On a roll
- By Heather Harreld
- Sep 18, 2000
Officials at Computer Sciences Corp. credit two decisions for the companys
blistering growth in the federal information technology arena: sharpening
their focus on value-added services such as performance contracts and consolidating
federal operations in 1998.
The El Segundo, Calif., company won more than 90 percent of the civil
federal dollars on which it bid in its fiscal 2000, which ended in April.
The firms federal operation is humming along this year, with total federal
revenue up 17 percent for the first quarter.
CSC, which has pulled in sizable contracts to modernize IT systems for
the Internal Revenue Service and the Army, plans to bid on $28 billion worth
of federal IT contracts during the next 33 months.
CSC ranked second on Federal Computer Weeks list of the top 20 systems
integrators, based on federal IT revenue posted during the governments
fiscal 1999, which ended last Sept. 30. CSC accumulated $514 million in
federal contracts during that period, up from $351 million the previous
year, according to research firm Eagle Eye Publishers Inc.
"They have learned how to adapt to market needs in the federal government,"
said Ray Bjorklund, vice president of consulting services at Federal Sources
Inc., a federal marketing and research firm. "They reflect on what they
do well in the federal government and keep building on that rather than
trying new service areas."
CSC learned one important lesson after the company lost out to Andersen
Consulting last year for a contract to modernize the Education Departments
student loan- processing system. Andersen edged out CSC by committing to
specific performance improvements.
But CSC bounced back and used the same tactic to snag the Armys $681
million logistics modernization contract; the company tied a portion of
its payment to performance metrics.
"We have to go in and be more value-driven as opposed to telling them
how great a systems integrator we are and how many times weve done this
before," said Pat Ways, senior vice president of business development for
CSCs Civil Group.
Another key to the companys current success, CSC officials said, was
its move in May 1998 to consolidate the companys four federal divisions
into two. Of the divisions that emerged from the restructuring, one focuses
exclusively on civil work and the other on Defense Department work. This
allows the company to focus on customers instead of getting caught up in
internal disputes over who works on which contract, Ways said.
"It used to take the government two years to buy anything, so you had
time to spend on internal problems," Ways said. "Now, the government buys
things in 30 days. Its really important that you know your client that
youre intimate with your client as far as what their problems are and where
theyre going instead of waiting for [requests for proposals] to come
For the companys first quarter of fiscal 2001, which ended June 30,
civilian federal government revenue was $647 million, up 30 percent from
a year ago. Major civilian wins this calendar year include a $68 million
contract from the Federal Aviation Administration to develop an automated
digital communications system for pilots and air traffic controllers and
a contract to support facilities operations at NASAs Stennis Space Center
CSCs Defense Group has also bagged several big wins this year, including
a Defense Information Systems Agency service contract worth $300 million,
a $200 million contract for information services to support U.S. forces
in Europe and a $250 million contract for support services at the Air Force
Space Command. Defense Group revenue for the first quarter of fiscal 2001
is up 10 percent from last year.
CSC will continue to ramp up its Pentagon business as the military outsources
more tasks such as upgrading legacy systems, said Austin Yerks, senior vice
president of CSCs Defense Group. Also helping CSC snare contracts is its
track record of hiring federal workers whose government jobs are eliminated
as it did with the Army logistics modernization contract. "We were very
successful in transitioning about 205 [Army] people into CSC," Yerks said.
This strategy of moving federal employees to its own payroll as part
of outsourcing sets CSC apart in the federal IT arena, according to Bjorklund
at Federal Sources. "The notion of a "soft landing really, really puts
them in good stead. Its something that seems to differentiate them from
all the other contractors."
Bjorklund said CSC has been adept at "finding those kind of commercial
best practices and figuring out how to sell the same solutions to the federal
Yerks agreed with Bjorklund that CSCs commercial practice provides
a vast well of resources for the federal group to tap.
"I have a huge technology and resource engine behind me," he said. "You
dont have to have an e-business center of excellence. Its embedded in
this engine I fall back on. We can adapt to the new technology trends that
we are seeing. We dont build airplanes. We dont build submarines. We stick
with our niche."
Harreld is a freelance writer based in Cary, N.C.