one of the offshoots of procurement reform: the National Institutes of Health's Electronic Computer Store II. While SEWP II has only 14 contractors with product offerings focused primarily on workstations and related technology, ECS II has more than 40 prime contractors and offers a broad range of products.

"SEWP II caters to a clientele who needs specialized information technology services more so than we do," said Elmer Sembly III, the outreach and education director for NIH's Information Technology Acquisition and Assessment Center. "We are like a Wal-Mart; they are more like a specialty store."

ECS II has nearly four dozen contractors because "our initial mission is to serve NIH. There are 23 different institutes. You have to understand that each institute and center receives a different appropriation," Sembly said.

So while ECS II may offer many of the same products as SEWP II, the two programs are not necessarily viewed as competitors. "I don't think that they compete with each other at all. SEWP II is more solutions-oriented, and ECS II is more fulfillment-oriented," said Robert J. Guerra, president of Robert J. Guerra and Associates.

Nonetheless, many other agencies buy off SEWP II, which is open governmentwide. The purchasing limit for SEWP II is $1.8 billion, and there is no maximum dollar limit on specific orders. SEWP II is expected to expire in November 2000.

"We deal with every government agency through SEWP," said Charlie Trentacosti, the marketing manager with Hewlett-Packard Co.'s Government Business Unit.

"During the planning process, NASA tried to be sure that all federal agencies were involved to be sure everybody had a stake in the contract," said John Bowers, Sun Microsystems Federal's program manager for SEWP II.

NASA remains the largest user of the SEWP procurements, placing more than $190 million in orders for Unix workstations, servers, peripherals and networking gear.

But other heavy users include the Army, with almost $45 million in purchases; the Navy, with almost $33 million; and the Air Force, with about $21.5 million. Orders also have come from GSA and the departments of the Interior, Justice, the Treasury and Veterans Affairs.

Observers say NASA makes SEWP II attractive by making it easy to use and by keeping it current with frequent technical refreshes and price changes.

"When SEWP II was in the works, GSA insisted on it getting big because SEWP I was working so well. GSA wanted it to be open to all of government," said a computer specialist with the Transportation Department's Financial Management Service who works to support acquisition personnel from multiple DOT bureaus. "It's so easy that there's no reason not to use SEWP."

"We do a range of buying, from desktops to big iron," said George Rumney, a senior systems engineer at NASA's Center for Computational Sciences.

One of the benefits of SEWP II is the range of products available, which makes it easy to avoid buying too many products from one particular vendor or another, Rumney said. And because SEWP II is based on open standards, the systems on the contract usually interoperate. "Standards are what SEWP is all about," he said.

The program office at NASA's Goddard Space Flight Center also has focused on trying to improve the ordering processing itself, particularly through the use of electronic commerce.

Skip Kemerer, NASA's SEWP II chief and head of the Multiservices/ADP Procurement Branch at Goddard, told a story of an Air Force captain who, on Dec. 23, found that he needed a Unix box to support a mission. The captain made his purchase decision on Dec. 24 and received his product on Dec. 28. Kemerer said many orders are fulfilled within two days, although some may take 25 to 30.

"It used to take one week for orders to be processed. Now the orders are handled within 24 hours," Unisys' Chilson said. "Now we do [electronic data interchange] for orders. It went from paper to now getting notification by e-mail of orders. It's a fast cycle and very automated."

Likewise, NASA has made a point of constantly adding new products and updating prices rather than allowing the lag time traditionally associated with IDIQ contracts, Kemerer said. "Our contracts are tied to the market."

Every SEWP II vendor has at least one product refresh per month. "Tech refreshes can be two items. We had one that was 5,000 items," Kemerer said. He encourages vendors to keep their contracts filled with the latest technology. He tells vendors, "If [customers] are not choosing you, they're choosing your competitor."

NASA does not stop with one technology refresh per month, according to vendors. "If we have a new product line we are introducing, Goddard is able to do an extra tech refresh,'' said Larry Reynolds, the SEWP II program manager at Silicon Graphics Inc.

Additionally, pricing on SEWP II changes daily. Kemerer noted that most prices on SEWP II are tied to prices on the GSA schedule, and the contract requires SEWP II prices to be better than those on the GSA schedule.

"SEWP is flexible [and] highly dynamic. Vendors are encouraged and motivated by SEWP to update prices and items on [contract line-item numbers, or CLINs]," Rumney said. "The SEWP procurement folks have allowed for emergency tech-

refresh actions to take place; it's a smooth electronic operation. Most refresh actions are price reductions on SEWP."

Another attractive element about SEWP II is NASA's 0.75 percent surcharge. SEWP II has the "lowest surcharge of any contract, which makes it attractive to customers," said Gayle Troan, senior program manager at Government Technology Services Inc. NASA also has streamlined how that surcharge is tallied and collected.

"Initially, customers had to do two separate purchase orders," said Hampton Edwards, IBM Corp.'s SEWP II account executive. "Now vendors collect the surcharge and then get the money to NASA quarterly." And NASA made the surcharge its own CLIN, thus taking away the need for yet another piece of paperwork.

The SEWP II program office also has been a leader in the use of the World Wide Web. "They were early to encourage vendors to make contract information available on the Web," Edwards said. "You can configure IBM systems on our home page and get SEWP prices on the Web. There is a lot of Web access to contractual data."

"It is the best-managed contract out there," Troan said.

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