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In round figures, the outsourcing contract between the U.S. Treasury and its supplier, Wang Government Services (a Getronics company) will be over $100 million over the life of the ten-year contract. Like the old kit and caboodle American saying, Treasury omitted nothing – it has outsourced the management of its entire infrastructure.
Getronics’ services include customer support, help desk, asset management, IT training, network design, off-the-shelf software support, workstation moves/adds/changes, Nexus and Westlaw administration and management, Web services including Web development, email system, and voice management and administration (telephones, cell phones and voice mail). The contract scope is extremely large, but the true significance of this agreement is that Treasury is the first civilian agency to go completely to the concept of Seat Management.
Treasury and Getronics have been the pioneers in this new type of contract and, as such, they have waded through uncharted waters without the benefit of others’ “lessons learned.” Combine that handicap with a goal of satisfaction of customers (who, for Treasury, are the IRS, U.S. Mint, U.S. Secret Service, U.S. Customs Service, Bureau of Alcohol Tobacco and Firearms and other demanding agencies), and you have the makings of a herculean undertaking!
The contract was awarded in June 1999, and Judith Gerber, Program Manager for Seat Management for the U.S. Treasury, says that it was “very hard to get where we are today. It was a very bumpy road.” Where are they today? They are partners. “We overcame challenges because, from day one, it was never an ‘us and them’ relationship,” says Gerber. “The key is, we are in this together. And our goals are the same – we both aim for superior customer satisfaction.”
Their Seat Management contract has three primary components. It is fixed-cost, based on the price per “seat” (desktop or workstation), which includes the LAN, network, help desk, training and other services all factored in. It’s also a performance-based contract with incentives and penalties, which has enhanced the Department’s opportunity for concrete ways to improve its services and increase customer satisfaction.
The third component is that the government leases the assets. In the past, government has owned its equipment and contracted with suppliers to install, upgrade and support it. “But one of our goals was to be able to upgrade or refresh all of our products more quickly and in a manner more responsive to our customers,” says Gerber. The contract specifies that everything will be refreshed every three years. This has also helped Treasury’s objective of establishing asset management. Another goal was to be able to forecast its budget. Because of the negotiated price based on the number of seats per year, the Department is now able to accurately forecast its budget for baseline services for the next ten years.
Treasure Trove of Best Practices
Besides its broad range of resources, Gerber says Getronics was selected because they felt that government services was its core competency and not a sideline business. “Administrations come and go, and our requirements change so quickly,” she says. The Wang Government Services division of Getronics demonstrated through its written proposal and oral presentations that it understood Treasury’s unique requirements. “Nobody does what Treasury does,” Gerber says, “and they did a wonderful job in coming up with a top-drawer approach that would work well for us. It was also very obvious that their top management, from the president down, was very committed to this and that the support would be there when we need it.”
She adds that the supplier has been “tremendously flexible” and that it pulls out all the stops to make necessary changes when there are problems. Getronics partnered with PricewaterhouseCoopers to do change management and an elaborate customer outreach program to explain what would change and how to get the best service. She says it was a success, and soon regretted that they did not extend that same effort to the Treasury employees whose jobs were affected by the change. As a result, they “suffered with a little pushback from employees.” The operational level is working now, but that aspect of the transition was difficult. She advises other outsourcing buyers not to “gloss over” the transition phase.
There were other challenges, such as an attempted move to NT on the desktops; but the configuration did not work well. Back to the drawing board and a significant change to move to Windows 2000. “We have people who do econometric modeling on these workstations, people who do tax models, lawyers with huge documents, economists, mathematicians – and they all do tremendous multi-tasking,” she says. “Getronics hired a person who wrote the book on Windows 2000. That person is here, and we are not paying extra for it.”
Their contract also is structured to protect the baseline services. She says that when you ask a provider to do “Project B” even though it’s supposed to be doing “A,” they often do it. “But, in reality, you just took a resource off their base service, and that will suffer.” Their agreement provides that all special projects require bringing in additional resources and negotiating a separate cost.
Although it’s an outstanding success, the Seat Management contract is not what has made this relationship succeed. Gerber says it works because they are in it together, trust each other’s opinions and encourage outside-the-box thinking. “Those are the elements you need. We also both bring best practices and, no matter what the technology is, we have found that best practices will always be best practices and will always serve us well.” She adds, “We awarded this contract on best value, not lowest price.”
Lessons from the Outsourcing Primer:
- In a successful relationship, where both parties are in it together, the supplier will be flexible and pull out all stops to bring solutions to problems.
- The transition phase should not be overlooked, and there must be a change management program in place to reach out to employees whose jobs will be affected.
- A best practice is to protect baseline services and make separate contracts with separate resources and costs when there is a need for a special project.