Unisys Awarded $232M USDA Cloud, App Modernization Contract

The U.S. Department of Agriculture's Rural Development agency awarded Unisys a $232 million contract to modernize its applications and provide cloud services.

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Unisys today announced it has been awarded a lucrative government cloud computing deal worth $232 million by the U.S. Department of Agriculture (USDA).

The USDA's Rural Development agency selected Unisys to provide secure application modernization services for the department and to support the agency's Rural Development Comprehensive Loan Program (CLP) and other initiatives.

Unisys officials said the company will employ an Amazon Web Services (AWS)-based DevOps environment to build new projects and integrate them into the agency's cloud-based infrastructure.

The contract was awarded under the National Institutes of Health's Chief Information Officer – Solutions and Partners 3 (CIO-SP3) umbrella contract. The deal has a ceiling value of approximately $232 million over the base period and seven option years. The contract is a 10-year Indefinite Delivery/Indefinite Quantity (IDIQ) contract.

This new contract extends an existing relationship between Unisys and the USDA Rural Development. In 2010, the agency tapped Unisys for applications modernization and user support services. That contract had one base year and four one-year options—all exercisable at the sole discretion of the government. The estimated value of the base year of that initial contract was $29.5 million, and the contract had a ceiling value of $150 million over five years. "Unisys welcomes the opportunity to continue to provide these innovative solutions leveraging our experience implementing secure cloud services across government," said Greg Gordon, Unisys client executive for natural resources agencies, in a statement. "Our record of success in delivering secure business-to-government services offerings can help USDA Rural Development achieve its objectives safely and securely."

Under the new contract, Unisys will provide services for the CLP and secure web services to protect the personal information of citizens, Gordon said. For this fiscal year, USDA Rural Development has a portfolio of $212 billion in loans to manage and it will administer $38 billion in loans, loan guarantees and grants, he noted.

"This program will help the agency develop and maintain software systems needed for the essential loans and grants to help improve the economy and quality of life in rural America," said Casey Coleman, group vice president for civilian agencies at Unisys Federal, in a statement.

Unisys has committed to apply Agile development methodologies to facilitate the delivery of software for its application modernization and maintenance efforts under the contract, Gordon said.

This government contract is significant for Unisys, as the company is in the midst of a turnaround and the government market is strategic to the company. Peter Altabef, president and CEO of Unisys, told eWEEK organizationally, the first thing he did when he took over as CEO last year was consolidate and streamline to two go-to-market organizations: one for the U.S. federal government, which makes up about 20 percent of the company's revenues, and another for the rest of its clients, which is about 80 percent.

In addition, to deliver highly differentiated, solutions to clients' most-pressing and complex problems, Unisys moved to realign and invest in vertical industries, initially focusing on three verticals: Government, which includes both the U.S. Federal group and the Public group in Enterprise Solutions, representing 44 percent of Unisys revenue; Commercial, which represents 35 percent of Unisys revenue; and Financial Services, with 21 percent of revenue.

For its second quarter of 2016, the company's net income grew to $21.6 million, versus a loss of $58.2 million in the second quarter of 2015. Altabef said the increase in profitability came primarily from decreased operating expenses resulting from the company's ongoing cost-cutting efforts. But it also was helped by an increase in revenues from higher-margin technology products, he noted.

Altabef said Unisys ended 2015 with $100 million in cost savings and, to date, the company has cut $155 million in costs. It is on target to achieve its goal of $200 million in cost savings by the end of this year.

"We are continuing to execute against the strategy we commenced in 2015, which focuses on providing security in everything we do, growing demand for both cyber- and physical-security offerings, while investing to improve our go-to-market effectiveness by aligning vertically," Altabef said in a statement.