WASHINGTON (07/24/2000) - When the U.S. General Services Administration awarded the first desktop outsourcing contract two years ago this month, many agencies met the deal with skepticism and even downright disdain. No agency would turn over the control of its technology operations to an outside vendor, many observers said.
But the few agencies that have made the plunge - outsourcing the management of their PCs, laptops and networks to commercial players - say that while the contracts may be difficult and painful to make work, the benefits outweigh the costs.
While desktop outsourcing does not necessarily save money directly, agencies have found that the strategy makes it easier to manage their information technology investments, giving them more control over their IT budget and freeing up internal staff members to work on key IT projects.
Stephen Miller, deputy director of the Special Operation Forces System Program Office at Wright-Patterson Air Force Base, was one of the early converts.
Miller took a leap of faith when he decided to outsource the management of 200 desktops through GSA's Seat Management program.
But after turning over the management of his desktop hardware, office applications and network from the 88th Communications Group to Federal Data Corp. (FDC) 10 months ago, he can't imagine managing his networks any other way.
"I'd never go back to the old ways of doing things if I had to," Miller said.
"My service would degrade, so I'd have to go back to the [88th Communications] group or put in a body to run things, and I just don't have anyone with that depth of know-how."
That is the kind of buy-in GSA was looking for when it launched the Seat Management program in 1998, selecting eight vendors to compete for task orders from individual agencies.
GSA officials had hoped the concept would radically improve the government's management of IT, as it had done for the commercial sector. Seat management would save money, provide more information about an agency's systems and improve information sharing, they believed. All systems would use standard software, freeing federal IT workers from the mundane and time-consuming task of managing the daily upkeep of networks.
But Seat Management skeptics also made compelling arguments. Some thought a single "cookie cutter" contract could never meet the IT needs of various civilian agencies, which have long guarded their networks. Others did not want to give up control of networks; still others feared budgetary snags, such as defending IT spending to Congress.
A survey conducted at the time by the Association of Federal Information Resources Management found that only 15 percent of federal managers said they planned to take advantage of desktop outsourcing, while 37 percent said they would not outsource systems. Nearly half of federal managers were undecided about seat management.
Still, while skeptics remain the larger camp, early adopters report positive results.
Four of the five agencies that have issued task orders from GSA's Seat Management contract agree that desktop outsourcing has solved some basic IT problems by helping agencies get control of budget expenses, standardize users on common technology and free needed IT staff from day-to-day technology maintenance. The fifth agency, the Peace Corps, could not be reached for comment.
The four federal offices, which have yet to complete switching to a fully outsourced environment, chose to outsource desktops because they could base the contracts on the level of service and performance rather than the number of technical people needed from a contractor.
"They had pretty much hit the saturation point of buying bodies," said Christopher Wren, one of the people at GSA who developed the Seat contract and one of its strongest supporters.
Although agencies are producing positive results, no one denies that agencies have had problems with seat management, including cooperating with vendors and aligning agency IT policy to match the technology. More than anything else, seat management requires agency IT staff members, users and executives to find a new way of managing information systems.
But despite the difficulties and growing pains, many believe the practice will inevitably become the preferred way to do business.
"I am more convinced than ever that the concept of seat management is what the government needs to do, despite our own implementation difficulties," said Bill Piatt, GSA's chief information officer, who has overseen GSA's conversion to Seat.
Seat as Coordinator
Agencies say one of the first benefits desktop outsourcing provides is a more accurate accounting of how much money they spend on desktop hardware, software and maintenance.
In a traditional management environment, IT numbers can vary from year to year, making it difficult to determine how much of an agency's IT budget is left for programs that may have a more direct impact on an agency's mission.
Seat arrangements build those numbers into the contract, providing a predictable and budgetable number. In some cases, agencies have had no idea how much money they are spending on management until launching an outsourcing initiative.
"The government, on average, has been strapped for money and resources to do a number of initiatives to keep pace with technology," said Wren, who is chief technology officer at GSA's Federal Technology Service. "When you're fighting fires, you're not planning very far ahead."
That was the case at the Treasury Department, when the department's headquarters signed a Seat Management task order for 1,600 seats with Wang Government Services in June 1999.
