By Ann Roosevelt
Raytheon [RTN] sees major growth in a relatively new business area for them–the world of Indefinite Delivery/Indefinite Quantity (IDIQ) acquisition, according to a company executive.
Since starting the business effort, growth has been stunning, Susan Haeseler, director of the Raytheon IDIQ Office, told Defense Daily in an interview yesterday.
“The volume has increased in two years by 319 percent,” she said. “My goal this year is a billion dollars. That’s how big this marketplace is.”
As an example, in late July, Raytheon was one of 29 companies selected to provide improved information technology solutions and services through the General Services Administration’s Alliant IDIQ contract, which has a potential value of $50 billion over 10 years. Raytheon will provide infrastructure, application services and IT management services to support federal agencies. Raytheon can bid on task orders under the Alliant contract.
Raytheon is now pursuing large IDIQs specifically with the Army and the Air Force.
While the IDIQ acquisition contract vehicle has been around more than a decade, the company focus began just a couple of years ago with Raytheon Chairman and CEO William Swanson giving the green light to the project.
At the time, project advocates told Swanson, that “30 percent of the time they [Defense Department] procures, they’re using an IDIQ, and that number is now 42 percent,” Haeseler said.
The marketplace using IDIQs is growing 17 percent annually, she said.
It all started in the mid 1990s in the government information technology (IT) services arena, Haeseler said. Then, when a government employee went to buy a computer, it took them 18 to 24 months to buy it. It made sense to figure out a faster way to buy technologies.
Since then, IDIQ has expanded to include multiple award IDIQs, so there is a pool of qualified vendors. Then, the government can issue task orders to them in a much more rapid environment.
“Anything Raytheon does, anything anybody does, the government can buy via these IDIQs,” she said.
Before the project got under way, “Raytheon was woefully behind our competitors in this,” she said.If the company didn’t move into this area, it would be cut out of the marketplace.
“Because if you’re not on one of these big key IDIQs–and that’s the way your customer buys–you’re out because you’re not the prime,” Haeseler said. “You have to be the prime on these big ones. One top of which if you’re not a prime, you’re a sub [contractor], your customer is paying more money to get to you because they’ve got to pay the guy who owns the vehicle to get to you.”
Without actually saying so, the work is performance based. Task orders are usually only a year long, so if the company is doing a good job, they’ll get extended task orders and more money. Similarly, if a company is not doing well, it’s easier for the government to move to another contractor.
Under contracts with a base year and options, the government often stayed with a company because it was hard to change, recompete or drop the contract.
“When you win one of these huge IDIQs, you have to educate your people how to use them. Raytheon already has now the training system in place to go around and educate people,” Haeseler said.
That meant a transformation effort at Raytheon to move in this new IDIQ direction.
“It’s not rocket science; it was cultural change,” she said.
The company set up a “huge” outreach campaign that continues, with about 50 trainers. There are also large road shows that move to all the company sites and teach about IDIQs.
One of the teaching tools is a soft toy car with the logo, ” Raytheon Contract Vehicles” that looks like a Formula 1 racer to make the point.
“We’re teaching people this is fast, this is rapid, you’ve got to move like this,” she said.
There’s also a handbook, showing every single IDIQ the company has. When a business unit talks to a customer about a solution, “we have to recognize we have to help our customers with the acquisition solution,” she said.
“In today’s environment, you also have to help the customer with the acquisition solution,” Haeseler said.
Additionally, Raytheon formed an IDIQ Council. The council is unique to Raytheon and is comprised of two members from every business unit. When there are opportunities, either IDIQs or task orders, e-mail notifications go out to council members. “And, within three hours, over a 73,000-person company, we immediately know if any business is interested in these task orders,” she said.
In the past, these large IDIQs fit in a business, and the rest of the company didn’t always see the task orders. By pulling IDIQs into the IDIQ Service Center, they are now managed and serviced at the corporate level.
It’s really connecting the dots between the business units and helps Raytheon provide a solution in a very competitive environment, she said.
Corporate policy also changed in the ‘who gets the credit’ area, she said. “Any work that a business wants to do using an IDIQ they will get direct sales, earnings and profit. We’re one of the only companies that have done that. It completely changes the model.”