DISA pulls plug on $350M pact

With momentum building behind a proposal to turn over many basic operations to the private sector the Defense Department last week instructed the Defense Information Systems Agency to cancel a $350 million set-aside program for data center support services.

As announced by DISA director Lt. Gen. Al Edmonds last December the Defense Computing Operations Support (DCOS) program would establish contracts with small businesses based in the neighborhood of the 16 Defense megacenters. DISA planned to award at least two contracts in each of four geographical megacenter regions.

DCOS would cover basic data center services including computer operations system administration performance monitoring and end-user support.

However with DISA anticipating March awards DOD chief information officer Emmett Paige Jr. last week brought the program to a halt. While some industry sources attributed the decision to Paige's alleged concern about using small businesses Paige said that was not the case. His main concern he said was outsourcing.

"At the completion of the briefing given to me by DISA I advised them that I could not concur with the procurement as it did not make good business sense and it would not get us any closer to outsourcing the data center services " Paige said. "I strongly believe that everything we do should be oriented to eventually buying computer processing services rather than continuing to own and operate administrative and logistic data centers."

Representatives of several small businesses contacted last week said the DOD decision was based on a bias against small-business contracts.

According to several other industry sources the cancellation of the DCOS pact goes deeper than a small- vs. large-business issue. Paige also was concerned that the set-aside approach eventually would make it difficult politically to transfer data center workloads wholesale to the private sector sources said.

Paige denied any bias against small businesses and any conjecture of political motives behind his decision to cancel DCOS.

"I am not against a small-business approach to anything that makes good business and good management sense and leads to the total outsourcing path that I believe we should be heading to " Paige said.

"Adding contractors to support the "as is" system or business process certainly does not make it easier or get us to the end objective faster " he added.

During the last year a number of reports commissioned by the Pentagon - including a report last summer by a Defense Science Board task force - have recommended outsourcing data center operations along with many other DOD information technology-related services. The upcoming Quadrennial Defense Review - an exhaustive study of DOD operations - also is expected to come out in favor of outsourcing many DISA operations.

In part small businesses may be most concerned about change happening too quickly another industry source said. DOD has been talking about further consolidation of the megacenters - possibly down to as few as six - before then turning them over to the private sector maybe five years down the road.

However outsourcing seems to be looming much larger on the horizon following the succession of reports and the upcoming Quadrennial Defense Review the source said. "Outsourcing would be terrible for small businesses because they can't compete in that environment " the source said.