Treasury takes PC outsourcing leap

The Treasury Department last week gave a boost to the government's fledgling desktop outsourcing initiative, selecting Wang Government Services for a 10-year, $88 million task order to manage the PCs of some 1,600 headquarters employees.

The award, made through the General Services Administration's Seat Management program, marks the first agency outside of GSA and NASA, which runs its own governmentwide seat management contract, to tap a desktop outsourcing contract.

Agencies have been slow to embrace GSA's contract, awarded in July 1998, and NASA's contract, called Outsourcing Desktop Initiative for NASA, awarded in June 1998, with many federal information technology officials initially voicing skepticism about turning over the management of their PCs to outside contractors.

"We expected [NASA and GSA] would be using the contracts," consultant John Okay said. But Treasury's award is "a vote of confidence for the overall concept of seat management and for the GSA contract program."

Under Treasury's seat management contract, Wang will provide desktop, help-desk and network operations services for Treasury's departmental offices, which include the Treasury secretary, the chief information officer, and other political appointees and their staffs.

Consultant Robert Guerra said these high-profile users make the buy "a good test case" for seat management because "in this market segment, you have a user community that is truly dependent on its information technology."

Treasury plans to use the task order to evaluate whether seat management should be used throughout the entire department, said James Flyzik, Treasury's CIO. "We believe that procurement of services is a trend [that] is going to work well in the government, and we want to procure services that will allow us to better partner with industry."

For example, rather than Treasury having to make decisions about when to upgrade its equipment, it will be up to Wang to recommend such steps and then supply and maintain the equipment itself. For a large number of desktops, this approach could reduce Treasury's total cost of providing equipment and support, or it could offer better value for the same money.

"Two thousand seats is at the level where a lot of the benefits of seat management are going to come out of taking advantage of economies of scale," said Payton Smith, manager of strategic studies with market research firm Federal Sources Inc.

Flyzik said it will take 18 months to two years before he collects enough information to tell whether the program is succeeding.

Industry analysts said that although they do not expect Treasury's decision to result in a rush by agencies to award seat management contracts, the department's progress will give agencies guideposts for evaluating whether this approach meets their needs.

"The thing other agencies can learn from them [is], of all the values available from a seat management-type of IT resource approach, which ones give the greatest payback in the shortest time frame," Guerra said.

Charles Self, assistant commissioner of the Federal Technology Service's Office of Information Technology Integration, said, "The fact that [Treasury] embraced [seat management] is a good thing in and of itself. It demonstrates there's a commitment at the highest levels."

He said GSA is working on task orders with the Department of Housing and Urban Development and the Health Care Financing Administration. "I always said that in the first year if we get four or five [task orders], that will be good," Self said. "We're close."

Wang executives could not be reached for comment.

The award was made the day that the General Accounting Office denied a protest against the acquisition. FCW could not confirm the details of the protest at press time.