Big bucks in homeland security

With a contract win worth up to $1 billion, Unisys has taken the early lead in providing IT services to the planned US Homeland Security agencies. Christopher Ambrose and Lorrie Scardino from Gartner Research give their insights on the deal.

With a contract win worth up to $1 billion, Unisys has taken the early lead in providing IT services to the planned US Homeland Security agencies. The deal is significant in both its scope and the rapid award process used.

On August 19 2002, Unisys announced it had signed a contract with the US Transportation Security Administration (TSA) to create and manage the TSA’s systems architecture.

Under the multiyear deal, which has a ceiling of $1 billion and two initial work orders totalling about $250 million, Unisys will act as the prime contractor and will subcontract portions of the work to DynCorp Systems and Solutions, IBM, and other providers.

TSA, a new agency enacted by the US Congress and President George Bush in response to the terrorist attacks of September 11, is now part of the US Department of Transportation (DOT) and is among the US agencies slated for consolidation into the proposed Department of Homeland Security (DHS).

This is the first large IT contract that falls under the purview of a planned DHS agency, and the speed and scope of the deal reflects the executive-level mandate – from Bush and Homeland Security Secretary Tom Ridge – to move quickly to acquire the necessary resources.

For Unisys, the deal is a major win – especially since, as recently as December 2000, it actually considered exiting the federal government IT services market. This deal, the largest outsourcing agreement Unisys has signed with the US federal government, affirms Unisys’ commitment to the US federal market.

The contract is significant in its size, its scope of service and the approach the TSA followed in its procurement. Under the agreement, Unisys will own and operate the IT infrastructure for the TSA, and will deliver end-user computer, network and help desk services under a performance-based contract (including incentives and non-performance penalties) – in contrast to traditional government contracts, which typically involve facilities management of government-owned assets and resources.

The procurement cycle was much shorter than the typical period for an acquisition of this size. This was partly because the DOT already had a contract vehicle in place – Information Technology Omnibus Procurement II (ITOP II) – that allowed for the scope of services, pre-qualified bidders and unit prices. In addition, rather than using a traditional statement of work, the TSA approached the external service provider (ESP) community with a statement of objectives providing the overall business goals TSA sought to achieve.

ESPs were invited to bid on the contract structure within the ITOP II framework, and to propose the technical solution that would best meet the TSA’s objectives. The advantages of having a compressed procurement cycle with pre-qualified bidders – and of allowing ESPs to propose solutions that weren’t constrained to specific technology requirements – facilitated the rapid award process.

This contract reflects the trend toward increased government outsourcing of IT infrastructure assets and increased use of performance-based contracts.

Gartner believes this trend will continue, and expects to see the model used by TSA in future procurements. Government enterprises looking to outsource following a similar process should ensure they have aligned the goals of the program with the contract type best suited to deliver business results, and that technology requirements are sufficiently unconstrained to achieve adequate competition among best-in-class providers.

Analytical sources: Christopher Ambrose and Lorrie Scardino, Gartner Research.