Defense Department Picks ERP Implementation VendorsDefense Department Picks ERP Implementation Vendors

The Department of Defense said Tuesday it has awarded a group of major IT services vendors the right to compete for what could be up to $5 billion in software-implementation contracts over the next five years.

The department announced the so-called blanket purchase agreements with Accenture, BearingPoint, Computer Sciences Corp., Deloitte Consulting, and IBM. Under the agreement, the vendors will compete for individual contracts to implement business software from Oracle, PeopleSoft, and SAP that will be used as part of an enterprise-resource-planning system that the Defense Department is building. The contracts will run through 2009.

Last month, the General Accounting Office, the investigative arm of Congress, blasted the department for not moving fast enough to build an enterprise architecture. "After three years of effort and over $203 million in obligations, we haven't seen any significant change in the content of DoD's architecture or in DoD's approach to investing billions of dollars annually in existing and new systems," the GAO said in a May 17 letter.

Howard Ady, BearingPoint's program manager for the effort, says the financial risks associated with the implementation projects will be shared by the government and the vendors. "There's risk on both sides," says Ady, noting that the Defense Department will pay a fixed fee for the implementations regardless of actual costs incurred by the vendors. Ady says BearingPoint has worked with the relevant software makers to develop methods that will help his firm accurately predict project costs.