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Forward Thinking and Cost Controls: The United States Postal Service

John Edgar, Manager of the Corporate IT Portfolios for the United States Postal Service (USPS) spoke at an GovWin Federal Breakfast earlier this month and discussed some key challenges and objectives that the USPS is currently facing. He began his presentation by announcing that the Postal Service has been voted the most trusted Government agency for the last five years. Mr. Edgar then outlined the agency's plan to generate more revenue and increase efficiency.

According to Edgar, the financial condition of the USPS has been deteriorating over the last several months. Mail volume has been decreasing, and it's estimated that $2 billion dollars has been lost after the First Quarter of Fiscal Year 2009. This assessment was also echoed in an audit report released by the GAO on March 25, 2009.

Currently the USPS needs to concentrate on:

  • Reducing costs and increasing revenue to offset volume declines
  • Maintaining legal requirements, which include Sarbanes-Oxley
  • Providing technology and enhanced information to managers in order to help them make better decisions
  • Automate and streamline processes to eliminate manual operations
  • Modernize technology (Intelligent Mail Barcode System)

Edgar then stated the USPS's major current objectives:

  • Providing consistent data for corporate reporting and analysis
  • Integrating data across functional organizations
  • Driving business based analytics
  • Implementing a self service reporting model
  • Providing a historical repository of key corporate data
  • Sorting mail at minimal costs

GovWin is tracking the development of the USPS' major initiatives and cost control measures through the following opportunities:

  • Enterprise Technology Services: GovWin Opportunity 54372
  • Telecommunications WAN Services: GovWin Opportunity 54324
  • USPS.com Modernization Software: GovWin Opportunity 54373
  • Next Generation Mail Processing Technologies: GovWin Opportunity 52170
  • Automate Road Test: GovWin Opportunity 45283

GovWin's Take:

The USPS needs to consolidate efforts and create more efficiency within the agency in order to avoid potential layoffs, the closing of various postal facilities, and even the rumored elimination of mail delivery one day a week in order to reduce costs. Over the next few years the primary focus for the USPS will be on their current business situation to meet the need for optimal organizational structure and the right technical capabilities. This situation provides an opportunity for vendors with expertise in business process engineering, IT infrastructure consolidation, and other cost management processes, to work with the Postal Service to modernize their systems and processes. The USPS wants to provide user friendly technology to their end user, while taking costs and efficiency into consideration.

Employment & Training Administration Distributes $3.9 Billion in Economic Stimulus Funds

The Department of Labor's Employment & Training Administration (ETA) recently distributed $3.9 billion in economic stimulus funds to 484 non-profit organizations and state and tribal governments through seven formula grant programs. States will be passing funds from some of these grants to local governments.

Assistance Program No. of Awards Stimulus Amount Distributed
Wagner-Peyser Funded Employment Services Activities (CFDA 17.207) 108 $396,000,000
Unemployment Insurance (17.225) 53 500,000,000
Senior Community Service Employment Program (17.235) 74 118,800,000
Workforce Investment Act (WIA) Adult Programs (17.258) 57 495,000,000
Workforce Investment Act (WIA) Youth Activities (17.259) 57 1,170,180,000
Workforce Investment Act (WIA) Dislocated Workers (17.260) 57 1,241,088,750
Native American Employment and Training (17.265) 78 11,872,298

Source: Employment and Training Administration (ETA) and GovWin

Additional information about grant awardees is available to certain GovWin members (member log in required).

GovWin's Take

  • Up to $250 million of the stimulus funding for the Wagner-Peyser funded employment services formula grant may be used for information technology solutions that support identifying and serving the employment needs of unemployment insurance (UI) claimants.
  • These are existing grant programs so, basically, it's business as usual. Vendors should consider teaming with existing contractors to get a share of these stimulus dollars.
  • Even though these are existing grant programs, the reporting and transparency provisions are new. Many states and local governments do not have the systems in place to meet those provisions. Contractors should be prepared to be part of the reporting solution.
  • Be an educated business development professional; state government program managers expect it. State WIA annual plans are available on the ETA web site.
  • Use state professional associations' events and conferences to meet the state government program managers.

For more information on these programs, as well as all of the other social services programs funded by the American Recovery and Reinvestment Act (ARRA), read GovWin's recently released Economic Stimulus State & Local Vertical Report: Social Services.

Information Sharing: The Challenge for DoD

At a recent ACT/IAC event, the Department of Defense Deputy CIO, Dave Wennergren, covered various DoD-wide challenges involving information security: 1) Interagency Collaboration, 2) Cloud Computing, and 3) Information Sharing.

