How Not To Buy 300,000 Personal Computers

Computer makers were ecstatic in May, 1991, when the U. S. Air Force announced plans to buy 300,000 personal computers. Not only was Desktop IV worth up to $1 billion, but the Pentagon hoped that the deal's streamlined procurement process could serve as a model for the future.

Nearly two years and no--as in zero--computers later, PC makers and the Pentagon alike are wondering if the government can ever rationalize the Byzantine way it buys high-tech gear. The latest evidence says it will take much more than good intentions to cut through the costly, many-layered wasteland of purchasing red tape.

Consider this: On Feb. 16, the Air Force put on hold its award of Desktop IV to Zenith Data Systems Corp. and reseller Government Technology Services Inc. It was the third time in a year that sore bid-losers had successfully thrown sand in the gears. Now, the Pentagon may have to start the process over once more. "It looks like sheer idiocy," says Robert A. Dornan, senior vice-president of Federal Sources Inc., a contract consultant in McLean, Va.

ONE CHANCE. Could the debacle have been avoided? Air Force Major Charles H. Mather once had high hopes. "The way we were doing it in the past was absurd," he says. His plan for Desktop IV mandated simpler, less cluttered guidelines to produce simpler, easily evaluated bids. A shorter request for proposals would deter losers from tying up the contract with appeals pinned to obscure details. And in a break from past protocol, bidders would submit only a single, final offer--no negotiation, no revisions.

When issued, the Desktop IV proposal filled 10 pages instead of the usual 150. It specified only that PCs be able to run Microsoft Corp.'s Windows and other standard software. To make life even easier for bidders, the Air Force distributed its specs through electronic bulletin boards and gave on-line answers to computer makers' questions. In November, 1991, from a slate of 22 bidders, the Air Force awarded the deal to CompuAdd Corp. in Austin, Tex., and Sysorex Information Systems Inc. in Falls Church, Va.The new buying system worked just fine, it turned out, but the elaborate processes surrounding it remained seriously flawed. When the government purchases anything, it is bound by thousands of rules designed to prevent corruption and favoritism. As soon as the Air Force picked the winners, losing bidders complained that procurement officers had erred by rejecting proposals on minor technical grounds. Indeed, one bid was disqualified because it failed to include the price of a single spare part, another when a section was left blank rather than marked "not applicable." The protests had the desired effect: In January, 1992, the GSA's Board of Contract Appeals canceled the award.

That April, the Air Force tried again, requesting new bids by summer. And in September, it gave the job to Zenith Data Systems, a division of France's Groupe Bull. Again, losers screamed, this time raising the politically sensitive issue of foreign ownership, among other objections. Inevitably, politicians got into the act. Representative J. J. Pickle (D-Tex.) wrote Defense Secretary Dick Cheney on behalf of his constituent, CompuAdd. Because Zenith was French-owned, he said, "we have grave concerns about the security of data stored on these computers." The GSA appeals panel held 10 days of hearings, waded through 4,000 pages of documents and, in late December, told the Air Force to give it one more shot.

BACK IN LIMBO. Still hoping to salvage a contract from the fiasco, the Air Force reviewed the bids and split the order between Zenith Data and GTSI. But Electronic Data Systems Corp. and CompuAdd objected that Zenith Data was selling foreign-made monitors and the Air Force should have considered awarding the contract to more than two companies. Now, the contract is in limbo once more. The GSA has until April to decide whether to approve the award, kill it, or get the military to pick another bidder.

Until a resolution is reached, the military is stuck buying most computers under its 1989 Desktop III specification--a disaster in its own right. The winner then, Unisys Corp., which hoped to gain a foothold in the government PC market. It bid so low that it was losing money on each unit. But now, PC prices have plunged so steeply that every time it purchases a Unisys machine, the government pays a premium--for outdated computers based on Intel 80386 processors.

Can the ordeal get much worse? Sure, if everyone keeps bickering. "The fault is with industry for spending more time and energy in trying to prevent this award than in preparing the best possible proposal in the first place," says Thomas Buchsbaum, vice-president for federal systems at Zenith Data. Unless vendors support true reform--which must include limits on endless appeals--Desktop IV will, alas, stand as a monument to everything that can go wrong.

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