Vendors use protests to sell more PC wares

Air Force buyers will not have to wait long to get Desktop V-like pricing and technology, despite protests that have halted the procurement, because several firms are putting together what analysts call "DT V killer" packages.

These companies intend to market PCs aggressively to Air Force users during the next two months, as the General Services Administration's Board of Contract Appeals deliberates protests filed against the $1 billion Desktop V contract by Sysorex Information Systems Inc. and Government Technology Services Inc.

The Air Force made a dual award of the Desktop V contract for up to 360,000 PCs to Hughes Data Systems and Zenith Data Systems on May 3. Sysorex filed its protest last Monday, May 13, and if GSBCA takes the full 60 calendar days allowed to resolve the protests, no final decision will be made until July 17, well into the peak federal summer buying season.

Bob Dornan, senior vice president of Federal Sources Inc., predicted that if GSBCA upholds the award to Hughes and ZDS, it would take at least another two weeks for orders to start flowing through the procurement pipeline.

If the board rules for the protesters, "that's the end of DT V for this fiscal year," he said.

Waiting to place orders "is just too long," in the view of Theresa Garza, vice president of federal sales and marketing for Dell Computer Corp.

"It's ridiculous to run a business that way, and the federal government is a big business," Garza said. "If you spend your entire budget in one month, it could take 12 months to deploy the products...at which point they're almost obsolete."

Dell has already started to put together PC packages from its General Services Administration schedule to fill the Desktop V hiatus, Garza said, adding, "This is a significant opportunity for us, and we've already started to see DT V replacement orders come in."

Dendy Young, chief executive officer of GTSI, said his company has started to put together "good-value alternatives" to the Desktop V packages offered by Hughes and Sysorex on its Desktop V schedule but declined to reveal details.

Electronic Data Systems Corp., another Desktop V bidder, believes it "can offer Air Force users attractive options at a good price," a spokesman said. He added that EDS decided not to protest the Desktop V award.

Compaq Computer Corp. plans to unveil "significant" price reductions on products targeted at Air Force buyers this week, a spokeswoman said.

Dornan said the historical record indicates that schedule sellers will do well during the Desktop V protest period.

GTSI saw its schedule sales in fiscal 1989—the year Desktop III was protested—jump to $120 million from $54 million in 1988. ZDS' GSA sales in the same period "jumped from virtually nothing to $92 million," Dornan said.

Few details about the Sysorex protest were available last week, as Air Force, GTSI, Hughes and ZDS lawyers wrangled over the amount of detail contained in that protest that could be publicly revealed.

Against this background of protests and jockeying by GSA schedule sellers, rumors started to circulate within the federal PC vendor community that Hughes intended to switch out Micron Corp., its PC supplier, in favor of PCs from Digital Equipment Corp., which supplied the high-end workstation on the Hughes bid.

Industry sources at an Army computer conference in Orlando, Fla., last week said they expected Hughes to drop Micron for Compaq. General Motors, Hughes' parent, is one of Compaq's largest customers, one vendor said.

Tom Walters, vice president of Hughes, denied this speculation, saying, "We stick with our partners."

Walters then added, "Technology does move rapidly, and if there is an advantage in moving [the mix of products] on DT V around, we believe our partners would see the advantage in that."