Local Contract

List of Top Pentagon Orders Reveals Strategy Shift

By Roseanne Gerin
Special to The Washington Post
Monday, July 24, 2006

The Defense Department's drive to transform the way it does business is reflected in a spate of new information technology contracts valued from $300 million to $30 billion.

"If you look at all the Defense Department opportunities coming up in the remainder of 2006 and into the beginning of next year, there are a lot of very promising opportunities," said Ray Whitehead, vice president of business development at General Dynamics Information Technology, which was formed after General Dynamics Corp. bought Anteon International Corp. for $2.2 billion in June.

An analysis for Washington Technology by market research firm Input Inc. identified 22 contracts that reflect the hottest opportunities in the coming months. The top five are in the accompanying chart; the full list can be found at http://www.washingtontechnology.com/ .

Many of the contracts are "recompetes" or follow-ons to established contracts, and they reflect the growing use of omnibus procurement contracts.

"The greater emphasis and dependence on multiple-award, indefinite-delivery, indefinite-quantity contract vehicles to procure services and solutions is the primary trend," Whitehead said.

Big, multiple-award contracts give the Defense Department the flexibility to quickly deal with emerging requirements by issuing task orders, while getting the good prices already negotiated under the contracts, said Michael Gaffney, president of business development for the federal sector at Computer Sciences Corp.

The Defense Department is backing away from using General Services Administration contracts and returning to military-specific contracts to get better results, said Ed Faulkner, group vice president and general manager of the defense systems group at Apogen Technologies Inc. of McLean.

The contracts also underscore the Defense Department's focus on business transformation, IT security, interagency networking and knowledge management, and outsourcing, said Megan Gamse, Input's manager of defense opportunities.

"It is imperative that we protect information and protect our networks," said Brig. Gen. Jeffrey Foley, the Army's director of architecture, operations, networks and space, speaking at a conference sponsored by the Armed Forces Communications and Electronics Association's Northern Virginia chapter.

After reviewing the list of contracts, some company executives said that another defining trend is that mid-tier firms are getting squeezed out of the Defense Department IT marketplace.

With task order and governmentwide acquisition vehicles, the Defense Department believes that "it's a safe choice" to go with large companies to get the "breadth and depth" of what they have to offer, said Michael Williams, Apogen Technology's executive vice president of business development.

The task order contracts favor "big companies with a large footprint" that can easily and quickly respond to Defense Department requirements, said Gaffney of Computer Sciences.

But several contracts on the list contain portions for small business or have small-business subcontracting requirements. Two small-business set-aside contracts are the Army's Field and Installation Readiness Support Team Restricted contract and the Air Force's Professional Acquisition Support Services contract.

Most company executives do not expect Defense Department budget cuts and reallocations of money to support the war in Iraq and the global war on terrorism to have much effect on IT contract work, saying it can improve efficiency.

"What you're seeing is a lot of pressure on IT replacing people as a way for [the Pentagon] to get dollars back for their existing budgets since it's not going to be growing its budget to the kind of numbers it wants," Faulkner said.

Roseanne Gerin is a staff writer with Washington Technology. A more complete report on these contracts can be found athttp://www.washingtontechnology.com.

© 2006 The Washington Post Company