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HHS is a Major Player in the Move toward Agile Acquisition

HHS is helping to lead the way toward more agile acquisition of IT. Outgoing HHS CTO, Brian Syvak, recruited Mark Naggar to start the HHS Buyers Club and blaze a trail for more innovative acquisition in the agency. The Buyers Club brings together HHS procurement professionals to discuss and test innovative purchasing ideas. 

 

Naggar used the Digital Services Playbook for the first HHS Buyers Club procurement, redesign of the Office of the Assistant Secretary for Planning and Evaluation’s (ASPE) public and intranet websites.  Vendors were only required to submit an eight-page concept paper after which five were chosen to proceed by creating prototypes.  This procurement concept allows vendors to show the federal buyer “what they can do” rather than writing about it in a lengthy proposal.  Naggar involved all of the stakeholders and significantly shortened the procurement cycle. 

 

In an interview with FedScoop Naggar said, "So often we're focused on getting something awarded and there's not enough attention focused on implementation, which is why we're trying to switch from waterfall to agile."

 

The waterfall method traditionally used for procurement and development has proven to be time-consuming, costly, and has not delivered what agencies truly need. So often, agencies don’t realize they’re headed down the wrong path until large sums of money have already been spent on a project.  "It's basically, 'Congratulations, you won the award,' they drop the mic and walk out of the room. And in six months you get something and realize it's not what you wanted, not what you needed," Naggar told FedScoop.  An agile approach dramatically mitigates risk and delivers results faster.

 

Naggar feels so strongly about government-wide acquisition innovation and reform that he organized a Conference for Innovative Acquisitions in February of this year.  The conference was sponsored by the Federal-wide Buyers Club with help from OFPP, the US Digital Service, and GSA and its 18F team.  The attendance of over a thousand government employees and contractors showed that Naggar is not alone in his quest to re-invent federal acquisition. 

One goal of the innovative acquisition movement is to change the federal government’s aversion to risk.  Although current procurement methods have been shown to be ineffective, federal procurement officials are trained to be good stewards of taxpayer funds.  Failure is not an option.  The private sector realized long ago that failure is part of innovation using the adage "fail fast, fail often."

Anne Rung, OFPP administrator and strong supporter of innovative acquisition, said at a recent conference, "We don't tolerate any kind of perceived failure. And people immediately walk away and resort to the old way of doing things."

The President’s FY 2016 Budget Request calls for more digital services teams and idea labs modeled after HHS across the federal government.  With such strong support from top officials and buy-in from the procurement ranks, we are likely to see increased use of innovative acquisition methods in the coming months and for years to come. 

 

GovWin Recon - April 28, 2015

GovWin Recon, produced by Deltek's Federal Industry Analysis (FIA) team, is designed to support awareness and understanding of the issues impacting the government and the contractors that serve it. Recon highlights key developments surrounding government technology, policy, budget and vendor activities.

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Army Investment in Unmanned Systems Benefits IT Vendors

The U.S. Army today faces significant budgetary and technological challenges. The fiscal limitations alone cannot be underestimated. With the Army’s annual budget falling the last several years, military leaders have been forced to cut both programs and personnel. Current projections show that by FY 2019 the number of active Army personnel will slide to 420,000 troops, down 14.3% from the current level of 490,000. Rapid technological change is also altering the circumstances under which Army personnel operate, as potential adversaries with advanced technical capabilities, particularly in the area of electronic warfare, challenge U.S. military supremacy.

In response to these challenges, the Army is turning to ever more advanced platforms for intelligence gathering and electronic warfare, particularly platforms that are unmanned and/or robotic. These platforms are unlike previous generations of technology in that they continuously generate vast amounts of data. This data requires analysis, which is a potential boon to vendors that offer advanced analytic capabilities. There are, however, other areas related to unmanned systems where information technology vendors can find business opportunity. These include modeling and simulation, algorithm design, software development, autonomy/artificial intelligence, testing, machine learning, cyber security, and electronic warfare-cyber convergence.

The Army’s investment in unmanned systems is symptomatic of the fundamental transformation of modern warfare into a seamlessly intertwined network of weapons systems, surveillance platforms, and IT capabilities. It therefore behooves those of us tracking federal IT to keep an eye on unmanned systems spending for the business opportunities it presents.

The table below shows programs directly related to the development and fielding of unmanned systems, as listed in the Army’s Research, Development, Test, and Evaluation budget request for FY 2016.


