Agencies have more choice in buying
Telos, a software
development company founded in 1968, was experiencing a midlife crisis in its government
work. Wood decided the privately held company should focus on advanced messaging, database
integration, information security and wireless networking.
In 1995, Telos won the Armys Small Multiuser Computer II contract, through
which it sells network infrastructure products and services. The previous year, the
Immigration and Naturalization Service had awarded Telos the Personal Workstation
Telos has seen a jump in its General Services Administration Information Technology
Schedule sales, including the negotiation of a blanket purchasing agreement with the
Treasury Department. The $250 million company has a Capability Maturity Model Level 4
rating from the Software Engineering Institute.
Wood has bachelors degrees from Georgetown University in business
administration and computer science.
GCN associate editor Bill Murray interviewed Wood at his Ashburn office.
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GCN: What trends do you
see in your Defense Department work?
WOOD: Weve focused on logistics. Its a real pain point for the Army and the
rest of DOD (see story, Page 34).
DODs logistics market used to be all about mass: moving tons of people over a
six-month period to Normandy. Now, its about velocity: getting that division over
there in two weeks or 24 hours.
DOD is going from a just-in-case manner of managing inventory to a just-in-time model.
It used to stockpile tons of equipment and supplies, and there was little sharing between
organizations. Everyone became like M*A*S*Hs Radar OReilly with a
stockpile mentality, which is completely different from how corporations function.
Weve focused on fixed-price contracts.
It is not an ongoing, never-ending kind of gig. Instead, it is a highly focused,
value-priced return on investment approach.
And that has resulted in much more efficiency. Thats a huge shift in how the
government views us.
GCN: For example?
WOOD: Gen. Johnnie Wilson [commander of the Army Materiel Command] gave an October
presentation where he asked how many guys in the room had lost materiel requisition
orders, and you heard a big groan in the room. That information for MROs is trapped
between different proprietary databases, processes and people.
At the Army Industrial Operations Command in Rock Island, Ill., weve worked on
requisitions. Because the government has many different, old databases across different
organizations, it used to be difficult finding the status of an order. To query and find
out whether a cannon or food order would arrive on time would take an average of 66 hours
because the data would be located in several proprietary systems.
You would first have to know where the data was and, second, be able to query for the
specific data. Youd have to call people in other organizations and wait for them to
call back. By the time the information came back to you, it was old and outdated.
Its very costly to migrate those systems fast to a big database environment.
Thats sort of where the Armys going, but it could take eight or 10 years.
We built a product called Virtual DB, a virtual database that let the user query and get
the information in less than a couple of minutes.
We demonstrated that to the Army in 1997. That got us marching down the logistics path
because we were able to crack what was considered a difficult problem: getting the answer
to the end users query quickly.
Virtual DB knows where all the information is, and it understands the relationships
between the different databases.
The first application took about 90 days and cost less than $300,000. Getting people to
see the value of sharing information and how it fit into the overall plan took the longest
time. Once we did that, additional applications were built much more quickly.
GCN: How has procurement
reform affected what agencies are looking for and how they buy?
WOOD: When I started, the company was a traditional government business with a long
procurement cycle. When you won a contract, essentially you had a license. There were no
other places the customer could buy from.
It was the opposite of free-market theory, and it was an artificial market. What made
the contract vehicle so valuable were the limits. The $50,000 maximum order limits on
General Services Administration schedule contracts meant that larger orders had to go
through other contracts or sole-source awards. The products and services might be
commodity-oriented, but contractors could charge a higher-than-commercial price because
agencies didnt have a choice.
The single biggest change of procurement reform is that the customer can choose from
whom to buy products and services. The value of winning an indefinite-delivery,
indefinite-quantity vehicle isnt as significant. GSA gave agencies an alternative if
they didnt like the contracts.
What I love about the change is its free-market theory. The government is going
commercial in how it buys products and services.
A lot of the technology being sold was plug-and-play commodities. The only thing that
differentiated a lot of the commodity resellers was price, so they beat each other to
GCN: How different are GSA
schedule buys from indefinite-delivery, indefinite-quantity contract buys?
WOOD: Were seeing blanket purchasing agreements that address specific solutions.
The data integration work I spoke of was a competitive procurement in which the Army
evaluated other solutions. We couldnt get ours on Small Multiuser Computer II fast
enough, so we worked with GSAs regional office in Kansas City, Mo.
Thats one advantage of GSA: You dont have the scope problems that you might
on an IDIQ.
Were seeing GSA schedule contract buys that cobble together different products
We are seeing some SMC II orders that are larger than typical schedule orders.
Were reaching customers we didnt do business with before. Were seeing a
lot with the Army in Europe and Korea, where theyre looking for local support.
In some cases, theyre looking for us to get spare parts through customs or
provide an extra set of cables and routers. In many cases, were providing them with
The average stay of Army personnel in Korea is less than a year, so were seeing a
lot of training challenges.
GCN:What information security
trends are you seeing?
WOOD: Companies used to sell information security services at a set hourly price. You
ended up having a price competition, and the government rates were in many cases lower
than those in the commercial world.
The government is not evaluating us based on the hourly cost but rather on what the
person and tools can do. We can sell a security audit for a price, like $10,000. For that,
well make sure you know where youre imperviousyoull get a report.
We may try a break-in. Thats become a product instead of a person working for a
number of hours.
Now that the agency knows where the threats are, it can buy other products and tools,
encapsulating the risk. The contracting officer wants to evaluate you on hourly rates, but
business is saying no way.
We manage all the fire support systems at Fort Sill, Okla., and the communications and
satellite systems at Fort Monmouth, N.J. Those are marketable skills we can leverage into
data integration, information assurance, message handling and wireless.
GCN: Are agencies spending
as much as they should on security?
WOOD: Theyve taken two approaches. In DOD, its what we call an independent
watchdog: One person builds the system and another audits it. The work in that area was
falling off, and then the Internet came along and revitalized it.
The Social Security Administration and Housing and Urban Development Department are
putting their data on the Web. They have opened themselves up and are concerned about
penetration and integrity.
The White House, through the Commission on Critical Infrastructure Protection, has
levied requirements on these folks. The General Accounting Office has been tasked with
GCN: Is it possible to
have secure but open systems with remote access?
WOOD: The security issue is not about locking down the systems. Its about a
balance between access and prudent protection. Its a threat-response kind of thing.
Hackers develop new tools on a monthly basis, and you need to up your security levels.
If youre talking about the soldier in the field, how much are you willing to
spend on security? Its about lives.
If its information that someone can hack into and see but not do anything with,
then theres a trade-off.