"It put our desktop technology into a recurring budget," said Mayi Canales, director of the CIO Liaison and Business Service at Treasury.
By making the hardware, software and maintenance a standard expense in the Treasury budget each year, the agency is able to make allowances for special technology initiatives that arise. Treasury still must spend money to upgrade the seat-controlled technology, but the agency will know ahead of time when it will be spent and how much will be coming out of the budget, Canales said.
That money has also bought Treasury a staff of contractors devoted to its technology maintenance needs instead of using a federal staff that is constantly being pulled between maintenance and developing new projects.
Treasury also can use the Wang staff for special projects, such as putting in a new e-mail system or consolidating servers, that the department's staff members may not have been able to take on.
"It gives us a customer-focused group of talent that has been geared to do just this," Canales said. "We can't hire and fire, we can't bring in temporary talent and then get rid of it. This gives us the ability to pick and choose talent when and where we need it."
Having a group of contractors devoted to everyday IT maintenance issues also frees agency IT staff members to work on projects that may have a more direct impact on Treasury's public and financial institution customers and Treasury employees, Canales said. Treasury is developing a customer-service group in its CIO office, which would enhance the role IT plays in Treasury's mission, including cutting down on duplicating efforts across its bureaus by enabling many offices to use resources developed at the departmental level, Canales said.
"The CIO should really be a partner in the business...and government shouldn't just look to the CIO for what desktop to buy next year," she said.
Agencies also have discovered that seat management is a flexible concept, something they can size to fit their specific environment.
For example, under the original award at Wright-Patterson, FDC works only for the Special Operation Forces System Program Office and not the entire base, which houses more than 70 Air Force organizations and 24,000 people. Although the office still has to work via the 88th Communications Group for core applications and security, FDC provided a single help desk that works with the communications group to enhance the performance of all the IT systems - whether they are held by the contractor or the communications group - and provides faster and better responses to trouble calls, Miller said.
Help-desk service has improved, and the office found that working with one contractor to standardize the office on specific hardware and software products improved the performance of the networks, Miller said.
The commander of the Aeronautical Systems Center at Wright-Patterson, which oversees many of the Air Force organizations on the base, including the Special Operation Forces, has decided to expand the GSA Seat task order to the remainder of the base.
The Special Operation Forces System Program Office and Treasury's networks were more standardized than most agencies', making it easier for a single contractor to take control of the system. For other agencies, such as GSA, a less standardized network made for a more difficult transition to outsourcing.
"One of the lessons learned is that it is much easier to transition from an already standardized environment to seat than using seat to get a standardized environment," Piatt said.
GSA has begun to outsource 2,500 seats at its Washington, D.C., headquarters and several surrounding offices to Litton/PRC Inc. Because GSA had different local-area networks, applications and contractors, it has taken the agency longer than planned to get to a single network with a common technology architecture. Litton/PRC must deal with different desktop systems, often running different applications that would not work together across the agency, and there was no overarching policy to govern how the change to a single architecture should have been made.
"There's no reason you can't do seat if you've got decentralized IT, but you have an easier job if you have a centralized authority over IT," Wren said.
This month, GSA held a meeting in San Diego with all of its regional IT coordinators to determine what system to use as a standare before it moves its seat contract to its regional offices, which it plans to do in the next year.
The group plans to develop a detailed architecture that coordinators will take back to their regions, setting priorities for IT spending and working to overcome resistance to seat management, Piatt said.
This will eliminate the many difficulties in communicating across the technologies used in each region. For example, there won't be a need to convert documents if the sender is using Corel Corp.'s WordPerfect and the recipient is using Microsoft Corp.'s Word.
"We want to be sure that as we get into our year-end spending that the spending is based on a list of priorities that will result in getting systems that support the agencywide vision rather than a list of regional priorities," Piatt said.
Preparation is Everything
Agencies and consultants say one of the keys to the early success stories has been the efforts taken to explain to management and agency employees what outsourcing will do and what it will not do.
"You need to do a lot of prep work. The things that are really important are outside the contract," said Phil Kiviat, president of the Kiviat Group, an IT consulting firm. This includes telling employees the benefits they should expect to get from the contract, securing support from upper management for the changes and forming a good relationship with the contractor, he said.
