As PC prices fall, feds are shopping for name brands

When SMAC Data Systems added Compaq Computer Corp. products to a Navy blanket
purchasing agreement late last year, the move represented more than just a contract

It signaled a general shift in government contracts away from clone PCs and toward
top-end, brand-name products.

“We have to adapt,” said Roland Hua, vice president of corporate development
at SMAC, a Gaithersburg, Md., 8(a) manufacturer that made a name by selling its own
no-name systems to agencies. “There are requests for clone systems but not to the
extent there were two years ago.”

Instead, the Air Force, Marine Corps, Navy, and Education and Treasury departments have
been showing a clear preference for top-tier products, such as Compaq Dell Computer Corp.,
Hewlett-Packard Co. and IBM Corp. PCs. The GartnerGroup Inc. of Stamford, Conn., dubs the
PCs by these makers as enterprise-level.

Part of the shift away from clones has to do with price. The large PC makers have been
slashing prices in recent months and working closely with chip maker Intel Corp. to cut
the total cost of ownership.

Agency contracting shops feel pressure to seek brand-name products to keep buyers.
“If we don’t have [brand names], they’ll go somewhere else,” said Lee
Harvey, branch chief at the Army Communications-Electronics Command Acquisition

Harvey said GartnerGroup’s study concluded that buyers will save more money over a
system’s lifecycle if they buy from the so-called enterprise-level vendors.

“I don’t even know if we pay more for Tier 1 at the outset” on large
contracts, he said.

Things were not always that way. International Data Products Corp. of Gaithersburg,
later acquired by Dunn Computer Corp. of Dulles, Va., once grabbed nearly 50 percent of
sales on Army Portable-1 with its own notebook computers.

According to one federal survey, IDP at the time had the second-largest installed
federal base among notebook vendors.

The Army’s recent PC-3 request for proposals assigned evaluation credits to
enterprise-level vendors.

“The user community wants first-tier products,” Harvey said. “It’s
not mandatory, but there’s a preference.”

Like the Army, IDP and SMAC, Dunn is seeing “more brand preference on the part of
the customer,” said Bill Hughes, the company’s marketing vice president.
“We still sell some of our own product” but must throw in more Intel CPUs and
motherboards, network interface cards and video cards to appeal to agencies.

Dunn has also started to resell PCs from Acer America Corp. of San Jose, Calif.

The Marine Corps mandates worldwide logistics support for the PCs it buys because
personnel are “going to end up in places like Madagascar or Bosnia,” said Maj.
Christopher Biggs, assistant program manager for the Systems Command’s Information
Technology Infrastructure. So vendors must demonstrate support capability for any location
with an embassy—a requirement that tends to favor the Tier 1 vendors, Biggs said.

Marine Corps officials plan to issue a request for quotes for a PC BPA soon, leading to
an award by July 1, Biggs said.

Education Department officials set a de facto standard last year, agreeing to support
only Compaq or Dell PCs.

Midlevel vendors, as defined by GartnerGroup, include such companies as Micron
Electronics Inc. of Nampa, Idaho, which reached name-brand status last year when an Air
Force BPA awarded by the Standard Systems Group called for Dell, Micron and Gateway Inc.

The IRS recently negotiated a $26 million order with Micron but has shown a strong
preference for Dell products in the past.

Treasury Department Acquisition BPAs also specify products from Dell, IBM and Micron.

Despite the trend against clone PCs, they are not about to disappear from federal

The Military Sealift Command’s worldwide support requirements did not prevent SMAC
Data Systems from winning a contract to supply as many as 2,000 unclassified PCs last year
under a three-year lease.

The Drug Enforcement Administration has installed some 4,000 clone PCs since 1995, said
Timothy Metzinger, special projects technical director. “We plan to buy 2,000 or
3,000 more over the next few years,” he said.

And in one of the largest and longest-running federal clone deployments, Unisys has
installed thousands of machines from Win Laboratories Ltd. of Manassas, Va., at the Social
Security Administration through the Intelligent Workstation/LAN contract.

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