Air Force suspends Zenith PC contract

MONTGOMERY Ala. - The Air Force Standard Systems Group abruptly suspended ordering on Zenith Data Systems Corp.'s Desktop V contract throwing last-minute fiscal year ordering into turmoil.~

~Competing vendors exhibiting at the Air Force Information Technology Conference here last week moved quickly to capitalize on the situation promoting PCs of their own that fill the Desktop V bill's price and performance requirements.~

Ken Heitkamp SSG technical director said the suspension will last until ZDS takes "corrective action" to meet contractual requirements that it deliver PCs to users in the continental United States within 10 days of receiving an order from the SSG central processing office. Delivery must be within 14 days for overseas locations.~

Last week Federal Computer Week reported that ZDS had failed to deliver on time roughly 10 percent of the Desktop V orders it had received. SSG did not identify the number of ZDS PCs ordered but sources here pegged it at roughly 2 100. Heitkamp said the command had received about $20 million in orders on Desktop V a figure that covers both the ZDS and Hughes Data Systems contracts.~

ZDS said late Friday that it would deliver PCs within 30 days - not the contractual 10 days in the United States and 14 days overseas - on orders received for the remainder of the fiscal year. The company added that it has proposed to the Air Force a "substantial consideration" for users willing to accept the 30-day delivery schedule.~

ZDS also has had problems meeting maintenance requirements for PCs sold under the Desktop IV contract Heitkamp said and SSG wants the company to resolve them quickly.~

Heitkamp said SSG did not have a quality problem with the ZDS Desktop V systems. The decision to suspend ordering on the ZDS contract stems solely from the fact that the company "can't meet its delivery requirements " he said.~

Heitkamp told the closing session of the conference last Thursday that the suspension will not be lifted "until we are satisfied ZDS can meet the delivery schedule.... [Then] we will lift the suspension but I can't give you a date."~

Speaking at a panel session on the Desktop V contract Capt. Wes Boychuk Canadian Forces the ZDS Desktop V project manager said the ZDS contract was "in trouble serious trouble " with delivery delays in some cases running "30 days or more." Boychuk said ZDS and SSG are "working to getting this resolved very quickly."~

Pat Gallagher ZDS' sales vice president said he believed the problem that led to the suspension can be resolved swiftly. "It's our hope this is just a speed bump " Gallagher said.~

SSG sent out an Air Forcewide message last Monday suspending the contract and the following day dispatched a high-level team to Packard Bell Electronics Inc. ZDS' new corporate parent in Sacramento Calif. This team included SSG contracting director Lt. Col. Andrew Gilmore and Col. Larry Sampson director of the SSG Small Computer Program. Col. John Weimar SSG's vice director joined the team Friday.~

Heitkamp said these officials as well as specialists from the Defense Contract Management Agency and SSG industrial engineers were "walking through the plant looking at all the processes associated with ordering manufacturing packaging and shipping."~

The last-minute suspension had Air Force users scrambling for alternatives. Joel Grigg SSG project manager for the Hughes Desktop V contract suggested that buyers consider the Hughes contract and the General Services Administration schedule as well as other indefinite-delivery indefinite-quantity vehicles such as the Unified Local-Area Network (ULANA) II contract held by Electronic Data Systems Corp. and Litton/PRC Inc.'s Supermini contract.~

Boychuk said the SSG Small Computer Program will work with Air Force purchasers to help them redirect their funding for orders already in the pipeline. But he said "what will happen is up to you.... You can accept the delays [and stay with ZDS] or cancel and have the orders go elsewhere. Orders already at ZDS will go through unless canceled." As for orders in the SSG central order proc-essing facility Boychuk said the command "will call all buyers of ZDS and ask [what they] want to do."~

Rumors swirled around the show floor here that besides delivery problems ZDS has quality problems. Gallagher said he was aware of those rumors but added that the team SSG dispatched to Sacramento is concerned "with the process how we handle orders. I'm not aware of a quality problem. I believe they are reviewing our order handling procedures."~

ZDS which changed production from its own plant in St. Joseph Mich. to the Packard Bell plant just as the summer federal buying season heated up encountered some glitches in the switch Gallagher said which led to "the first orders running late - 20 days or more."~

Packard Bell also took over dispatching for maintenance in the switch-over and Gallagher said that initially Desktop IV customers encountered "atrocious delays" in getting through to the central Packard Bell dispatch facility in Utah. That problem has been resolved and Gallagher emphasized that the company "is committed to maintenance. We did well in the past and we will continue to do well."~

Except for the Desktop III contract awarded to Unisys ZDS has held every major Air Force PC contract for more than a decade. Gallagher described the suspension as "one of the five worst things that could happen to us." He said he was somewhat mystified by the suspension because "I don't remember [SSG] ever suspending another contract during our 14-year relationship. But we welcome the review."~

Some industry executives here viewed the suspension as excessively harsh if one compares the delays from ZDS on Desktop V with the problems Air Force buyers encountered under the Unisys Desktop III contract when that company delivered slightly less than 90 000 systems on a 300 000-PC contract.~

Heitkamp said this was not a fair comparison. "We only had one vendor on DT III and it was a requirements contract. We had no choice and no alternatives. The reason we have two vendors on DT V is one of the lessons we learned from DT III."~

Air Force users at the conference praised SSG for its swift action on the ZDS Desktop V contract and rival vendors here wasted no time in plastering their booths with quickly run-off fliers featuring their Desktop V-alternate packages. Government Technology Services Inc. for example advertised systems from Nexar PC. EDS which recently added full-featured PCs to its ULANA II contract put together bundles that would meet requirements of Desktop V buyers and provided them with an easy-to-scan comparison chart of systems on the two contracts.~

EDS vice president Kim Luke said "We can provide a comparable system that is significantly less expensive."~

International Data Products Corp. also jumped on the suspension offering systems from its GSA schedule that closely matched ZDS' Desktop V PCs in price and performance. Tom Conway an IDP sales representative said "It's easy for us to do this because we have a bid in on the DT V small-business contract."~

Though Hughes seems to benefit the most from the ZDS suspension company president E.O. Knowles said he hoped "the suspension gets resolved quickly for the good of everyone."