The home stretch is near for five teams of companies aiming to win the largest contract ever awarded by the Orange County government,a five-year pact worth $120 million or more to run the county’s data-processing and telecommunications centers.
If a five-year renewal option is exercised, the deal could top $200 million.
The pending contract award has created a bonanza for lobbyists who have been hired by the competing teams of bidders to help them win the contract. But it is also a process under a cloud, with the 1995 renewal of the data-processing contract still a sore point between the county and at least one of bidders, and the county’s contract-letting process under scrutiny because of a more recent controversy.
The data-processing contract is held now by Lockheed Martin IMS, which is being paid $19.8 million this fiscal year by the county to oversee and maintain the county’s computer system, which has 16,000 users. The telecommunications contract, which includes key communications in the Sheriff’s Department, is held by GTE Customer Networks, which is being paid $4.2 million this year.
Lockheed is leading one team bidding on the combined contract; GTE is a subcontractor on another bidding team.
Each of the lead companies bidding on the proposal is working with a telecommunications subcontractor. Each team has hired a lobbyist to make its pitch. The teams, and their lobbyists, are:
n Acxiom, a Little Rock, Ark.-based IT company with $700 million in sales that specializes in outsourcing and customer relationship management. For this bid, it has assembled as subcontractors the telecommunications giant Lucent Technologies and CAP Gemini, which recently bought Ernst & Young. Its lobbyist is Scott Hart of Ellis Hart Associates.
n Science Applications International Corporation (SAIC), a San Diego-based high-tech research and engineering company with $5.5 billion in revenue last year that provides similar services for San Diego County. Its team includes as subcontractors long-distance telecommunications provider Williams Communications and application service providers SCT and Maximus. Its team of lobbyists includes former supervisor William Steiner and Ruby Wood.
n Dallas-based ACS, an outsourcing firm with $1.6 billion in revenue last year. It doesn’t have a team of subcontractors, but is expected to hire the existing staff. Its lobbyists are Lyle Overby and Brion May.
n Santa Ana-based Software Maintenance Systems (SMS), with subcontractors GTE, which holds the current telecommunications center contract; Santa Ana-based South Tech Systems, a systems application provider; and Orange-based Global Pacific Wireless, which specializes in installation of equipment to provide broadband wireless Internet access utilizing spectrum microwave technology. Its lobbyists are Tom Daly, who is also mayor of Anaheim, and his fianc & #233;, Debbie Trabattoni.
n Lockheed, with subcontractors Pacific Bell, which has a similar telecommunications contract with the San Diego County; and system applications providers GCAP and ARK, both of which now provide services to the county’s centers. Its lobbyist is Randy Smith.
(One firm, Intratek, withdrew its bid, saying in a letter to county officials that it believed it had a conflict of interest because it has another contract with the county.)
Staffing vs. Outsourcing
Each team was asked to submit two proposals, one based on extended staffing and one based on outsourcing. The difference is that under the outsourcing model, the vendor would lease the County Data Center and purchase the county assets. Under the extended staffing model, the county would remain responsible for the operation of the data center and telecommunications assets, with some county employees remaining at the facilities. Under this model, the vendor would be allowed to sublease the county’s excess data-processing capacity, generating revenue for itself and the county.
County officials are interviewing the five teams and their recommendations are expected to be released June 6. Two weeks later, the Board of Supervisors will hold a hearing. The board is expected to decide what type of model it prefers and name the top two or three bidders. The staff will then begin negotiations with those vendors and make its final recommendation in September. The current contract will expire in October.
Lockheed Martin first won the data-processing contract in 1992. But when the contract was renewed in 1995, it wasn’t put out to bid, sparking a controversy. Lockheed was represented by Smith and Lyle Overby, considered two of the premier lobbyists in the county. At that time, Smith said the contract wasn’t put up for bid because it would have cost the county $250,000 to go through the bidding process at a time when the county was still recovering from the bankruptcy.
Lockheed also argued that if it lost the contract, there could be plenty of transition problems. Lockheed also threw in some extra goodies, saying it was cutting off $2 million in costs for the county.
But SMS President Michael Winder at that time said his company could have saved the county $4 million annually compared with Lockheed’s proposal. He said the county’s refusal to put it out to bid signaled an attitude of “business as usual” in county government.
This time around, the project is open to bid and all five companies have lobbyists to pitch for them.
This time around, all the companies have lobbyists.
“This proposal will affect a good number of the county agencies. It will have an impact over a long period of time,” said Winder. “All we’re trying to do is say, ‘Look you have some great companies in Orange County. Keep this contract at home.’ ”
System Under Scrutiny
The bidding also comes at a time when the county contract system is under scrutiny for the way it awarded a taxi-service contract at the John Wayne Airport in March.
“I think (the taxi controversy) might cast a shadow,” said OC Treasurer John Moorlach, who is on a committee overseeing the data-processing contract.
However, Smith, representing Lockheed this time around also, said it’s too late to change the current bidding process.
“Once the RFP issued, it lays out the process for how it’s done. It’s not good to change this in mid-stream,” he said.
Lockheed has continuity in its favor. In 1985 the contract was switched from Electronic Data Systems Corp. to Martin Marietta Technical Services, and in 1992 from Martin to Lockheed. Each time, there were plenty of transition problems. The system being managed by Lockheed now generally is viewed as adequate.
Meanwhile, SAIC has perhaps the most notable lobbyist in Steiner, a former OC supervisor. And Acxion, which is represented by Ellis Hart Associates, includes big hitters Lucent and Cap Gemini on its team.
“Viewed as one entity, this team by far is the largest proposer for this project,” said Scott Hart, one of the principals in Ellis Hart.
