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tcs: TCS bidding for a slice of $50 billion US NIH contracts


Tata Consultancy Services () is vying to participate in a massive $50 billion information technology procurement contract floated by the US Government’s National Institute of Health (NIH), alongside other global IT majors including Capgemini, official documents reveal.

India’s largest software exporter is bidding for a share in the 75 to 125 contracts–termed as the Chief Information Officer-Solutions and Partners 4 (CIO-SP4)– that will be awarded to entities other than small businesses through its US subsidiary Tata America International Limited, the documents reviewed by ET show.

CIO-SP4 is among the largest technology procurement vehicles to be launched in recent years, and is aimed at meeting the general IT, biomedical and health IT needs of US government agencies across areas such as IT services, outsourcing, cybersecurity, cloud services and software development.

Even a partial win will enable India’s largest software exporter to further compete in the massive market for US federal technology procurements, analysts aware of the development said.

NIH, which called for proposals in May, has stated the goal of CIO-SP4 as “provide government agencies a mechanism for quick ordering of IT solutions and services at fair and reasonable prices…”.

TCS did not reply to queries from ET on the development citing silent period. The company is announcing its second quarter results on Friday, kicking off the earnings season among large Indian IT players.



Competitive Scale

“TCS certainly has the scale and capability to compete and deliver on this and other bids of this magnitude,” said Peter Bendor-Samuel, chief executive officer of Everest Group, a US-based IT advisory and research firm.

“It remains to be seen if they have the political connections to compete. Successful winners of these bids tend to be consortiums which have invested heavily in lobbying and nurturing the contacts necessary to win,” he added.

TCS is among the world’s largest IT services firms with a revenue of $22.17 billion in fiscal 2021, second only to Accenture, which reported a $50.5 billion revenue in the same period.

The Indian firm has said that it had 5,09,058 employees as of June 30 this year, while Accenture has a headcount of around 6,24,000.

TCS has snagged a record $9.2 billion worth of deals in the fourth quarter of the previous fiscal and ended the entire year with an order book of $31.6 billion, growing 17% over the previous year.

In an interview with ET last month, TCS CEO Rajesh Gopinathan said that the company is continuing to win large deals on the back of enterprises stepping up spending on transforming their businesses digitally amid the Covid-19 pandemic.

Last month, the Indian IT giant won a 10-year contract from the UK government’s Transport for London to design, implement and operate a cloud-based smart mobility system for administration of London’s 115,000 taxis and private hire vehicles.

In India, TCS runs the country’s passport issuance process along with India Post’s digital and financial inclusion project, among several other e-governance projects.

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Price War

If TCS does make the cut as a vendor in the American NIH programme, it is expected to compete fiercely on price, according to analysts who estimate this could win it a place in consortiums that could emerge to service massive contracts but could also lower prices for US government procurements.

“The US government can benefit from more competition in driving down prices, improving service delivery, and accelerating innovation,” said Ray Wang, principal analyst and founder at Constellation Research.

“ Several international firms have gone after federal contracts through US subsidiaries, what was interesting was the size of contracts emerging because of CIO-SP4,” he added.

Protest Rejected

The Indian IT giant has, however, faced a hiccup in its participation for CIO-SP4 procurements, with the US Government Accountability Office (GAO) rejecting the company’s protest that the requirements for the contracts were anticompetitive.

Tata in its complaint, which was filed with GAO on July 15, had argued that the request for proposals was unduly restrictive of competition as it required companies to provide commercially sensitive information about its customers, something it was unable to do as it has signed confidentiality agreements with them.

The GAO denied Tata’s protest earlier this month, stating that “the requirement is reasonably related to the agency’s (NIH) need to validate the claimed experience.”

Both Samuel and Wang said that this was only a modest setback for TCS.

Samuel of Everest Group said that the rejection of TCS’ protest was “indicative of the learning curve TCS must go through if it is going to learn to successfully compete. It is my belief that given the relentless nature of TCS and its commitment to play the long game, it is only a matter of time before TCS cracks this market.”

Wang also pointed out that all of TCS’ competitors would also need to comply with the same requirements.

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Since the NIH issued its request for proposals in May this year, over 21 protests have been filed by several firms including Tata and its rival Capgemini. While Tata’s protest has been denied, documents from GAO reveal that Capgemini’s protest was withdrawn, without providing any further explanation as to why this was done.

Capgemini did not respond to ET’s queries until press time on Thursday.

According to FedScoop, a digital media brand covering the federal government market, three of the protests against requirements of CIO-SP4 have been withdrawn, while a further 11 have been dismissed by GAO.



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