“Making a bid that was much lower than its competitors and ensuring the highest service levels were key to Computer Sciences Corp.’s selection as San Diego County’s information technology provider, said Darrell Issa, chairman of the county’s selection committee.
Issa, president of Vista-based Directed Electronics and a Republican candidate for the U.S. Senate last year, called CSC’s $644 million proposal “significantly lower” than the bids from the two other partnerships, one led by Electronic Data Services and the other by International Business Machines.
The actual bids from the other teams will not be revealed until the county Board of Supervisors votes on the contract Oct. 26. If approved then, CSC would take over as the county’s technology vendor Dec. 13.
Beyond making a lower bid, the CSC team, known as the Pennant Alliance with partners Science Applications International Corp., Pacific Bell and Lucent Technologies, was deemed as the best value to the county.
“Consistently, they were willing to take the burden of the risk for any potential problems for the costs of providing the services,” Issa said.
Low Bid, Solid Service
The 16-member source selection committee, which included county managers, hired consultants, and local industry executives, rated CSC’s proposal both the lowest priced and technically superior to the competition.
The information technology contract covers seven years, averaging about $92 million annually, and has three one-year options.
It entails replacement of practically all the county’s telephones, personal computers, and operation of its computer systems, including user support, security management and other functions.
Also contained in the contract are strict provisions for servicing. PCs designated for “mission critical” functions would have to be repaired within four hours, or trigger monetary penalties.
Consolidation A Plus
County Chief Administrative Officer Walt Ekard said one of the prime reasons for contracting with a single vendor was to consolidate a multiplicity of private technology contracts that now exist.
If something goes wrong, the county will simply call CSC to get the problem fixed, rather than tracking down several vendors, he said.
Last year, the county spent some $98 million on information technology.
The proposed CSC deal doesn’t include the computer systems of the District Attorney’s Office or the Sheriff’s Department. Without those components, the county’s budget for its technology services was about $72 million, and includes “dozens of outside contractors,” said Tom Boardman, the county’s chief technology officer.
The increased annualized cost is worth it since it entails replacing some 18,000 phones and 17,000 PCs over the next three years, and running the county’s computer systems at much higher levels than before, Boardman said.
The county embarked on outsourcing its information technology needs last year in the face of what Ekard called “a broken system, from top to bottom.”
Some of the equipment county employees were using was more than 30 years old, constantly breaking down and was a hindrance to efficient internal communication, he said.
A report from the Warner Group
estimated the cost for hardware and software needed to bring the county up to date was about $250 million.
Issa and the selection committee were also impressed with how CSC would treat those county technology employees who stood to lose their jobs as a result of the contract.
Under the proposal, the 290 affected workers would be guaranteed jobs with either CSC or SAIC for a minimum of two years, get a 7 percent salary increase, and a comparable benefits package.
While the county’s largest labor union leader was happy to see those provisions, she called the massive contract far too risky, and ill-advised.
“The larger concern is the scale of this contract,” said Mary Grillo, executive director for Services Employees International Union, Local 2028, which represents the affected tech workers and some 10,000 other county employees.
“If this goes bad, it will drain the county’s budget and that will have an impact on all county employees’ jobs.”
County officials assert the contract includes specific performance standards, and sets price levels to avoid cost overruns.
Richard Jennings, general manager for CSC’s Western region, said once CSC takes over as the county’s vendor, his company would add some 100 staffers to help in the transition. Within six months, yet another 100 staffers would be added, bringing the total local servicing unit on the county contract to about 500 people.
As part of the contract, CSC said it would create a San Diego Futures Foundation, with a $4 million budget. The idea for the foundation is to provide hardware, software, and computer training to county residents who cannot afford it. The structure and goals of the organization would be determined by a community board, Jennings said.
Issa said the foundation concept wasn’t an item that was scored by the selection committee in determining the best value, but “it made us like them.”
Based in El Segundo, CSC is one of the largest computer servicing companies in the world, with some 52,000 employees and 700 offices worldwide. For the year ended this July, CSC had revenues of $8 billion.
SAIC, based in San Diego, is the nation’s largest employee-owned research and engineering company. It had annual revenues of $4.7 billion and more than 38,000 employees, including 4,200 in the county.
All totaled the four companies making up the Pennant Alliance , CSC, SAIC, Pacific Bell and Lucent , employ about 11,000 locally and had a combined annual payroll of $600 million.
‘Consistently, they were willing to take the burden of the risk for any potential problems for the costs of providing the services.’
Darrell Issa, Chairman
County Contract Selection Committee.”