AF won't extend Zenith Computer pact

Electronic News, June 16, 1997 by Chad Fasca

The first suspension occurred Sept. 9, 1996, and was lifted Sept. 14, 1996, after SSG officials flew to Sacramento, Calif., to assist ZDS senior managers at Packard Bell NEC's headquarters in identifying and correcting problems, according to ESC. The latest suspension addressed ZDS's failure to sustain an acceptable level of performance on delivery and warranty.

A ZDS spokesperson responded that a key to the decision was ZDS's attempt to modify the contract, making the deal closer to commercial best practices and extending delivery time as well as a couple of modifications on which the spokesperson declined comment. One factor in delivery problems, according to the spokesperson, was a prohibitive number of configurations requested by the government.

Responding to questions on whether Hughes had simply been more successful in wooing Desktop V government sales, the ZDS spokesperson responded that, if anything, ZDS received more orders, but ultimately sought a commercially-oriented relationship based on leveraging manufacturer's economies of scale against the higher price of cutting edge technology.

According to SSG executive director Robert A. Frye, ZDS remains under contractual obligation to complete delivery on existing orders, provide warranty service for five years and upgrade software for three years. But orders in the Air Force pipeline will be returned to their issuing contract offices.

The ZDS Desktop V contract was valued at up to $1.05 billion and was intended to provide the Air Force and other government offices with computer systems, such as portables, desktops and servers as well as services (EN, May 13, 1996). When bidding began (EN, Aug. 14, 1995), the Air Force received 14 different proposals, reportedly including offers from Electronic Data Systems, NCR, Government Technology Services, Inc. (GTSI) and Hughes Data Systems. ZDS and Hughes Data Systems won the Desktop V contract. It was not the first Air Force contract for ZDS. The company had won previous Air Force contracts, including the much-disputed Desktop IV, which it shared with GTSI. The Desktop IV contract took almost two years to award, following two successful rounds of protests, causing the Air Force to entirely miss the 386-class of computers.

The Desktop V contract was challenged by Sysorex Information Systems (EN, May 20, 1996) which protested on grounds that items under both of the winning bids included items which were no longer in production or did not meet mandatory minimum technical requirements. The General Services Administration's board of appeals cleared all hurdles to the contract by dismissing all protests (EN, June 24, 1996). But soon after, ZDS' problems began to surface, leading to the first suspension in September 1996 and subsequent suspension this April.

According to SSG, Air Force customers may still satisfy their computer needs through the Hughes Data Systems Desktop V contract. A Hughes spokesperson declined to comment on the Air Force's decision, its impact on ZDS, or any change in Hughes' role generated by ZDS' fallout. The spokesperson cited company policy.