Weary of order backlog, Air Force bumps ZDS off Desktop V contract

After suspending orders for the company's products for the second time in a year, the
Air Force Standard Systems Group decided this month it will not extend ZDS' Desktop V
contract past the base year.


Charging that the company could not maintain an acceptable level of delivery and
warranty performance on the contract, the Air Force on April 1 halted ZDS Desktop V
ordering and never lifted the suspension. That was no surprise, however, because the
service last September had indicated that it was not content with ZDS' order fulfillment
practices.


According to Air Force officials, the company consistently failed to comply with the
Desktop V contract requirement that it make deliveries within 10 days for U.S. orders and
within 14 days for overseas orders. ZDS also could not meet maintenance requirements for
servers to be repaired within 16 hours and other products within 24 hours, service
officials said.


Although the company in the last 60 days had tried to eliminate a 1,600-order backlog
and meet contract commitments, the Air Force and ZDS insisted they mutually agreed not to
exercise the first of two one-year options. The Air Force had until May 3 to decide
whether to renew its Desktop V contracts with ZDS and Hughes Data Systems of Irvine,
Calif.


"We elected to allow the contract to expire at the end of its first year,"
ZDS vice president and general manager Jim Shea told GCN.


"There were a number of issues on the contract that we attempted to get changed.
But we were unable to change them," he said. "There are some very strict
absolutes in the contract regarding warranty repair and delivery of systems that really
didn't take into account real-world situations."


Ironically, at the time of the second and final suspension, ZDS had been enjoying a
comfortable lead over Hughes for orders on the $1 billion indefinite-delivery,
indefinite-quantity Desktop V. During the one-year base period, the company sold 32,465
desktop PCs, 2,137 notebooks and 301 servers, generating $120 million in revenue.


"We elected to put our resources in a more commercial contract vehicle, such as
the General Services Administration schedule and blanket purchasing agreements, that offer
us greater flexibility to deliver more current technology at more competitive
prices," Shea said. "Many government buyers are purchasing the latest
commercially available technology direct from manufacturers. We'd like to be able to do
that as well."


Hughes is not the only contractor to potentially benefit from ZDS' departure. Desktop V
buyers now can satisfy their needs through the long-awaited, $729 million 8(a) contract.
The service awarded that contract to International Data Products of Gaithersburg, Md.,
last year but it had been on hold because of a protest at the Small Business
Administration.


SBA's Office of Hearings and Appeals recently dismissed the protest filed by Dynamic
Decisions Inc. of Edison, N.J. SBA ruled April 30 that IDP qualified as an 8(a)
manufacturer and a regular dealer of the products it plans to offer under the Desktop V
contract.


Dynamic Decisions had charged that Win Laboratories Ltd. of Manassas, Va., is the
manufacturer of two of four systems IDP will sell on its Desktop V contract and that IDP
is not a dealer for the Win-built systems.


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