State, local IT moves quickly

advice from Paul Lombardi, president of DynCorp of Reston, Va.

Lombardi, who became president in March 1997, said he is consolidating the
company’s drive into the government IT market at all levels, including federal.

DynCorp, founded in 1949, has acquired 13 IT service companies since 1991. Lombardi
calls computer services, as opposed to services such as aircraft maintenance that the
company used to sell, “the fountainhead for the future.”

“I was hired to change the company from a technical format to more IT
professional services,” Lombardi said.

Ninety percent of DynCorp’s revenues come from government contracts, and
Lombardi said the mix is unlikely to change. DynCorp holds many government contracts,
including several with the Postal Service for network management.

The company was a bidder on the General Services Administration’s Seat
Management procurement.

GCN editorial director Thomas R. Temin interviewed Lombardi at his Reston office.

GCN: What are the main differences between your
federal and nonfederal businesses?

LOMBARDI: State and local is a higher margin business than federal, but it’s
fractured. The duration of contracts is shorter—two years max. Our last three federal
contracts have all been for more than eight years.

GCN: What are some of your state or local

LOMBARDI: In Michigan and Texas, we’re doing health care services outcome
prediction, giving [health care agencies] computer algorithms for procedures under which
Medicare and Medicaid will go out.

The algorithms tell them what places to use and when to use inpatient or outpatient
care. The biggest health care question is how to manage the variables. Some are
significant, some are not.

GCN: Talking about federal for a moment, what if
GSA gave a Seat Management contract to everyone who bid?

LOMBARDI: That’s certainly a concern. Our team consists of us as integrators. All
other [subcontractors] are commercial companies. They have the infrastructure available
worldwide that could respond to the requirement.

If that procurement takes hold, we’d be a player. But it’s not clear the
federal government will do that.

GCN: What about the Outsourcing Desktop Initiative
for NASA contract?

LOMBARDI: Even in a multiple-award situation, when you bid in a NASA facility, one
contractor gets the whole facility.

The only way to make money in seat management is in volume, because the infrastructure
costs will kill you.

GCN: You have a partnership with Siemens Pyramid
Information Systems Inc. for year 2000 services in which you rehost the customer’s
application and convert it to new code that’s 2000-ready. Do you have any orders?

LOMBARDI: The Pyramid deal has not been as successful as we’d hoped. We’ve
made a ton of presentations. We got one order from Scott Air Force Base, Ill.

GCN: What is wrong?

LOMBARDI: One, there’s not a whole lot of Y2K activity in the Defense Department.

Two, the proposal is so unique that government buyers have a hard time dealing with it.

GCN: What’s your take on procurement reform?

LOMBARDI: The Federal Acquisition Streamlining Act has helped.

It’s put a lot more emphasis on past performance. If you don’t watch
your P’s and Q’s, it hits a database and you’re toast for a long while.

The procurement cycle is no longer like an elephant giving birth. And there’s
more trust between the government and the private sector.

Now, when we win a contract, we sit down with the customer and a facilitator and air
expectations. We’re getting higher award fees and the engagements are


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