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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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94 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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96 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.