PC vendors benefit from AF strategy
- By Dan Verton
- Jun 27, 1999
In its fourth month of operation, the Air Force Standard Systems Group's latest acquisition strategy for buying standard computer products is beginning to pay off in the form of supplier and product flexibility and unprecedented customer response times, officials said.
Gateway Inc., Micron Electronics Inc. and Dell Computer Corp. have sold more than $30 million worth of desktops, laptops and servers to Defense Department customers through SSG's Information Technology Tools (IT2) program, which is aimed at replacing a slew of
indefinite-delivery, indefinite-quantity contracts with blanket purchase agreements over five years.
SSG began the IT2 initiative in March with BPAs covering desktops and peripherals, followed in April by a BPA for rugged portables. SSG plans to issue another round covering computers next month.
Aside from sales figures, IT2 officials said the program marks a significant departure from how the Air Force has done business, bringing SSG closer to its customers and suppliers and enhancing its ability to respond to changes in the market.
"Our history shows that during Desktop III, IV and V, we had lost touch with the market, with the customer and, to some degree, with the product," said Lt. Col. Glenn Taylor, director of SSG's Commercial Information Technology Product Area Directorate. "IT2 is a much better model for today's IT market."
One reason IT2 is working so well, Taylor said, is because SSG has cut delivery times drastically and has reduced the number of government-specific specifications and design requirements by using the General Services Administration schedule. "Eighty percent of our deliveries now occur within two weeks, and 90 percent to 95 percent occur within three weeks," Taylor said.
Another reason for IT2's success has been close cooperation with product suppliers, Taylor said. "Our partners are working with us as true partners," he said. Technology refreshment - the process of integrating the latest technological developments into existing product lines - used to take weeks to months to complete, but today technology refreshment is "measured in minutes and hours," Taylor said.
"In the past, we had system specifications that exceeded 300 pages in length," said Marty Toland, desktop BPA manager for SSG. "Today, we can add complete systems in a matter of one hour at extremely attractive prices. What you see on television is what you get [from IT2]."
Phil Kennett, vice president of federal sales at Gateway, which led the pack with $12.5 million in sales, said he agrees that IT2 is a big change from the days when IDIQ contracts took years to negotiate and were "exceptionally expensive" to administer after winning. "Your investment in obtaining a BPA is limited and doesn't take a lot of time and resources," Kennett said. "IT2 is a win-win situation."
Harry Heisler, vice president and general manager of Micron Government Computer Systems Inc., which has sold $10.3 million worth of products through IT2, said IT2 is an example of the progress made in the Air Force's philosophy of procuring commercial computer equipment. Unlike with the IDIQ contracts of the past, "their experience on the first BPA really showed them that they could get much better responsiveness and better pricing in real time," Heisler said. Micron also plans to add extended services and life-cycle management tools under its MVision initiative to its Air Force BPA, he said.
Officials from Dell, which has had $8.1 million in business from IT2, could not be reached for comment.
J.M. Sims Haas, senior consultant at Federal Sources Inc., said many agencies have turned to BPAs in conjunction with the GSA schedule because of the advantages in terms of cost-effectiveness and the time it takes to do business.
Using a BPA with the GSA schedule, agencies can access "commercial products and commercial services relatively rapidly," Haas said. "Since these services are on the GSA schedule, GSA has pre-screened the rates and determined that they are fair and reasonable."
Other advantages, according to Haas, include the following:
* Performance-based statements of work prompt vendors to take responsibility for the end result.
* A BPA enables agencies to negotiate competitive prices on a repeated basis.
* If either party of the BPA is not satisfied with the vehicle's performance, non-use is not a big issue.