CDW-G ramps up with Mint pact
- By Diane Frank, Elana Varon
- Jul 11, 1999
After 10 months building a base for its new government business, CDW Government Inc. (CDW-G), a division of the giant computer retailer CDW Computer Centers Inc., is preparing to reap the rewards of its first major federal contract.
The company is rolling out a five-year, $30 million pact with the U.S. Mint to supply computer hardware and software to the agency. The indefinite-delivery, indefinite-quantity deal offers the company an introduction to one of the government's largest civilian information technology buyers - the Treasury Department - and a chance to showcase its electronic commerce services in a market that is demanding online procurement support from its suppliers.
From its launch last September, CDW-G focused on making sales from its General Services Administration schedule contract, looking to build its reputation in the government market through smaller purchases instead of bigger contracts that most companies go after, said Larry Kirsch, senior vice president with the company. But in the past two months, since the April 23 Mint award, agencies have started to approach CDW-G with bigger opportunities.
"I think people inherently tend to notice the larger contract opportunities more," Kirsch said.
The strategy is a common one, said Mark Amtower, who heads Amtower and Co., a marketing consulting firm. "I see a lot of numbers that show me that schedule business, particularly on the commodity side, is used as a door opener," he said.
The Mint contract would be "a significant win for any commodity player, period," Amtower said. "I know some of the people down in Mint, and they are relatively loyal buyers of commodities from other vendors. If you can wean them away from another source, you own a significant part of a Cabinet department."
As the Mint and CDW-G work toward rolling out the contract this month, CDW-G expects that the e-commerce services it is providing to the agency through an extranet will help win customers inside the Mint and elsewhere in the government.
The company routinely offers its customers use of a customized, secure extranet, which customers can use to place orders, track invoices, monitor deliveries and generate reports about their purchasing patterns.
"It's a layer that sits on top of our existing Web site," said Jim Schanks, the chief information officer of parent company CDW.
"For each individual person within the Mint, we can produce content for them," he said. Such content might include tailoring online ordering capabilities according to the purchasing authority of each buyer or creating reports of buying activity for contract managers.
"The extranet was one of the key components to the closing of the arrangement," Schanks said. The Mint, which is automating many of its administrative operations, made these services a requirement for the winning vendor.
A spokeswoman for the Mint said the agency was "not prepared to make a statement" about the contract last week. A copy of a memo about the contract, obtained by FCW, called CDW-G's "secure, state-of-the-art ordering system" an "innovative approach to purchasing IT equipment that will greatly benefit" the agency.
The memo indicated that the Mint intends to make all of its IT equipment purchases through the contract, although a source familiar with the deal noted that because the contract is an IDIQ vehicle, no one is required to use it.
Recently other federal vendors, such as GTSI and Unisys Federal Systems, have started offering extranet services similar to CDW-G's, said Chip Mather, senior vice president with consulting firm Acquisition Solutions Inc. Agencies care about having easy access to purchasing data, but they do not necessarily want to build a system in-house to manage that data.
"It's a function of downsizing of the government and acquisition reform at the same time," said Mather, adding that the Mint's requirement is one example of a growing trend. "The people that are left in the government are having to find new ways to buy things," he added.
Nevertheless, according to Kirsch, extranet services are still relatively uncommon. "That capability seems like second nature to us, but it amazed us how surprised people in this market seem to be by it," he said.
Although agency purchasers have been ordering from the contract, Kirsch said he could not provide any sales figures. Schanks said the agency still is training its buyers at seven locations nationwide about how to use the extranet. Most sales, however, are expected to come from the agency's Washington, D.C., headquarters, where office automation equipment is used the most.
Meanwhile, Kirsch said CDW-G will continue to market its schedule pact.