Market emerges for piecemeal 'seat' services

As federal agencies turn to seat management to get control of their expanding desktop computing environments, they must navigate a dizzying array of federal contract vehicles and pricing options to determine which best suits their needs.

The federal outsourcing market took shape last year with the creation of two governmentwide seat management programs: the General Services Administration's Seat Management, which is administered by GSA's Federal Technology Service; and the Outsourcing Desktop Initiative for NASA (ODIN), which NASA runs but which GSA administers for customers outside NASA.

But over the past year, a number of agencies and contractors have positioned their existing contracts as alternative vehicles for seat management services. The differences among all the vehicles are numerous, but the alternative vehicles are alike in that they offer agencies a scaled-back approach to seat management.

The original seat management programs were designed to encompass the entire desktop enterprise, including servers and networks, integrated by a single vendor, with pricing models based on cost per seat.

The alternative vehicles, by contrast, give agencies the option of taking a more measured, modular approach rather than a full surrender of the desktop enterprise in one shot to one vendor. These vehicles offer an array of information technology services that include many of the components of basic seat management deals, from which agencies can create more limited desktop outsourcing projects.

"It's easy to understand," said Mac Oxford, vice president of seat management services at Litton/PRC Inc., a contractor under GSA's Seat Management. "A lot of people say, 'I'll do my desktop first,' meaning standardization and support, before they look at turning over their more complex servers and networks. There's a lot of empirical data to support the return on standardization of the desktop. That's straightforward, and the results are tangible."

Other vendors have heard agencies express similar concerns.

"I've had agencies come to me and say, 'We like this seat management concept, but we don't want to go through the expense or the effort to go the full-blown approach.' They get to dabble in it, and they get the contract vehicle they choose," said Dave McGill, director of business development for Electronic Data Systems Corp.'s government industry group.

One of the emerging vehicles for desktop management is GSA's Federal Supply Schedule, through which a growing number of vendors are offering IT services.

Since FSS brought services into its IT program in early 1998, the demand for them has skyrocketed. "We did $1 billion last year in services, and we've already done $1 billion this year in services, which is 60 percent ahead of last year in sales," said Bill Gormley, assistant commissioner of the Office of Acquisition at FSS.

Most observers acknowledge that FSS has been the most flexible program for selective procurement of seat management services. "The value of the FSS program is like a menu covering equipment, software and services. You can pull out whatever part you want to define. You can build your own seat recipe," Gormley said.

GTSI was one of the first vendors to position itself to offer seat management services on the GSA schedule. GTSI distinguishes itself from the typical seat management provider by offering pre-

integrated systems and off-site service, with pricing on a per-seat basis. "We function more as a desktop systems integrator," said Betty Greene, director of GTSI OnSite, GTSI's seat management program

GTSI offers a modular set of contract offerings that enable customers to build around what they already have in place. "They don't need somebody to unseat or replace that infrastructure. They just need somebody to support and augment it," she said.

The pliable FSS approach gives vendors such as GTSI an opportunity to distinguish themselves and enables agencies to ease into seat management, avoiding the shock of a big change or the discomfort of having to terminate existing contracts. Through FSS, agencies can buy one functional area for a contract that has expired and add functionality as other contracts expire or when the infrastructure is in place.

Agencies can take one step up from straight schedule buys by bundling services and products through schedule-based blanket purchase agreements and work their way up to full seat management.

That is what the Bureau of Alcohol, Tobacco and Firearms did when it put together seat management requirements under a $30 million BPA it awarded to Unisys Corp. in 1998.

ATF tackled several problems in succession. "We were eons behind in technology. There was no standardization. There were e-mail system failures, no integration at the desktop and no support for Internet technology," said Larry Jurcich, deputy chief information officer at ATF.

That sounds like a setting for fully integrated seat management, but ATF used FSS' modular approach. "The most important thing in this type of engagement is to plan," said Terry Weipert, director of Unisys Federal Systems' network and desktop practice, McLean, Va.

In a different approach, the U.S. Postal Service conducted its own seat management procurement, awarding EDS an 11-year, potential $200 million agreement for operations support and help-desk management in a cost-plus-award-fee agreement.

"I hear so many horror stories about full-blown outsourcing, but selective outsourcing has been a pleasant surprise for us. As long as you manage the outsourcer, it's a positive relationship," said Bill Orr, manager of USPS' Distributed Systems Central Management Facility, Raleigh, N.C.

Some traditional indefinite-delivery, indefinite-quantity contracts also have emerged as potential vehicles for scaled-back seat management services.

For example, it is possible to buy components of seat management through the Information Technology Omnibus Procurement (ITOP) II, administered by the Transportation Department, by grouping different contract line-item numbers into a task order, said Walter Klaus, account operations manager of EDS' ITOP-II program.

Despite the common approach, the proliferation of contracts and vendors offering modular seat management services does cause confusion, as potential customers sort out the different variables they need to consider.

For example, contracts can take different approaches to pricing seat management services, leaving room for wrangling. "There's a lot of disagreement about what is included in seat management and what isn't, so as a result, cost per seat varies widely," said Jim Kerrigan, president of Colmar Corp., Res-ton, Va.

In addition, the administering agencies' service charges vary. For example, ITOP-II service charges run from 0.75 percent to 3.25 percent of the project, applied only to the first $10 million. "The percentage depends on the customer's desired level of involvement. If the ITOP special projects office runs the whole procurement for the agency, then the fee is higher," said Greg Boehmer, EDS' ITOP-II program manager.

In contrast, FSS charges 1 percent on a quarterly basis to run a procurement for an agency, Gormley said.

However, some agencies could end up turning to another FTS resource, the Federal Systems Integration and Management Center, to help them navigate the fees and vehicles. Fedsim can function as a clearinghouse for federal contract vehicles, charging a percentage fee based on the project, EDS' McGill said.

Observers said it is too soon to tell whether an agency can get the best returns on investment with a full or selective seat management approach.

So far only a few task orders have been awarded through ODIN and Seat Management. One of those was for GSA itself, which got behind its Seat Management program by awarding a 10-year, $114 million contract to Litton/PRC to provide full seat management services to GSA's headquarters.

The Litton/PRC award is an example of the full, integrated approach of GSA's Seat Management compared with the more flexible approach offered by FSS and other vehicles. "You can't buy just help desk under [GSA] Seat or ODIN. They are self-contained vehicles for buying life-cycle support of the distributed computing environment," said Chris Wren, director of GSA's FTS Center for Special Projects and New Product Development in the Federal Computer Acquisition Center.

According to Wren, the integrated GSA Seat Management and ODIN offerings provide operational efficiencies and returns on investment that are useful in today's distributed environment, where a decision in one support area has ramifications across all the other functional support areas.

Regardless of which approach is better, most agencies still shy away from rapid total implementations, some observers said.

"The biggest thing I see is the desire to do pilots and phase in seat management over a number of years instead of jumping off the cliff and doing it all at once," said Tim McCurdy, Fedsim's director.

-- Gerber is a free-lance writer based in Kingston, N.Y.

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