Reacting to a perceived growing need for technological services and outsourcing in the federal and commercial marketplace, information technology provider Affiliated Computer Services (ACS) has inaugurated a new division dedicated to business process outsourcing (BPO) and started its program with a $56 million contract with Ginnie Mae.

The five-year deal, wherein the company's subsidiary ACS Government Solutions Group, Inc. will provide technical and professional services to support the GSE's mortgage-backed securities program, is the first of several similar types of contracts coming down the pike in which public sector agencies outsource backend data processing and analysis to IT companies, sources say.

"We have been getting into federal BPO more and more as the government shifts to outsourcing their back-end data collection and analysis processes," said Lee Allen, manager of corporate communications and public relations at ACS. "We have been doing commercial BPO for years, and now we're exploring the federal side. With this type of outsourcing, now government agencies can continue doing their core business, which in Ginnie Mae's case is backing securities and mortgage loans."

Under the new contract, ACS, along with subcontractor Deloitte & Touche, LLP, will provide a variety of services for the GSE, including collecting, analyzing and maintaining data on MBS and loan-level information, conducting risk analysis, monitoring compliance with the Ginnie Mae custodial bank ratings, administering data center operations and improving Ginnie Mae's proprietary systems.

Additionally, Allen says that ACS is in the process of developing new applications software geared toward enhancing the agency's main database, called the Mortgage-Backed Securities Information System.

According to a spokeswoman at Ginnie Mae, these technical services were previously outsourced to PriceWaterhouseCoopers, whose contract ended recently and was "competitively rebid." The new ACS contract has a three-year base period with two one-year options.

"We believe that ACS' proposal provided the best value for the government," said Karen Overmiller, MBS specialist at Ginnie Mae. "With only 60 employees here, we do not have the resources to do this work ourselves, so outsourcing makes sense."

According to Overmiller, many other firms vied for the contract, but ACS provided the most expansive range of services at a reasonable price.

"If some other firms came in with a competitive offer at a better price, I'd take that," Overmiller said. "There is no guarantee - we are looking for a good value. PriceWaterhouse was doing an adequate job, but ACS is not the same kind of company."

Though Overmiller claims that the GSE's choice had nothing to do with the fact that ACS was a well-known IT company - as opposed to PriceWaterhouse, which is in the accounting business - sources at ACS say that it is currently exploring similar deals and bidding contracts with other government agencies.

As government outsourcing to IT companies becomes more common, opportunities for companies like ACS will abound, said ACS's Allen.

"Companies such as ours have the infrastructure in place to do this kind of work, and the government agencies are aware of that," Allen said. "By creating this new BPO division, I think ACS has developed an excellent business strategy." - AT

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