Army expects PIII swap

NORFOLK, Va.—The two Personal Computer-3 contractors should upgrade their offerings to include Intel Corp.'s forthcoming Pentium III processors at no additional costs to the customers, an Army procurement official said last week.

Intel Corp. plans to begin phasing out its Pentium II line in August, during the heat of the government's buying season. This means that Government Technology Services Inc. and IntelliSys Technology Corp. "will have to substitute a PIII," said Lee Harvey, the division manager of the Army's Communications-Electronics Command Acquisition Center-Washington (CAC-W), which managed the procurement.

This should come as no surprise to the two vendors, based on the PC-3 contract language and "the clear road map" Intel provided to the PC industry, said Harvey, interviewed here at the Army Information Technology Conference, which was sponsored by the Army Small Computer Program.

Because CAC-W awarded PC-3 on a "best-value" basis, Harvey indicated that the Army will not accept anything less than a Pentium III, such as Intel's Celeron processor or chips from Advanced Micro Devices Inc.

Joel Lipkin, senior vice president of GTSI, agreed with the assessment, saying, "The contract is clear that you have to [switch to a Pentium III] at the same price" as Pentium II systems currently offered on the contract.

GTSI offers on PC-3 a Hewlett-Packard Co. Pentium II 400 MHz PC for $1,267 (see "At a Glance").Based on Harvey's view, a similarly equipped Pentium III package would sell for the same price once Intel completes the switch in processors and the supply of the Pentium II chips evaporates in the distribution chain.

Steve Baldwin, president of IntelliSys, took a more cautious approach to integrating the Pentium III into his company's PC-3 product line. "We'll have to wait and see," Baldwin said when asked about his upgrade plans. "We'll work with the Army...and whatever we propose, we'll be certain it complies with the requirements of the contract."

IntelliSys offered what it called a "contract opening special" of a Pentium II-based Compaq Computer Corp. PC for $1,546 (see "At a Glance"). Based on the Army's view of the terms of the PC-3 contract, a similar configuration with a Pentium III chip should sell for the same price.

Baldwin said IntelliSys intends to add a 500 MHz Pentium III-based Compaq system to the contract, priced at less than $1,700, pending Army approval. Because it would be a new line item, not a substitution, it would not be restricted to existing price structures.

Portable-3

The Army plans to award its Portable-3 contract before the end of May, but in a move to protect sources of supply to Army units in the Balkans conflict—the Army has extended the Portable-2 contracts held by GTSI and Inacom Government Systems until the end of the fiscal year.

Scott Goldberg, deputy program manager for the Inacom Portable-2 contract, said his company has taken quick action to upgrade its offerings from Gateway Inc. and IBM Corp. in line with this extension, adding that "there might also be a price reduction.... We're going to be very aggressive on price."

Goldberg said Inacom submitted an offer to the Army last month to upgrade its IBM ThinkPad offering and plans to submit an offer to upgrade the high end of its Gateway line this week. Inacom also offered a "show special" on its entire Gateway line, taking from $100 to $200 off the price in a limited-time offer.GTSI has stocked up on the rugged portables it offers from Panasonic Personal Computer Co. on the Portable-2 contract in order to respond to any "expedited requirements" the Army has for those computers.

Jan O'Hara, Panasonic's federal region manager, said the rugged Panasonic line is "the best-selling portable in the Army" but declined to provide detailed sales information, just saying that the company has sold "thousands" of them.

***

AT A GLANCE

The Army expects similarly equipped Pentium III machines for the same price as these Pentium II offerings from the PC-3 vendors:

* GTSI $1,267Hewlett-Packard Co. Pentium II-based 400 MHz PC equipped with a 17-inch monitor, a 13.6G hard drive, a 32X CD-ROM drive and Microsoft Corp.'s Office Professional.

* IntelliSys $1,546Compaq Computer Corp. Pentium II-based 400 MHz PC equipped with a 17-inch monitor, a 12G hard drive, a 32X CD-ROM drive and Microsoft's Office Professional.

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