When Wang Laboratories Inc. opened its federal systems office in Washington last October, it wasn't because doing business with the government was so easy. It was because it was so hard.
Selling computer office equipment to the government has become a lengthy and complicated job for many businesses, such as Wang, Honeywell Information Systems Inc., IBM and smaller firms that locate in Washington to learn complicated procurement regulations. The companies spend years making prototypes, then wait months and sometimes years again before the government approves an acquisition.
One of the incentives for these firms to do business with the government now is that, during the recession, many potential customers in private industry have put their computer acquisitions on hold. "The commercial markets dry up and they want to keep those factories moving," said Ronald E. Cuneo, vice president and general manager of Honeywell's federal systems division, which has a major office in Tysons Corner. One government contract can mean many millions of dollars. "Government is the number one buyer," Cuneo said.
But selling to the government has been a help to local economies. For example, many of Honeywell's 700 employes devoted to government business are located in McLean Center at Tysons Corner. Wang has 236 federal systems employes, many of whom work in its lush Bethesda offices.
As for the office automation market, the federal government is "the largest employer of administrative help and office people," Cuneo continued. "The market for office automation is growing very fast."
Wang gradually moved into the government office equipment supply business, but last October formally opened a special office in Bethesda. "Federal business became more complicated," said Eugene Shugoll, vice president for federal systems at Wang.
"The government is slow," Shugoll continued. "You deal with the question like the Reagan budget. The budgets were late and that holds up procurement."
But for the millions of dollars involved in one contract, a little inconvenience seems to be tolerable. "The government has rigid rules for procurement," Shugoll said. "But it doesn't bother me because the government is the largest procurer of data processing in the world; we're dealing with large numbers. There aren't too many commercial companies that can buy that much."
A recent General Accounting Office report criticized the way the government buys computer equipment and said the government continues to use costly, outmoded computers.
"Many federal agencies' computers today are not up to date," the GAO report said. "If this outmoded equipment were replaced with modern computers that are more effective, efficient and economical and that could improve processing capabilities, costly operations would be avoided."
About 2 percent of the government's large and medium-scale computers use 1975 or later technology, the report said. "Much of this equipment uses 1971 or earlier technology."
The reasons for the government's reluctance to make the plunge into modern computers, the report said, are that agencies have not recognized the costs and problems of using outmoded equipment and federal managers have less knowledge than they should about computer technology. The report said the government could annually save $1.4 million by replacing old equipment just at four installations GAO investigated.
The GAO report said that in 1979, the government had 1,366 medium and large-scale computers, acquired an average of seven years earlier for $1.3 billion.
A typical federal computer used in 1980 had 1965 technology and was bought in 1971 for about $450,000, the report said. Altogether, the government has about 12,600 computers.
The Office of Management and Budget and the General Services Administration are studying ways of improving computer procurement, the GAO said.
Meanwhile, several companies are waiting in the wings to break into the federal computer procurement business. "We're just now in the middle of several bids worth $100 million in the next five to 10 years," Shugoll said. "That's the size and scope of what we have to deal with."
For example, Honeywell developed a computer network for the Veterans Administration using a 3,000-terminal system hooking all VA offices. "Instead of veterans having to wait weeks, a vet now can gain access to records anywhere in a matter of seconds," Cuneo said.
"Procurements have gotten larger, more centralized and competitive," he said. "Procurements have become more complex, geographically dispersed."
When a specially designed system isn't needed, the companies can sell the government office equipment off the shelf, Shogull said.
"There's a great deal of criticism about the federal government. Some of it merited," Shogull said. "But if they weren't sophisticated in procurement, we wouldn't have to become specialists ourselves."