With new IT contract, VA will scrutinize purchases

PCHS-2 RFP

The Department of Veterans Affairs is seeking proposals for a follow-on contract to its popular hardware and software purchasing vehicle in a move designed to tighten the belt on technology spending at the agency. The VA is seeking requests for proposals from at least two vendors for the Procurement of Computer Hardware and Software-2 (PCHS-2) contract, which could be worth up to $1.37 billion. The RFP calls for a one-year base period with four one-year options for hardware and software. Proposals are due Sept. 24. The current PCHS—commonly called "peaches"—expires in January.

With PCHS-2, officials plan to set new rules to help the VA carry out a Bush administration mandate to control costs. Chief among the rules is the elimination of the $250,000 floor for contract purchases. In the past, VA agencies that wanted smaller contracts did not have to use PCHS-1 or get prior approval for any small purchases, but that is about to change. In an Aug. 23 memorandum, John Gauss, the VA chief information officer, said every new information technology program and purchase had to be approved by his office "to ensure how and on what our $1.4 billion information technology budget is being spent."

The decision to centralize approval comes in the wake of VA Secretary Anthony Principi's decision to put the CIO in charge of approving IT expenditures. The move has met with mixed reviews from those in the field. One manager who declined to be identified said the mandate would result in IT managers trying to hide their purchases in other budgets that do not require approval from Washington.

The first PCHS contract was awarded in 1997 to Compaq Computer Corp.'s federal unit and Micron Government Computer Systems LLC, with a potential value of $741 million to each. Neither company responded to questions about whether they would bid for the new contract. Hewlett-Packard Co. announced Sept. 4 that it is buying Compaq for $25 billion, making the company's plans in the federal sector unclear.

Nevertheless, other vendors said that it is impossible to break into the VA market and they would not be submitting proposals.

"It is probably going to be awarded to the incumbent. The partnerships have been established. I don't think we'd have a good shot," said an official for one major vendor, who spoke on condition of anonymity.

However, some small vendors see the new contract as an opportunity.

"I'm trying to figure out how to join their team. The attractiveness of a five-year contract is that it gives you a five-year business base," said Steve Gibson of Advanced Engineering and Research Associates Inc., a small IT company.

Unlike PCHS, the follow-on will not be a governmentwide acquisition contract, Gauss said, but it will include leasing provisions that did not exist in the original.

In addition to desktop and notebook computers, servers and peripherals, PCHS-2 will offer handheld computers, which have become an important tool for health care workers at the VA's 172 hospitals.