DoD previously sought to create larger and fewer IT systems to integrate and align information across agencies, yet such systems have proven slow to develop with high failure rates. Consequently, we've seen the rise of smaller, more localized/regionalized systems across the Department to address needs within individual agencies. While this move allows for faster transfer of information and greater efficiency, a new problem has arisen: how to satisfy the growing need to integrate and align information across the Department among the various agencies. Wennergren indicated that the government is already employing online collaboration tools like Facebook, Twitter, and Wiki technology to accomplish these goals. Other examples include a tool currently used by the Defense Language Institute, the Intelligence Community's (IC) "Intellipedia," and a program called "A-Space," used by analysts within the IC.

Wennergren briefly highlighted the growing demand for cloud computing across DoD. Cloud computing is anticipated to be a major priority for the Obama administration. DISA's Rapid Access Computing Environment (RACE) program, discussed in a previous blog, is one such example.

Wennergren then discussed a major challenge concerning information sharing: reconciling the apparently diametrically-opposed demands of security and sharing. DoD needs the ability to share information efficiently across agencies, while storing and transmiting this information securely. One challenge is connecting people on different networks possessing different levels of security clearance. Wennergren noted the need for secure browsing, "open" architecture, and thinking "modularly," and stressed the importance of leveraging Public Key Infrastructure (PKI). He pointed to DISA's need for object-level encryption and other emerging technologies.

So what are the implications for the contracting community? Contractors investing in technologies that can aid DoD in its interagency collaboration efforts stand to gain, while small businesses specializing in such technologies could also have ample opportunities to team with the larger systems integrators, typically prime contractors on the major Defense IT contract vehicles, like DISA's ENCORE II. As Wennergren repeatedly stated, not only the government, but also contractors themselves must embrace Web 2.0 in order to be successful.

Upcoming opportunities related to information security include:

  • DISA's potential requirement for Fielding Support for the Global Command and Control System - Joint (GCCS-J) Program Management Office, Opportunity ID 54356
  • DTIC's requirement for the Software Networks Information Modeling and Simulation TAT (SNIM), Opportunity ID 48774
  • DISA's potential recompete for Universal Description, Discovery and Integration (UDDI) Registry COTS Product with Unlimited Licenses for NCES Usage, Opportunity ID 50418

Because the amount of information needed to be stored and shared securely across DoD will only grow in the coming years, contractors can rest assured that information sharing solutions will remain in high demand.

BearingPoint sells government business to Deloitte

BearingPoint announced the sale of its government business to Deloitte for $350 million. Because BearingPoint is in bankruptcy, more attractive offers must be considered and the court must approve the deal.

Low Valuation

With $790 million in FY08 reported prime obligations (not the same as revenue, but tracks closely), a price of $350 million could be considered around 0.5x revenue. While this appears low relative to other deals in the government market, the valuation is tempered by the professional service nature of the contracts and the likelihood that some contracts will be lost due to conflicts of interest (see more below on conflicts of interest).

Deloitte federal now > $1B?

A combination of Deloitte and BearingPoint's federal business could be worth over $1 billion a year in federal prime obligations. Deloitte had roughly $240 million in reported prime business in FY08. BearingPoint had nearly $800 million.

What will Deloitte get?

BearingPoint's top federal contract, worth nearly 25% of its FY08 prime business in fiscal year 2008, is its United States Agency for International Development's (USAID) Support for Economic Growth and Institutional Reform (SEGIR) Macro II contract. The largest task orders have been under the foreign assistance program. These orders were also the main reason for an increase from $520 million in FY07 to nearly $800 million the following year.

For more analysis of BearingPoint's top contracts and customers, GovWin members click here.

What will Deloitte and BearingPoint competitors get?

With this acquisition, conflicts of interest will exist between Deloitte's and BearingPoint's contracts, opening up opportunity for competitors. There will be a choice between tax/auditing services and consulting engagements at several agencies.

