Neal Fox | Contracting in perspective: DHS' Eagle'Will it fly?

One of the most highly anticipated contracts scheduled for award in 2006 is Homeland Security's Eagle (Enterprise Acquisition Gateway for Leading Edge solutions). DHS views Eagle as its premier procurement vehicle for agencywide consolidation of IT services, replacing the numerous legacy contract vehicles now used by DHS component agencies.

Eagle could account for most of the department's annual IT services contracting, valued at over $4 billion. Eagle is now in source selection, following receipt of proposals back in November. DHS officials intend to make awards in the June-through-July time frame.

Eagle actually consists of two contract vehicles: one set aside for small businesses and another for all other vendors. Two separate source selections are being used, and task orders will not be competed across the two vehicles. The request for proposals outlined Eagle's five IT services categories covering: 1) infrastructure engineering design, development, implementation and integration; 2) operations and maintenance; 3) independent test, validation, verification and evaluation; 4) software development; and 5) management support services. The program will run for seven years'an initial five-year contract plus two one-year options.

Eagle, it's worth noting, is an agencywide vehicle, not really a governmentwide acquisition contract as authorized by the Clinger-Cohen Act of 1996. But DHS says it can be used by other government agencies to meet homeland security-related needs. The trick is, most other agencies will need to use Economy Act provisions, requiring justification and high-level approval.

Still, this truck-size loophole may be playing semantics with the Office of Federal Procurement Policy, which has the authority to regulate and oversee GWACs. OFPP grants GWAC authority to agencies annually but does not closely regulate agencywide contracts, which Eagle is purported to be. It remains to be seen whether OFPP continues to agree that Eagle is not a de facto GWAC once it is up and running.

Like other contract vehicles agencies used for recurring IT services needs, Eagle is a two-stage program that first chooses a set of vendors, then competes agency requirements among only those vendors for the services defined in the basic contract. The first stage reduces the universe of contractors the agency will use and puts in place contractual provisions to provide for a more streamlined acquisition process. The second step competes all ensuing task orders among only those vendors. It also obligates agency funds.

This two-stage process accomplishes some important goals. For instance, it reduces contracting workload and accumulates best-in-class vendors to perform the work'theoretically, at least. And it provides incentive for vendors to give lower pricing in return for increased opportunity for business from the agency. Some criticize the way these large vehicles limit vendor access to agencies, and DHS will find this to be an ongoing source of complaint after Eagle is awarded.

Risk of Complexity

Eagle is remarkable in a negative way for its complexity. DHS will award contracts under the five functional areas listed above. This means that a vendor wishing to offer full-scope IT services on EAGLE would need to be awarded up to five functional area contracts, which is unlikely for most. As a result, users will likely find Eagle difficult to navigate for complex IT services. And since most DHS IT requirements will call for integrated solutions, this could cause significant issues, including out-of-scope problems.

Users will be forced to wrestle with the dreaded scope issue as they try to determine which functional category fits their acquisition, and whether a certain vendor is really allowed to offer that service. Real-life IT solutions often do not fit neatly into the functional stovepipes contracting people like to use to build a contract vehicle. Eagle users will need to cut across functional categories for their task orders, but the company they want to use may not have a contract for every functional area required.

To remedy this, the RFP calls for "teaming."

If there is one thing contract users hate it is complexity in using the vehicle, because that introduces risk even before a contract is awarded.

Agencies make the same mistakes over and over on these multiple-award vehicles. The biggest one is having too many vendors. The real source of pain on these large contracts is the constant battle against vendor accumulation. Various interest groups fight to add all the vendors they might want to use'large established companies, leading-edge innovators, various socioeconomic vendors'you name it.

The reasons for vendor accumulation are endless and compelling. And that is precisely the problem. There is no good argument against vendor accumulation except one: It dooms the contract vehicle to mediocrity.

Will Eagle go down this same path? Very likely it will, sooner or later. Those forces are just too hard for most to resist. DHS is wrestling with this very issue right now, as demonstrated by the recent slip in contract award dates due to the overwhelming response. But look at the history of highly successful IT services contract vehicles, and you will find the single most important key to success was having a small number of outstanding vendors.

Potential Shakeout

Who loses as a result of Eagle? The General Services Administration and other agencies managing GWAC contracts that had hoped to pull in the DHS business. Vendors not part of Eagle will miss out on a share of the annual spending. Incumbent vendors who held other contracts with DHS component agencies, where the future work will be shifted to Eagle, could lose as existing contractual relationships are ended. Small businesses might even be net losers, even though a fortunate few will benefit.

So will Eagle be successful? Partly, but I think it is unlikely to live up to DHS expectations. And those expectations will need to be high if the DHS central office has any hope of cajoling its component agencies into giving up their existing contract vehicles in favor of this new method that is'as they will view it'being imposed on them.

If DHS has the fortitude to require all component agencies to accept direction from headquarters, the agencies might be able to reduce contracting cycle times and redundancy, while working toward common DHS goals. Eagle could also give the CIO a clearer view into IT services spending.

Putting together a complex acquisition and executing it in today's climate is very difficult, and DHS is to be commended for several notable successes related to this procurement.

First is the excellent Eagle team that has been assembled. One of the most significant components of retired procurement chief Greg Rothwell's legacy at DHS is that he accumulated outstanding people'often at the expense of other agencies.

Second, DHS acted quickly to put together a plan and execute it. This stands in sharp contrast to such other agencies as GSA, which has not demonstrated the same level of agility. And the three-page Statement of Work is a thing of beauty. Compare that to GSA Networx, a much smaller contract vehicle, with its 621-page SOW.

Additionally, DHS has made a commitment to an integrated approach to IT services acquisition, especially important when seeking integration of homeland security efforts among many agencies and on many levels.

Editor's note: This article is the second in a series on contracting. The next installment will discuss GSA Networx.

Neal Fox is the former assistant commissioner for commercial acquisition at GSA and now leads Neal Fox Consulting. He can be reached at nfox@usa.com.