DOD swaps shopping advice

The Defense Department measures the success of its Standard Procurement System program
in increments.

DOD's Major Automated Information Systems Review Committee has approved the first of
three incremental SPS software enhancements for use at 137 contracting sites throughout
the department.

The software from American Management Systems Inc. of Fairfax, Va., will let DOD
contracting offices within the Army, Navy, Air Force and Defense agencies swap data with
other organizations in the department.

Although the initial software release will support only about 45 percent of DOD's basic
procurement functions, the releases planned for next year and 1999 will satisfy the
remaining requirements, said DOD procurement director Eleanor Spector.

"AMS is ready to go with the next increment of 79 percent functionality. However,
it hasn't gone through operational evaluation," Spector said. "We are expecting
100 percent functionality by 2000."

In April the Naval Information Systems Management Center chose AMS' Procurement
Desktop-Defense (PD2) software as the baseline for SPS after a seven-month evaluation and
demonstration process. AMS beat DynCorp of Reston, Va., for the $241 million, 10-year,
indefinite-delivery, indefinite-quantity contract to provide DOD with a single, automated
procurement system.

The SPS request for proposals required that the program software be based on an
existing commercial package, compatible with Microsoft Windows and able to handle nearly
300 procurement functions. PD2 supports Windows 3.1 and Windows 95 and is in use at two
Navy sites, but AMS officials told DOD that to meet all the SPS requirements the company
would have to add enhancements to PD2.

The requirements, in descending order of importance, are: user performance at 16 DOD
procurement sites, commercial upgrades, management approach and price. According to
Spector, AMS' proposed price for software licenses was higher than DynCorp's but its
technical score was better.

PD2 prices for DOD users vary according to site size and configuration. The current
license cost for one DOD site of 100 users using a Microsoft configuration is $23,351. AMS
expects to release an upgraded version next February at a price of $20,881 per 100-user
site. The final software release is scheduled for February 1999 and will sell for $22,551
per 100-user site.

The SPS contract includes standard commercial warranty and software rights. AMS will
retain the PD2 source code so DOD will have to negotiate any additional modifications.

DOD hopes to avoid the high software maintenance costs associated with the myriad
legacy procurement systems. Over its 10-year lifecycle SPS is expected to save nearly $2
billion, or give a return on investment of 6-to-1.

SPS merges DOD's two basic procurement functions: contract award and administration.
The system is designed to provide more timely responses to customer requests, permit more
cost-effective procurements, improve visibility of contract deliverables, reduce
procurement lead times and provide more accurate information.

DOD also plans to create a central data warehouse of contracting data using SPS. The
Defense Logistics Agency is developing the shared data warehouse that will eliminate
manual data entry, ease information exchange in the acquisition process and help eliminate
DOD's problem of unmatched disbursements.

DLA established a prototype last month with initial capability based on electronic data
interchange standards. Initially, the data warehouse must be able to store and extract
data based on the EDI 850 standard for purchase orders and the EDI 860 standard for
changing or canceling orders.

A functional shared data warehouse will be fully integrated with SPS by next June,
Spector said.

DOD has scaled back its original plans to deploy SPS at 1,200 procurement sites because
of the department's ongoing consolidation.

"We're looking now at about 900 contracting sites around the world up until
2000," Spector said. "My suspicion is by the time we go to install this at all
of those sites, there will be fewer of them around."

DOD plans to first deploy SPS to locations with little or no automation. Among the 137
sites that have been approved by the MAISRC for deployment are the Naval Air Warfare
Center and the Naval Sea Systems Command.

DOD will buy the PD2 software for the services but the users will pay for installation.

"We will budget for all of the central activity on the software and the upgrades,
and they will budget for installation of SPS because there are too many unknowns, such as
what hardware, software and people are at each site," Spector said.

"It would have delayed SPS too much for us to try and piece that kind of
information together for 900 sites."

The SPS contract has one base year and nine one-year options for procurement of
software, software support, and related products and services necessary to deploy and
maintain the system.

AMS subcontractors include Digital Systems Research Inc. of Arlington, Va., Sybase Inc.
of Emeryville, Calif., and Electronic Data Systems Corp.