Generally speaking, this part of the Army’s budget request includes dollars that will be spent on research and development efforts. It is often considered to be “new” money the Army is asking for, unlike the funding it requests for Operations and Maintenance, Military Construction, etc. As we can see, the Army invests a lot on unmanned systems. This RDT&E spending amounted to nearly $263 million in FY 2014 alone. In FY 2015, the Army anticipates spending almost $289 million. In FY 2016, however, investment drops-off to roughly $218 million. There is no data to explain this decline, but my assumption is that planners have factored in the threat of sequestration.

It is worth noting that the development effort surrounding every one of these systems has one or more IT components related to it. These components include systems design, software engineering, and testing, among a myriad of other activities. The work is generally centered at the Army Research Laboratory, although considerable effort also takes place at the Communications-Electronics Research, Development and Engineering Center (CERDEC). Finally, the programs listed above are those which deal directly with unmanned systems. There is also work related to unmanned systems in programs where unmanned systems are but one part of a larger effort. For these programs, the Army has requested $285 million in FY 2016, making the pot that much sweeter in the coming fiscal year.

 

State budget overview: Critical information on priorities and funding for vendors

As spring progresses, news from most states is centered on legislative actions (some controversial) passed before the annual sine die adjournment of the state legislature. With that backdrop, many state legislatures will approve budgets for the coming fiscal year or biennium. Beyond the headlines about the growth of government and funding cuts to pet projects, or the spin promulgated by lawmakers’ press releases and governor budget addresses, vendors can find essential information on state priorities.

A state’s budget and how it passed into law is important information for a vendor to have when deciding in which states or localities to compete for business. For most states, the budget process follows the same approval path by the full legislature and the governor’s signature. The first step in this process generally comes from the state agencies themselves. In most cases, these agencies report to the governor as part of the executive branch. The agencies conduct their own planning and budgeting process and submit a request to the governor’s budget team or office. The governor and his or her team then decide which priorities and funding to include and compile a document of the governor’s recommendations for submittal to the state legislature.

At Deltek, we spend quite a bit of time compiling and analyzing the state governors’ recommended budgets. The budgets, along with other compiled data,  are contained in Deltek’s State Government Profiles. The profiles provide essential and in-depth reference and research on state budgets, procurement, and organizational details to assist contractors in building important state buyer relationships and quickly ramping up new government sales professionals.

A governor’s proposed budget is by no means the final budget that makes it out of a state legislature, though it provides valuable insight about the executive priorities and the fiscal condition of the state. These documents also provide us with historical expenditure data, which allows for a more in-depth analysis of budget trends and fiscal realities. 

Following the governor’s lead, the state legislature begins work on their own version of the budget. Sometimes they use the governor’s recommendations as a starting point, but this is not always the case in adversarial political environments. Both houses of the legislature (for every state but Nebraska) weigh in on the budget as it goes through the normal process of committee and floor votes, and then conference committees work to reconcile any differences. The legislature submits the budget to the governor and he or she decides to approve it or not.  

For vendors, both the governor’s proposed budget and the final version are important documents. They can help to understand both the priorities of an administration and the reality of the political system and/or fiscal climate. Of course, they also offer insight into exactly where state funding is flowing and which departments will be looking for vendor support. 

In the coming months, look for the compilation of state budget data, including IT line items and detailed Deltek analysis of this data. In addition, vendors in the architecture, engineering and construction (AEC) space should watch for more budget data specific to state investment in AEC as outlined in state capital budgets.

You can learn more about state budgets in Deltek’s State Government Profiles. Not a Deltek subscriber? Click here to learn more about Deltek's GovWin IQ service and gain access to a free trial

 

GovWin Recon - April 27, 2015

GovWin Recon, produced by Deltek's Federal Industry Analysis (FIA) team, is designed to support awareness and understanding of the issues impacting the government and the contractors that serve it. Recon highlights key developments surrounding government technology, policy, budget and vendor activities.

Headlines beginning with an * include quotes from Deltek analysts.

Federal IT:

Agency News:

Vendor News:

Cybersecurity:

Health IT:

Big Data / Analytics:

Defense / C4ISR / Embedded Technology:

Contracting / Acquisition:

Legislation:

Mergers and Acquisitions:

State and Local:

GovWin Recon is Deltek's daily newsletter highlighting federal government contracting news and analysis from around the government contracting world. Get it delivered to your e-mail inbox, free!

GovWin Recon - April 24, 2015

GovWin Recon, produced by Deltek's Federal Industry Analysis (FIA) team, is designed to support awareness and understanding of the issues impacting the government and the contractors that serve it. Recon highlights key developments surrounding government technology, policy, budget and vendor activities.

Headlines beginning with an * include quotes from Deltek analysts.