Opportunity Tracking: Stimulus Funding Accelerates Consolidated DHS Headquarters Project

Whether or not you heard our fearless leader, Kevin Plexico, on Federal News Radio Monday afternoon with Chris and Amy on the Daily Debrief, the good news is I can provide the highlights here. Also, all GovWin "Opportunity Tracking" segments are available on the Federal News Radio homepage. This week the topic was the consolidated DHS Headquarters project. With the infusion of funding from the American Recovery and Reinvestment Act (ARRA) of 2009, the Obama administration has proven support for this vast project. The GSA Public Buildings Service is preparing to award the Lead Design Architecture and Engineering (A&E) procurement in the next few months. This contract valued up to $445 million will provide the design services and prepare the construction and installation projects to begin. The business opportunities for technology, IT, security and telecom companies will be built into the construction process. Based on the size of this project, there will be many requirements for infrastructure, IT and security solutions to support this state-of-the-art facility. DHS Headquarters is anticipated to be one of the largest construction projects in Washington, D.C since the Pentagon was built and is anticipated to meet the standards of GSA's new Leadership in Energy and Environmental Design (LEED) Green buildings rating system.

As for the stimulus impact, DHS estimates that this project will create employment opportunities for 32,800 people in the metro region, largely within the construction and renovation industry. Of the early funding, $650 million was provided through the economic stimulus legislation ($200 M to DHS and $450 M to GSA). Overall, the total value has not been finalized but estimates range from $3.2 to $4.1 Billion. In fact, DHS is likely to received additional funding in the fiscal year 2010 budget as well.

As Southeast DC prepares for this massive project, the adjacent industries mentioned above (security, IT, telecom, etc.) can be preparing for pieces of this large facility. With the environmental concerns of GSA and the security concerns inherent to DHS, there will be many requirements for appropriate planning, expertise and technology installation. Funding and support DHS Headquarters has already grown and the business opportunities will become more clear after the design firm is chosen and the spending is outlined over the next few months. As Kevin said yesterday, there are still unanswered questions around the speed, security and size of many requirements but since the stimulus package and budget funding have become available, the consolidated DHS Headquarters project is more a reality each and every day.

No Applicant Left Behind?

States are finding themselves ill-equipped to process human services benefits as unemployment continues to rise. In turn, states may start looking towards prescreening enrollment solutions to speed up the process. Any new solutions must also be able to simplify the application process for new applicants, seniors, people with disabilities, and non-English speakers, and be accessible to those in rural communities.

While current times have seen a trend of falling economies and stock markets, there is one area of the United States that is on the rise- unemployment. With numbers reaching as high as 8.1 percent in March, social service programs are seeing soaring numbers of applicants for financial assistance through programs like Medicaid, food stamps, and Temporary Aid for Needy Families (TANF). Newly eligible individuals, while taking advantage of a system meant to help those in need in hard times, are swamping state and county assistance systems (which, in some cases, were outdated before the economic crisis hit). Requests for medical reimbursement and food stamps are going unanswered in some counties, with case workers over burdened with cases that they can't handle.

For example, the Kansas Health Policy Authority (KHPA) is looking towards its legislature to restore administrative cuts to alleviate the strain on internal staff to handle the increase in volume of applications for Medicaid assistance. The number of new applications for benefits under Medicaid and the State Children's Health Insurance Program (SCHIP) has grown by an average of 987 applications a month since the beginning of FY2009, with over 10,000 applications and reviews remaining unprocessed to date. KHPA hopes to use some of the stimulus payments to replace the cuts to the budget to maintain staff and contractual services to handle the workload. Florida is another state that is brainstorming ways to improve food stamp, Medicaid, and welfare distribution in light of the stimulus packages increase in the amount that families are receiving in aid. The legislature hopes to approve money that would combine with federal funds to hire 288 workers to staff benefit call centers, where calls have skyrocketed from 1.5 million to 2.5 million over 2008. Although the aid to families is increasing, states are and will continue to struggle to serve all that are affected by the faltering economy.

Office of Justice Programs Ready to Dole out $2.7 Billion in Economic Stimulus Funding

The Office of Justice Programs received $2.76 billion for new and existing grant programs to support state and local law enforcement agencies prevent and control crime, administer justice and assist victims of crime. All of the funding allocations are completed and the requests for applications have been released. The following table details the eligible applicants, application due dates, and funding amounts.

