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OCR for page 93
Regaining Control Through
Centralized Action
Thomas D. Conrad *
The issues involved in managing microcomputers can be
summed up in a few words: to standardize or not, to facilitate or
not, to control or not, to wait or not. We face aspects of these
issues daily in the Air Force.
Standardization presents a special problem to the military be-
cause of rotation policies. As user-operators move from one as-
signment to another, they are exposed to different systems,
equipment, and database management systems (DBMSs). As a
result, we have continual training and logistics problems. How do
we resupply a microcomputer in Egypt, Grenada, Korea, the Phil-
ippines, or Okinawa? How do we handle backward compatibility?
How do we handle the portability of data as we move around the
world? How do we handle the portability of the hard were itself?
Procurement raises another set of issues. Should it be central-
ized or decentralized? Do we purchase computers with capital
funds or with operational funds? This is not an insignificant prob-
lem in the military services. Do we buy or lease? This issue is
being clebated in Congress. Do we use a Towest-cost acquisitions
policy or do we consider technical merit along with cost? For
years the military services have been prowled into awarding con
*Thomas D. Conrad is former deputy assistant secretary, information systems man-
agement, Office of the Assistant Secretary of the Air Force.
93
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AL4NAG1NG MICROCOMPUTERS
tracts to the lowest biclder. Are hardware and software acquisi-
tions single or separate procurements?
How should the whole proposal and contract award process
work? Should a request for a proposal (RFP) be on a requirement
basis, in effect designing the computer, or should specifications
be strictly functional? Should the development of specifications
and the evaluation of proposals be centralized or decentraTizecI?
How shouIc! we hancIle multiple awards? Do we choose in-house or
contract maintenance?
All of these issues grew out of some initial observations I made
when I first came to Washington. I realized there was a prolifera-
tion of all kinds of microcomputers in the Air Force. In fact, many
were not really business computers at all; they were more like
home computers, but they were being used in critical areas of our
national defense. Sometimes they were purchased with capital
funds, sometimes with operational funcis, sometimes with slush
funcis, and sometimes with private funds. Personal computers,
owner! by individuals, were being used operationally. When those
individuals rotated out, they took their computers with them.
Such practices dill not seem very wise from a business viewpoint,
particularly when that business was national defense.
My first step was to place a moratorium on the purchase of mi-
crocomputers. For almost a year no approval was given to pur-
chase any microcomputers. Besides catching everyone's atten-
tion, this step stimulated cooperation in the expeditious
development of specifications and a procurement strategy.
My next action was to convene an advisory council. The group
of about 33 appointees met in November 1982. It was not the
usual committee, because ~ hac3 decision-making power. Thus,
council members who had the most influential or convincing argu-
ments would actually determine the direction we would take.
We began by developing a requirements contract for microcom-
puters. No minimum or maximum quantities were specified. Nor
dic3 the contract require that any money be available for pur-
chases. Instead, it simply said that if any micros at all were pur-
chased over the period of the one-year contract (with two one-year
options for renewal on the part of the Air Forces they wouIcl be
purchaser! under the terms of the contract, from whomever won
the award. (In fact, when we placed the REP on the street and
even when we awarded the contract we had no assurance that we
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REGAINING CONTROL
95
wouic! buy any computers, because we had no money whatsoever
behind the contract.)
Further, the contract set only minimum specifications for ex-
ample, the size of the disk and the size of the screen and there-
fore was not a functional RFP. It was coordinated with and ap-
proved through the General Services Administration (GSA) and
became a joint acquisition of the Air Force, Navy, and Marine
Corps.
We received requests for the RFP from 330 different companies
or organizations. About two weeks after the release of the RFP we
hell! the preproposal vendor conference, which was attended by
155 people. We received 32 proposals, a record for the Air Force
Computer Acquisition Center. Of those 32 proposals, we elimi-
nated 17 that were deemed unsuitable.
I had states! publicly that it was not the Air Force's intent to
award the contract solely on the basis of the lowest bid. Instead,
the aware! was to be based on three integrated considerations:
cost, technical excellence, and postsale contractor support. The
RFP stated that cost would carry a weight of 40 to 60 percent. The
exact weight was not made public and, in fact, was not even cleter-
mine(1 until after we had initially evaluated the proposals. Techni-
cal excellence wouicI have a weight of 30 to 50 percent, and con-
tractor support counted for 10 to 20 percent.
The final award would be determiner! by an objective, cletailed
scoring of points weighted for technical excellence, based on an
established range set up in a scoring moclel. Excellence points
were given for those items offered that were above ant! beyond the
minimum specifications. For example, we specified a 5-megabyte
hard disk as an optional item. Those vendors who offered a larger
capacity hard disk earned excellence points. We also gave excel-
lence points for a separate keyboard, for the capacity of floppy
disks, for different database systems, and for certain spread-
sheets. It was possible for a vendor to get as many as 1,000 extra
points for technical excellence.
To select a tentative winning proposal, we integrated a value of
Tow cost, technical excellence points, and contractor support. The
integration exercise was interesting because we hacI never before
brought together cost and technical excellence points. One pos-
sible way to do this was to take the vendor's bid ant! divide by the
total technical excellence points given. We couIcI then put a value
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MANAGING MICROCOMPUTERS
on these points, and whoever had the lowest cost per point would
receive the work.
The fallacy of this methoc! was that it gave no consideration to
the vendor who had no technical excellence points. What was the
cost of his points if he had none? Such a bidder obviously hac3 an
acceptable system because he had survived the competition, but
with zero points for technical excellence he coup! not win the
award. To solve this problem we established a base value for the
basic offering. Every system that met the minimum requirement
was worth $18 million. We subtracted $18 million from every bid,
divided the remainder by the technical excellence points, arrived
at a value per point, ant! integrated that value with the cost.
Best ant! final offers brought prices clown substantially, ant! a
tentative winner was selected. Following the selection, a live test
demonstration resulted! in a rescoring and reduction of points that
caused us to reevaluate and go to the next apparent winner. That
vendor came out of the live test with more technical excellence
points than he hack originally.
In October 1983 we awarded the contract to Zenith Data Sys-
tems for their Z100 base systems at a cost substantially below
what was available in the market or through GSA (probably close
to a 55 percent discount on the retail pricer. In my estimation this
"exercise" saved the Air Force and therefore taxpayers some $36
million. As its originator, I am quite pleaser} with this centralized
action and its result.
Representative terms from entire chapter:
contractor support