The U.S. Department of Housing and Urban Development's Office of the Inspector General learned this last lesson, not having developed a level of trust with their contractor, DynCorp. The office had a paper-based system with few legacy systems. Management and employees wanted an automated workflow application that would permit HUD's more than 700 auditors to file documents and reports from anywhere in the nation. The network also had to be secure so that auditors could communicate with their offices and HUD's Washington, D.C., headquarters while out in the field.
The workflow and security applications were fairly simple: An off-the-shelf workflow application and a virtual private network solved the requirements. But communication with the contractor became a problem.
HUD signed its Seat task order in July 1999, and employees felt that they had little input into the system that DynCorp planned to introduce. The office accepted the solution developed by the contractor with little discussion, but it was not until November that HUD and DynCorp started talking about requirements and how HUD's business influenced information systems at the agency.
"In October, we suspended [the implementation] because we didn't know what the problem was, but we knew we were going too fast," said William Stine, project manager at HUD's Office of the Inspector General. "The communication was just not good enough.... We thought they were trying to screw us."
Agencies and vendors must work together every day to develop, adjust and maintain the technology behind a solution, but HUD and DynCorp did not establish that level of trust until a crisis showed the need for it.
It was not until the implementation teams on both sides brought in their senior management - the HUD inspector general and the president of DynCorp - that they were able to cut through the fear on both sides and get the level of partnership needed.
"We've had to work on building that," Stine said. "But they've been willing, and we've been getting a lot done now."
A lack of understanding between what an agency needs and what a vendor can offer is not uncommon. Before procurement reform, agencies developed the specifications and designs for new systems, and the private sector provided the systems to meet those requirements. The agency/vendor relationship ended after the vendor delivered the system.
To keep the relationship going, HUD formed a dedicated team of senior personnel from the IT, operations, security and telecommunications staffs that meets weekly with DynCorp to check on issues involving the contract. The HUD and vendor teams also work together on a daily basis to straighten out technical and cultural issues before problems arise.
Part of the increased communication includes having the DynCorp team listen to HUD employees' suggestions. In one case, HUD staff members told DynCorp that some housing projects do not have the digital connection needed to dial into HUD's virtual private network.
"When we're going through some of the implementation scenarios, my people, because of their experience, will think of things that the vendor wouldn't," Stine said.
Having a vendor become an agency's basic IT support staff requires a change in thinking that can take a while to adopt.
Treasury had to convince its IT staff members that they would not be cut and that they would, in fact, be performing duties more in line with the departmental offices' mission - forming the policy and management of Treasury as a whole. GSA had to put forward the same promise to its employees, and every other agency will have to deal with the same fear, Piatt said.
But what's harder to change is the overall federal view that the contractor is out to get the most money possible for the least amount of effort. "One of the key things with seat is you really have to partner with your provider," Treasury's Canales said.
Treasury created the Seat Investment Review Board, which includes representatives from every level of department offices, to consider technology and cultural issues and make any changes that come out of those discussions.
Worth the Pain
The pioneers of GSA's Seat Management contract have just started their outsourcing projects. The GSA task order, which is the furthest along, is still in its beginning phase.
Agencies have learned that although the technical and cultural difficulties in handing over the management of its networks to an outside company present real obstacles, the benefits far outweigh the costs. "We've had some bumpy spots in the road, but we're able to sit down and adapt as needed," Stine said.
Other agencies are choosing to join the seat movement. The Education Department's Office of Student Financial Assistance Programs and the State Department's Office of Foreign Buildings Operations have issued task orders.
Treasury, GSA, HUD and others have received calls asking for advice and opinions about seat.
Wright-Patterson plans to expand the training options provided by FDC. Treasury is investigating a new form of contracting in which the agency and its vendor share the cost of and the savings gained from new technology.
"I believe that it really is succeeding," Canales said. "I'd like to see our partnership [with Wang] grow."
Not every agency may go with the GSA Seat Management contract because there are many other options, including the Outsourcing Desktop Initiative for NASA contract and the ability to develop an individual solution on the GSA Federal Supply Service's IT schedule.
But the issues faced by the first five agencies under Seat will be seen anywhere, Kiviat said. "Anything you do for the first time is very much a pilot," he said. "[The Seat Management contract] has its flaws, but overall it was good enough, it was workable and it got people started."