Grant Program Grant Type Application Due Date Funding (in millions)
Assistance for Law Enforcement along the Southern Border and in High Intensity Drug Trafficking Areas (HIDTA) Grant Program (16.809)*
(Eligible applicants are Arizona, California, New Mexico, Texas, and local governments and tribal governments in those states)
Competitive April 17 $40.0
Assistance to Rural Law Enforcement to Combat Crime and Drugs (CFDA 16.810)
(Eligible applicants are rural local governments not located in a Metropolitan Statistical Area or that have a population of less than 50,000 or rural states with a population density of less than 52 people per square mile or with a county of no more than 150,000 residents. States, local governments, tribal governments, non-profit and for-profit organizations, and institutions of higher learning for providing training and technical assistance only)
Competitive April 22 125.0
Correctional Facilities on Tribal Lands Grant Program (CFDA 16.811)
(Eligible applicants are federally recognized Indian tribes, Alaska Native villages and corporations, intertribal consortia, non-profit and for-profit organizations, and institutions of higher learning)
Competitive May 4 225.0
Edward Byrne Competitive Grant Program (CFDA 16.808)
(Eligible applicants are states, local governments, tribal governments, non-profit and for-profit organizations, and institutions of higher learning)
Competitive April 27 225.0
Edward Byrne Memorial Justice Assistance Grant (JAG) Program (CFDA 16.738)
(Eligible applicants are states and local governments)
Formula April 9 (states)
May 18 (localities)
2,000.0
Internet Crimes Against Children (ICAC) (CFDA 16.800)
(Eligible applicants are states and local governments)
Formula April 8 50.0
National Field-Generated (NFG) Training Assistance and Demonstration Program (CFDA 16.807)
(Eligible applicants are states, local governments, tribal governments and organizations, non-profits, and institutions of higher learning)
Competitive March 26 5.0
Victims of Crime (VOCA) Victim Assistance Formula Grant Program (CFDA 16.801)
(Eligible applicants are states, the District of Columbia and U.S. territories)
Formula March 20 47.5
Victims of Crime (VOCA) State Crime Victim Compensation Program (CFDA 16.802)
(Eligible applicants are states, the District of Columbia, and U.S. territories and possessions)
Formula March 20 47.5

Source: U.S. Department of Justice and GovWin

*Note: Up to $10 million may be transferred to the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) for Project Gunrunner.

GovWin's Take

  • As my colleague wrote earlier this month, the economic stimulus legislation could not have come at a better time for state and local government law enforcement agencies. Many of these organizations have been hit hard by spending and personnel cuts. The grant programs listed above will provide some much needed relief to those budget pressures.

  • While state governments have a fairly solid understanding of ARRA, many local government agencies, tribal governments and other organizations are struggling to understand how much economic stimulus funding they may receive and how to go about getting it.

  • Smart sales and business development professionals will work with their law enforcement prospects to apply for these Recovery-authorized grant programs when other funding sources are unavailable.

  • If your company provides training and technical assistance to law enforcement organizations, you are eligible to apply for several of these assistance programs directly.

  • GovWin members may download the grant solicitation announcements from our web site. These announcements include details on purpose, objectives, and allowable expenditures.

Federal Economic Stimulus Procurements Are Taking Shape

Several federal agencies with economic stimulus money to spend have begun posting weekly activity plans and reports on their recovery websites as required by the American Recovery and Reinvestment Act (ARRA). A review of the plans for the week beginning March 23, indicates progress on several information technology, professional services staffing, architecture and engineering procurements:

Information Technology Systems Procurements

  • Agriculture/Farm Service Agency (FSA): FSA Information Technology will issue additional requests for proposals for management, business process improvement and information technology modernization procurements during March and April 2009.

  • Homeland Security/Customs & Border Protection (CBP):
  • Homeland Security/Immigration & Customers Enforcement (ICE) (Opp ID 54212): ICE – Continue development of procurement packages for P25 Upgrade.

  • Small Business Administration (SBA): Determine scope of information technology infrastructure and system requirements

  • Social Security Administration (SSA): National Computer Center (NCC) Replacement (Opp ID 54299) – Working with GSA to establish general project timeline with key milestones and target dates.

Architecture & Engineering Procurements

  • Homeland Security/U.S. Coast Guard (USCG): Bid solicitation advertisements for the Mobile Bridge and Elgin, Joliet, and Eastern Railway Co. Bridge project.

  • Homeland Security/Customs & Border Protection (CBP): Ports of Entry -- Plans to issue multiple Requesta for Proposal (RFP) by June 25 for multiple design/build project contracts award by August 16.

  • International Boundary & Water Commission (IBWC): Complete procurement packages by March 31 of all preconstruction activities (statements of work and estimates for geo-technical services, environmental, and design work).

Staffing Activities

  • Corporation for National & Community Service (CNCS): Begin hiring temporary staff to assist in administering Recovery Act Funds.

  • Labor/Occupational Safety & Health Administration (OSHA): Hire staff consistent with increased inspection workload.