Sequestration / Budget:

Federal IT:

Agency News:

Vendor News:

Cybersecurity:

Cloud Computing / Data Center Consolidation / Virtualization:

Health IT:

Big Data / Analytics:

Mobility:

Transparency and Performance:

Defense / C4ISR / Embedded Technology:

Legislation:

AEC News:

GovWin Recon is Deltek's daily newsletter highlighting federal government contracting news and analysis from around the government contracting world. Get it delivered to your e-mail inbox, free!

GovWin Recon - April 23, 2015

GovWin Recon, produced by Deltek's Federal Industry Analysis (FIA) team, is designed to support awareness and understanding of the issues impacting the government and the contractors that serve it. Recon highlights key developments surrounding government technology, policy, budget and vendor activities.

Headlines beginning with an * include quotes from Deltek analysts.

Sequestration / Budget:

Federal IT:

Agency News:

Vendor News:

Cybersecurity:

Cloud Computing / Data Center Consolidation / Virtualization:

Health IT:

Transparency and Performance:

Defense / C4ISR / Embedded Technology:

Contracting / Acquisition:

Legislation:

State and Local:

AEC News:

GovWin Recon is Deltek's daily newsletter highlighting federal government contracting news and analysis from around the government contracting world. Get it delivered to your e-mail inbox, free!

State and Local AEC Snapshots: Harris County, Texas

Harris County is the largest county in the state of Texas and the third-largest county in the United States. With a rising population exceeding 4 million residents, the county’s expenditures are rapidly increasing at a Deltek-estimated rate of 7.1 percent.

Harris County is also home to the largest medical complex in the world, the Texas Medical Center (TMC). As the county expenditure charts below illustrate, the county spends the most money on hospitals, and construction is a major component. For example, the University of Texas M.D. Anderson Cancer Center was estimated to spend $198 million on hospital expansions in 2014. The total size of the TMC is currently 45.8 million square feet and is estimated to reach 59 million square feet in the near future, according to the Greater Houston Partnership. 

Another category that pulls in high dollars is toll highways. The Texas Department of Transportation (TxDOT) recently awarded the SH 288 Toll Lanes Project in Harris County to Blueridge Transportation Group, which will be tasked with the development, design, construction, finance, operation and maintenance of tolled lanes, general purpose lanes, and associated facilities along a 10-mile stretch of SH 288 – from US 59 to the Harris County line at Clear Creek in Harris County.

 

Additionally, the Aggie Highway project involves work within Harris County and Montgomery County to provide a direct route from College Station to Houston. Harris County began constructing their portion of the toll way in 2013, and work is expected to be completed in 2015.

 

With both the population and spending on the rise, Harris County will also see an increase in construction and/or transit projects over the next several years. Architecture, engineering, and construction (AEC) firms should pay particular attention to the rapidly growing hospital and toll markets, and also take note that the county has set aside $145 million in the FY 2015-16 budget for infrastructure and systems projects.

 

 

You can learn more about Harris County in GovWin IQ’s government snapshot tool, which combines government data with Deltek’s expert analysis and forecasting tools. Our government snapshots provide vendors with key information on spending, population, agency contacts, employment, bids, and more so that they can make informed business decisions in their target markets. Not a Deltek subscriber? Click here to learn more about Deltek's GovWin IQ service and gain access to a free trial.

 

 

Energy Department Continues Collaborative Supercomputing Investment

 

The Department of Energy’s (DOE) Office of Science and the National Nuclear Security Administration (NNSA) provide high-performance computing facilities that enable world-class scientific research. Mid April 2015, DOE extended its exascale supercomputer development program under its Collaboration of Oak Ridge, Argonne, and Lawrence Livermore (CORAL) initiative with a third and final contract. 

The $525 million CORAL project was established in early 2014 with the goal of improving supercomputing investments, streamlining procurement, and reducing development costs for high performance systems that will be five to seven times more powerful than today’s top supercomputers. Through collaborating across the department’s labs on the effort, DOE aims to help the nation accelerate to next-generation exascale computing. The three CORAL labs specified requirements in a single Request for Proposal (RFP) released in January 2014. The recent $200 million award will deliver Aurora system to the Argonne Leadership Computing Facility, completing the final supercomputer investment of the CORAL initiative. DOE earlier announced a $325 million investment to build state-of-the-art supercomputers at its Oak Ridge and Lawrence Livermore laboratories.

The entire scientific community will have access to the system once it is commissioned in 2018. Key research goals for the Aurora system include: material science, biological science, transportation efficiency, and renewable energy. The next-generation system, Aurora, will use a high-performance computing scalable system framework to provide a peak performance of 180 PetaFLOP/s.  The Aurora system will be delivered in 2018. In the interim, Argonne and Intel will also provide the Theta system, to be delivered in 2016, which will help ALCF users transition their applications to the new technology.

