Air Force gets a good deal in search for 300,000 PCs


June 14, 1993|By PETER H. LEWIS

For anyone familiar with the horror stories of Air Force procurement -- $500 ashtrays, $700 toilet seats and $1,000 hammers -- it was easy to be apprehensive when the service announced in 1991 that it planned to buy as many as 300,000 advanced personal computers.

Last week, more than two years after the Air Force opened its Desktop IV competition with a vow that the contract would be a model for streamlined high-technology procurement, the first batch of computers, worth $724 million, was finally cleared for delivery.

The good news is that the Air Force -- and thus the public -- actually got a good deal, despite all the delays caused by bureaucratic fiat and red tape, repeated protests from losing bidders, and some bombast from pork-barrel politicians.

And while the government procurement process is unlike anything in the corporate world, the Desktop IV experience may offer some lessons for private-sector businesses.

"Let's face it, if corporations bought computers the same way" as the government did in Desktop IV, said Robert A. Dornan, senior vice president of Federal Sources Inc., a consulting firm specializing in government contracts, of McLean, Va., "our competitiveness in the world economy would crumble."

"But in the long run," Dornan hastened to add, "Desktop IV was a significant success. The fast-track plan was not implemented as well as anyone would have liked, but the Air Force tried a lot of new things."

"Instead of demanding detailed, nit-picky stuff, it called for open specifications," he continued. "Instead of low price, it looked for best value. It used electronic bulletin boards for bidding. And what it wound up with was not quite state of the art, but pretty darned close."

Two companies, the Zenith Data Systems Corp. of Buffalo Grove, Ill., and Government Technology Services Inc. of Chantilly, Va., will share the contract. What they won, essentially, is a three-year hunting license to sell personal computers, peripherals and software to various Defense Department and civilian agencies, all under the Air Force contract.

Zenith Data, a subsidiary of Groupe Bull of France, appears to have the best chances for bagging government sales. Unlike most of the original bidders, Zenith Data initially proposed selling computers based on the Intel Corp.'s i486 microprocessors. It was a bold step at the time, in May 1991 when the i486 was relatively new, but it paid off as the contract dragged on.

Government Technology, in contrast, proposed a bid based on PCs using the less-powerful 386 chip and made by Everex Inc., a struggling clone maker in Fremont, Calif.

Government Technology was added to the award after several protesters, including Electronic Data Systems Inc. of Dallas, Apple Computer Inc. of Cupertino, Calif., and the CompuAdd Corp. of Austin, Texas, cried foul over the decision to give the contract solely to Zenith Data.

The Zenith Data computers offered under Desktop IV are virtually the same as those available to anyone else, but with the volume discounts one might expect from a 300,000-unit order.

For example, one Zenith Data computer, to which the Air Force has given the catchy designation CLIN 0003AB, has these specifications:

An Intel i486DX/33 microprocessor with an upgrade socket for a faster i486 chip, a 400-megabyte hard disk drive, 8 megabytes of system memory, 3.5-inch and 5.25-inch diskette drives, keyboard, mouse, four 16-bit expansion slots, 1 megabyte of video RAM for superior graphics performance, built-in Ethernet networking connectors and a 14-inch multifrequency, non-interlaced color monitor with Super VGA graphics and local-bus video.

It comes with a suite of Microsoft software: DOS, Windows, Word for Windows, Excel and Powerpoint, plus Polaris Packrat (a personal information manager) and software for connecting to Unix systems,plus a promise of free software upgrades for the life of the contract.

The computer is backed by three years of free, worldwide, on-site service and round-the-clock toll-free telephone technical support, seven days a week.

Price: $2,330.

According to Zenith Data's Z-Direct sales catalog, the public can get a Z-Station 433Dh computer for $2,599. It, too, has an i486DX/33 chip and upgrade socket, built-in networking and a Super VGA monitor. But it also has only 4MB of system memory, a 200-MB hard disk drive and a single diskette drive. Forget the $1,000 worth of application software and upgrades offered with CLIN 0003AB, and lop two years off the on-site service contract.

So what are the lessons for businesses?

First, if you buy as much as the Air Force, insist on comparable discounts. Also, "Insist on transparent upgrade capabilities in whatever you're buying," suggested Robert B. Costello, a former undersecretary of defense for procurement in the Reagan administration, now a private consultant.

Zenith Data's machines cost more than the 386s proposed by others, but they provide more power, a longer life span, extra software and service and support. The Air Force might have missed out on what was best in the long run by focusing on a narrow range of specifications.

(Peter Lewis works out of the New York Times' Austin, Texas, bureau: [512] 328-8258.)

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