  • Social Security Administration (SSA): Gearing up to hire additional staff starting April 1 for additional disability and retirement claims processing workloads.

GovWin's Take

  • A review of economic stimulus related activity for last week indicates several contract awards have already been made. Companies that are focused on stimulus money should already have a strategy for getting out in front of these procurements. Waiting for procurement related information to be posted on Recovery.gov or solicitation notifications on FBO.gov will not get you there.

  • Federal, state, and local governments will be spending $483,000 per minute of economic stimulus appropriations in 2009 and over $1.1 million in 2010. Thoroughly understanding the spending initiatives in the economic stimulus legislation and knowing which initiatives are pertinent to your company is critical to getting your share of that spending. Have a plan with actionable tactics for pursuing each spending initiative. Plans should include interactions with program offices before they have begun their acquisition planning. Your plan should also include knowing who the incumbent contractors are and a teaming strategy for each of them.

  • Keeping abreast of all of the economic stimulus related activity at the federal, state, and local government levels is a very labor-intensive task and requires monitoring over 300 government web sites, several media outlets across the country, as well as associations and non-profits. To fully understand the information that has been posted, telephone calls to government agencies are necessary to get the full context. Have you re-directed staff to perform these functions or made alternative plans?

GAO to closely monitor 16 states' stimulus spending

Guidelines for how states spend and report their funds under the American Recovery and Reinvestment Act of 2009 are still under development. The deadline for public reporting to begin at Recovery.gov is July 13th, so they still have some time to work out the details...and, trust me, they and GAO would be well advised to use all the time they have to get it right. However, GAO has already engaged the 16 states that contain 65% of the nation's population and will, therefore, be receiving roughly two-thirds of the total recovery funds.

The states are Arizona, California, Colorado, Florida, Georgia, Iowa, Illinois, Massachusetts, Michigan, Mississippi, New Jersey, New York, North Carolina, Ohio, Pennsylvania, and Texas.

GAO will also "sample localities within these states to provide a perspective on the use of Recovery Act funds at a local level."

Here's the key paragraph from the GAO report.

"GAO will be reaching out to the respective governors' and state auditors' offices to begin the work needed for our first bimonthly review to be completed this April...These recipient reports are to include information on funds received, the amount of recovery funds obligated or expended to projects or activities, and the projects or activities for which funds were obligated or expended...Finally, our Forensic Audits and Special Investigations unit (FSI) will be undertaking ongoing risk assessments to identify specific programs and funding streams that are especially vulnerable to fraud, and it will conduct targeted investigations based on its assessments."

If you do business in these states, don't be surprised if agency folks are more skittish than usual about dotting all the "i's" and crossing all the "t's." Take a moment to read the full GAO report (it's only 17 pages) for some added business development insight. Don't assume that the rest of the states won't get an occasional visit from the FSI. (I think I see a new primetime hit: FSI: Washington.)

Of course, my recommendation is for the states to reorganize themselves as investment banks. Then they won't have to worry about financial oversight at all!

(Hat tip to NASCIO's Pam Walker for putting me on to this development.)

IV&V Contractors are Critical to the MMIS Process

An Independent Verification and Validation (IV&V) contractor is a state's strategic partner for Medicaid Management Information System (MMIS) implementation monitoring and success.

States are increasingly leveraging the benefits of MMIS IV&V contractors to ensure implementation success. The current economic climate has left states with tight budgets while many are trying to simultaneously engage in major IT investments, such as, MMIS replacement projects. As a result states are being more cautious with system implementation decisions and are more commonly employing phased approaches which need external assistance and oversight. These circumstances have increased the importance of procuring for an IV&V vendor to provide independent and objective risk management services, as well as, quality assurance, implementation monitoring and system testing services. In addition, IV&V contractors assist states with contract compliance, administrative and performance measures, project outcomes, readiness assessments and measuring against objectives. This more niche part of the MMIS contracting world enables vendors with information technology (IT) and professional services expertise to engage in Medicaid contracting opportunities and develop relationships with states that could lead to future IV&V opportunities. Beyond MMIS, as states and localities solicit for electronic health record systems (EHRs) and health information exchanges (HIE) they may seek IV&V vendors as well to improve success.

Examples of Upcoming Procurement Opportunities:

  • Maryland MMIS IV&V Services GovWin Opportunity #54194
  • Montana MMIS IV&V Services GovWin Opportunity #54608
  • North Carolina MMIS IV&V GovWin Opportunity #52338

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