Additionally, DOE Under Secretary Orr announced $10 million for a high-performance computing R&D program, DesignForward, led by DOE’s Office of Science and NNSA to accelerate the development of next-generation supercomputers. The recent announcement complements the $25.4 million already invested in the first round of program. Through this public-private partnership, technology firms will work with DOE researchers to study and develop software and hardware technologies aimed at maintaining a national lead in scientific computing.

 

Originally published for Federal Industry Analysis: Analysts Perspectives Blog. Stay ahead of the competition by discovering more about GovWinIQ. Follow me on twitter @FIAGovWin.

 

Half-way Through FY 2015, Pt.2 – How Much Are Agencies Spending on Information Technology?

With all appropriations and budgets finally settled and in place for FY2015, agencies have been spending on information technology (IT), among other things. So at the mid-point in the fiscal year, how are agencies doing at getting their IT contract dollars obligated and what might we expect in the second half of FY 2015?

Last week, I looked at the total market contract obligations at the mid-fiscal-year point. This week I’ll look specifically at IT obligations. In this, and other similar scenarios that I have explored, I took a rough “back of envelope” approach to projecting potential contract obligation rates for the remaining two fiscal quarters. For consistency, I will use the same baseline: If agencies obligate at least 90% of what they did in FY 2014, what might that project for spending on contracts in the second half of the 2015 fiscal year.

In the latest federal FY 2016 IT budget request, OMB reported the total enacted FY 2015 IT budget to be about $78B, which is $2.4 billion (3.2%) more than the $75.6B agencies spent in FY 2014.  So this 90% threshold that I am using for potential FY 2015 spending, while not a particularly scientific approach, might be playing it safe.

IT Contract Obligations Compared

For Information Technology spending in FY 2014, the twenty top-spending departments accounted for 96% of all federal IT contract obligations. In FY 2014, these twenty accounted for $10.5B and $14.2B in Q1 and Q2 obligations respectively. For comparison, these departments reported $16.6B and $26.3B in IT contract obligations for Q3 and Q4 respectively for FY 2014. (See table below.)

In FY 2015 so far, these top twenty departments have reported $10.1B and $5.0B for Q1 and Q2 respectively, although DoD lags in their contract data reporting by up to 90 days so Q2 is significantly understated. Nonetheless, if these top agencies spend 90% in FY 2015 of what they did in FY 2014 they will have more than $45.B left to obligate in the remaining two quarters of this fiscal year.


Observations

  • Each of the defense branches have reported lower IT contract spending amounts in Q1 of FY 2015 compared to Q1 of FY 2014. Even with hedging our bets with a 90% spending assumption, the FY15 Q1 percentage of total FY15 obligations is down slightly for Army and Navy compared to their FY 2014 relative proportions. The Defense Agencies and Air Force, although down in dollar terms, got a slightly higher proportion of their IT dollars spent in Q1 of this fiscal year compared to FY 2014, if the 90% assumption holds. Due to DoD’s data reporting lag, which could take up to 90 days to settle out, we won’t know what Q2 of FY 2015 really looked like until June or July. They’ll need to post more than $8B in IT contract spending to keep pace with Q2 of FY 2014.

  • Among the civilian agencies in the top twenty, five have reported lower Q1 FY 2015 obligations compared to Q1 FY 2014. Among those, DHS, DOT, and DOI are the three where the reductions are proportionately sizable, reporting drops of 21%, 14%, and 22% respectively. For comparison, HHS, VA, DOJ, State, DOC and SSA say year-to-year growth in Q1 spending of 13%, 38%, 37%, 30%, 21%, and 54% respectively, although some of the individual spending levels are modest by comparison. The Q2 comparison from 2014 to 2015 are less positive, with only NASA and the Department of Education reporting higher spending in Q2 from year to year. Still, looking at the relative percentages that the civilian agencies spend in Q3 and Q4 leaves plenty of room to catch up and surpass FY 2014.

The delay of some yearly appropriations bills, like for DHS, may explain some of the downturn or slowdown in FY 2015 IT contract spending so far. Historically, agencies have made up ground in the second half of the fiscal year – especially Q4. One thing seems fairly clear though: IT contract spending tends to be a bit more consistent and predictable than contracted spending as a whole.

When I crunched these IT numbers last year, I arrived at approximately $43B in potential Q3 and Q4 IT contract spending among the top twenty departments for FY 2014. The final numbers came in around $44.7B, so the 90% assumption was not a bad one, but it points to the fact that many agencies are tightening their fiscal belts.

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Originally published for Federal Industry Analysis: Analysts Perspectives Blog. Stay ahead of the competition by discovering more about GovWin FIA. Follow me on Twitter @GovWinSlye.

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