TSM shapes up as bidders' duel

Teams led by Lockheed Martin Corp. and Computer Sciences Corp. have emerged as the
"prime" contenders for the multibillion-dollar TSM contract, IRS chief
information officer Arthur Gross said. In working with industry over the past few months,
IRS has held many meetings with members of the Lockheed and CSC teams, he said.

"We have held a lot of discussions. My thoughts are that if there were any other
serious bidders, they would have participated by now," Gross said. "If there are
other bidders, they have disadvantaged themselves quite a bit."

He said the two teams and TRW Inc. were the only companies that filed detailed
responses to an IRS request for comments issued in May. IRS expects to release a final RFP
next month and award the contract by October 1998.

Gross said IRS asked TRW, which has been helping the agency develop the blueprint, to
refrain from bidding.

"TRW's decision not to pursue the prime was not because they did not perform well.
They performed very well," Gross said. "They did the noble thing and committed
themselves to playing the role we requested--a partner in developing future phases of the
blueprint--and made that decision after thinking through the financial consequences of
their decision."

Gross said TRW still can work as a subcontractor after IRS has chosen a prime

The Lockheed Martin team includes Electronic Data Systems Corp. and Andersen Consulting
of Chicago. Lockheed Martin Federal Systems of Gaithersburg, Md., will lead the team.

CSC has joined forces with IBM Corp., Northrop Grumman Corp., Science Applications
International Corp. of San Diego and Unisys Corp.

Industry analysts said the two teams bring qualities to the competition that other
companies would find hard to match.

Bob Deller, president of Market Access of Chevy Chase, Md., said Lockheed Martin brings
significant presence to the competition because of previous TSM work.

Terry Drabant, president of Lockheed Martin Federal Systems, said the team is a tough
contender given Andersen Consulting's work as systems integrator with state and local
governments, EDS' work with the revenue service in Great Britain, and Lockheed Martin's
experience as a major federal systems integrator.

But Deller said not to discount the CSC team. "CSC has committed itself to
understanding the problems of the tax system and has had a strong management and senior
staff dedicated to the IRS work," he said. "They have educated themselves well
and earned their credentials."

Michael Lephan, president of CSC's integrated systems division, said his company's work
on New York's tax modernization program, coupled with the government work of other team
members, gives the CSC team adequate credentials.

But neither team will have much to brag about if Congress does not appropriate the
funds IRS estimates it will need to bring TSM to fruition.

So far, IRS officials are tight-lipped about TSM costs. Gross has promised that next
month he will give Congress cost estimates and delivery timetables for the first phase of
the five-part, 15-year project.

Although Gross would not speculate on the figure, one vendor involved in the project
said IRS officials have put the price tag for the entire TSM work at $5 billion, which
would be $3 billion less than earlier IRS estimates.

"It's my belief that Congress is totally committed to IRS investing in its
modernization project with modern technologies," Gross said.

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