Testing e-commerce waters

By most accounts, it was a pretty bold plan — and certainly not business as usual. The Naval Sea Systems Command (Navsea), which is responsible for fielding the Navy's ships and shipboard systems, wanted to dry-dock the process it uses to buy $500 million worth of professional services each year and give the system a bow-to-stern overhaul.

Everything about the plan was different. For starters, it was based on a new and somewhat mysterious style of contracting. Contractors bidding for work would get five days to turn around concise proposals, not the one or two months that they used to get — and need — to produce the verbose works that more often resembled novels than business proposals.

Also, an electronic system, which was just a one-page diagram in December 2000, would eradicate paper from the process completely, including the time-honored handwritten signature. On top of it all, the system had to be built and the contracts awarded in a matter of months.

This time, the Navy really was going to shake things up, and if contractors wanted a piece of the business, they had little choice but to go along for the ride. Fortunately, they were in good hands.

"This was a culture change for [Navy procurement officers] and suppliers," said Kathleen Monahan, director of the surface systems contracts division at Navsea. "You really need to assess their needs, come up with a proposed solution, talk to them again and refine your strategy in an evolutionary fashion. Otherwise, these projects will not be adopted."

Now, just nine months into the new system's operation, it is becoming clear that SeaPort — as the overall initiative and the electronic procurement Web portal is called — is a big hit. SeaPort (www.seaport.navy.mil) has helped save money, slashed procurement cycle times from months to two weeks in some cases and allowed the Navy and the contractors involved to build a new level of cooperation that benefits everyone.

Sink or Swim

But the work is far from over. As Navsea officials have learned, making the system succeed for both themselves and the contractors requires a process of continuous feedback, improvement and, most important, a willingness to be flexible when necessary.

Navsea officials knew even before the first transaction took place on SeaPort that the combination of the new system and new contracts would save the Navy a lot of money. Before SeaPort, Navsea used about 350 separate contracts to buy professional services that support the Navy's acquisition programs. These services provide expertise in project management, logistics, financial management and engineering, and are intended to help Navy procurement offices do their jobs better.

When creating SeaPort's central set of multiple-award contracts in which 20 contractors would potentially compete for every task order, Navsea was able to include guaranteed savings clauses and a mechanism for converting the contracts over time to a less expensive, performance-based model. Also, by using SeaPort, the Navy would save the 3 percent to 5 percent fee the General Services Administration charges when the Navy procures similar services via GSA's services contract, according to Monahan.

One early decision that Navsea officials made shaped much of the work that followed: Unlike some past procurement initiatives, using the SeaPort Web site would not be mandatory. It would have to succeed on its own merits while competing with other procurement methods, such as the GSA schedules and the Navy's traditional paper-based systems.

"If it was a mandated solution, then we wouldn't have the pressure to provide that high level of customer service and to work with people to deliver a system that meets or exceeds their expectations," said Claire Grady, SeaPort branch head.

The key to reaching that goal, Monahan said, would be to create a system similar to Amazon.com, in which people with no special training go online and buy books. "We wanted it to be that intuitive and user friendly so that our program managers, as long as they had a Web browser, could go ahead and order services," she said of SeaPort.

Navsea officials built SeaPort using commercial electronic procurement software from Aquilent Inc., a spin-off from Commerce One Inc. Computer Sciences Corp. provided integration assistance.

As it turns out, instead of Navy personnel needing training to use the SeaPort portal, the Web site helped train them about the new procurement contract, providing an unintended benefit. The Web site is a way for them to understand how the new multiple-award contracts are structured, Monahan said.

Navsea officials also learned that building the perfect user interface is not as simple as laying out a laborious, "dummy-proof" set of steps that must be followed every time a contracting officer wants to issue a new task order. This approach is good for initiating new users, but it's a handicap for more experienced or computer-savvy users who want to use the system every day.

As a result, Navsea officials built SeaPort so that it allows several ways to create and manage a procurement contract. New users can use software wizards that walk them through the process, while veterans can skip ahead and customize their orders more quickly, Grady said.

Many of these features were conceived based on extensive feedback Navsea has sought throughout the process from Navy personnel and contractors, a move that has delighted some.

"They've been more responsive than any other contract I've ever worked with," said Mike Parrott, multiple-award contract business manager at ADI Technology Corp., one of the contractors participating in SeaPort.

For example, Parrott said that for a while there was a flurry of Friday postings on SeaPort for new requests for proposals (RFPs) that required strict five-day turnarounds. This meant vendors who wanted a shot at the work usually spent the weekend in the office drafting their bids. Parrott brought the issue up with Navsea officials at one of their regular meetings. The officials promised to avoid the practice unless necessary.

"That was a quality-of-life issue, and we really appreciate it," Parrott said.

Another benefit of SeaPort from Parrott's perspective is how the system has prompted ADI to speed up its contract-related administrative processes.

One reason for that improvement is the more limited but focused information Navsea requests in proposals. SeaPort provides plenty of ways to cut cycle times on Navsea's side as well: RFPs can be distributed and bids received and reviewed electronically. This translates into significant savings in personnel time, although officials haven't quantified them yet.

Although using the SeaPort Web site is optional, the system now handles about a third of all new task orders awarded for professional services at Navsea, a figure well beyond original expectations, Grady said. The initial deployment of SeaPort cost about $1.4 million. An additional $460,000 per year covers software license maintenance, system support and third-party hosting for the application.