Blanket Savings

year ago, Michael Arbatte, a civilian manager who oversees training programs at Kessler Air Force Base, Miss., wanted to buy new personal computers to use in teaching Air Force officers about the latest developments in information technology. But as Arbatte surveyed various computer vendors, he found most offered the same prices and he was left wondering how he could get more bang for his buck. "I wanted to make my money bigger," says Arbatte, who had $86,000 to spend for about 100 personal computers. Arbatte decided to try the Air Force's new online information technology superstore, the Commercial Information Technology Product Area Directorate (CIT-PAD), which offers big price breaks by consolidating numerous small IT orders into larger buys to win discounts from vendors. Additionally, the online store simplifies and shortens the procurement process by using vendors already approved to sell IT products to federal agencies at set prices under the General Services Administration's Federal Supply Schedule. Within days, Arbatte had the deal he was seeking. The IT superstore would allow him to purchase 116 computers for $86,000. "I was able to get 16 more computers than I originally budgeted for by getting CIT-PAD involved," he says. Increasingly, Air Force IT buyers like Arbatte are turning to CIT-PAD (www. itsuperstore.af.mil) for their commercial IT products and services. In fiscal 2000, the superstore sold more than 111,000 desktops, laptops and servers valued at $529 million. Rising sales are forecast this year as more IT buyers, inside and outside the Air Force, use the system and as new products and services become available. The engine driving the online store's growth is the Air Force's use of blanket purchase agreements (BPAs) signed with IT vendors on GSA schedules. The agreements are like charge accounts that allow the Air Force to buy multiple IT products and recurring services any time at set prices. The BPAs obviate the need for new contracts and costly full-scale competitions every time IT dollars are spent. "Instead of every office buying one, two or three computers at a time, the Air Force generates volume that we can place against [the BPA] each year," says Frank Anderson, a retired Air Force brigadier general who oversaw Air Force acquisition and now heads the Defense Acquisition University. Air Force Col. Neal Fox, who oversees CIT-PAD operations and development at Maxwell Air Force Base, Ala., says the superstore was created in the late 1990s when the Air Force realized it no longer could drive the commercial IT market. "We transitioned from driving the market to buying commercial off-the-shelf technology that was developed using commercial standards," says Fox. In making the transition, Fox says, the Air Force quickly became one of the largest consumers of commercial IT products in the world and realized that vendors were eager to win the service's business. By creating CIT-PAD, the Air Force was able to offer IT buyers a common contracting vehicle for consolidating orders and then push vendors for volume discounts through blanket purchase agreements. "We offer volume in exchange for better pricing. IT companies will lower prices to get our orders," Fox says. CIT-PAD has saved the Air Force hundreds of millions of dollars since it was launched in 1997, according to Air Force data. The annual savings achieved by making volume buys are enough to purchase three additional F-22 fighter planes or pay for more than 35,000 flight hours. Anderson says the site saves the service as much as $70 million annually. The Air Force does not have a separate annual budget for CIT-PAD. Instead, the site covers its costs with a small surcharge built into the prices for its IT goods and services, Fox says. The online system also makes it easier for users to choose IT products and services. "No longer do we spend hours on market research each time we make an IT purchase," says Arbatte. "I can go to the IT superstore and find the products instantly. The IT superstore allows me to do multiple, side-by-side configuration and price comparisons." All the products offered at the online store are certified for the Joint Technical Architecture, the Defense Department's common computer framework, and are compliant with Defense's common computer operating environment. Those certifications allow buyers to "plug and play" IT hardware and software when they purchase online rather than having to first adapt it to the Defense systems, Air Force officials say. Critics of blanket purchase agreements contend that they stifle competition because buyers simply order products from the same vendor again and again. Anderson says the Air Force has maintained competition by awarding BPAs to different vendors for the same products so they always have an incentive to offer the best pricing. Fox says that has created more competition. In the past, a single company may have had a contract to supply IT goods and services to an Air Force organization, leaving the service no room to negotiate for better pricing. Vendors prefer BPAs to winner-take-all competitions. "Previously, contract protests were a standard part of our competition because there were very few winners and all those who didn't win were locked out for a long time. CIT-PAD has not had a contract protest in three years," Fox says. Online buying also radically reduces order time for IT equipment by streamlining the contracting process. Traditional IT contracts, which often run 50 pages, are filled with detailed requirements and locked-in pricing, terms and conditions. BPA contracts are only about two pages long, allow for daily price changes (as the IT market changes) and have few government-specific requirements. The contrast is best illustrated by the Air Force's recent purchase of desktop computers. When the Air Force first began the procurement, it used traditional contracting methods that cost about $18 million to draft and oversee the deal and led to 18 months of negotiations. Later, the service switched to online BPAs, striking a deal in 26 days at a cost of $60,000. Additionally, online ordering cut delivery time from as long as three months to less than two weeks. By using BPAs, the Air Force has been able to cut deals for IT goods and services valued at about $600 million in 80 days as opposed to nine months using traditional contracting methods. "We have driven the contracting time down from months to weeks," says Fox, noting that time is critical when buying technology. The IT superstore won't rest on its laurels and is seeking ways to further cut procurement times, he adds. The Air Force is developing a new online service, known as AFWAY (the "Air Force way") that not only will allow for online ordering, but also will permit online filing and approval of purchasing and funding requests. "We are combining our electronic commerce and electronic business operations," Fox says. The variety of products and services online also will grow. In the past year, the IT superstore's inventory has grown from 10,000 to more than 100,000 items ranging from standard desktop computers to digital cameras. "We don't just sell traditional IT, but virtually anything that is IT-related," says Fox. Like any new IT system, CIT-PAD has faced skepticism from buyers used to filling out stacks of paper forms. Fox says the Air Force wants to educate internal buyers in order to drive as much of the service's IT business online as possible. He's already getting some help from one satisfied customer. "We have been so pleased with CIT-PAD that they now have become a regular part of the curriculum for Basic and Advanced Communications Officer Training schools," says Arbatte.