Compaq wins major USPS deal

The U.S. Postal Service announced Oct. 11 that it has awarded its Acquisition of Desktop Extended Processing Technology (ADEPT 2) contract, valued at up to $2 billion, to Compaq Computer Corp.

The contract requires purchases of all end-to-end industry-standard Microsoft Corp. Windows- and Intel Corp.-based IT solutions. The base five-year contact is valued at $1 billion, but contains options that could result in a total term of 10 years and double the dollar amount.

The contract includes services as well as Compaq and third-party products across the Postal Service's distributed computing environment.

"On ADEPT1, we did more than $1.2 billion in products and services.and this is for up to $2 billion," said Peter Blackmore, executive vice president of worldwide sales and services at Compaq.

In addition to supplying desktops, severs and other equipment, Compaq must also provide support services, including maintenance, repair and replacement of the hardware it sells. But Blackmore said he thinks those capabilities are what helped Compaq secure the award.

"Through our orals and written proposals, it was centered around services and program management capability as much as the project itself...as well as the strength of the team on the account, and of course the pricing and dollars involved," Blackmore said.

The Postal Service will be able to purchase the "very latest Intel-based Windows technology," including Compaq's revamped Evo product lines of notebooks, workstations and thin clients, as well as its latest "industry-standard server technology," Blackmore said.

Known as ADEPT2, the new contract is a "re-compete" of a contract awarded to Digital Equipment Corp., which Compaq later acquired, in 1994. Compaq delivered more than $1.2 billion of products and services—including more than 32,000 servers, 180,000 desktop computers and 50,000 notebook computers —on ADEPT1.

That contract was originally valued at $200 million, but was extended repeatedly and eventually grew to more than $1 billion, according to Postal Service contracting officials.

Alan Promisel, a PC analyst at IDC, said ADEPT2 will obviously provide a major financial boost to Compaq, but also help the company in other ways.

"It's an incredible injection of cash into a company that is really bleeding right now...and the visibility of the Postal Service brand is something they can use to show other business customers," Promisel said, adding that stockholders will also be pleased in view of the uncertainty that has followed Compaq since the merger announcement with Hewlett-Packard Co.

From a pure technology standpoint, some manufacturers have a slight advantage over others, "but nothing that significant to change the course of a deal," Promisel said. He added that Compaq's pricing has become increasingly competitive with the likes of Dell Computer Corp. and IBM Corp., and the company has shown an improvement in its service offerings.