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Software-Defined Networking: The Army Prepares to Reap the Rewards of Joint Modernization

For many years the U.S. Army has been the butt of jokes about the antiquated state of its information technology infrastructure.  Army personnel returning from deployments had better connectivity and IT services available to them in the field than they have in garrison and bandwidth into and out of Army camps, posts, and stations has been measured in megabytes, not gigabytes.  Dedicated Army IT professionals from the CIO/G-6 down to the Program Executive Offices have worked hard to change this situation by implementing initiatives like Defense Enterprise Email and by leading the move to a Joint Information Environment.  In doing so, they have changed the game for the U.S. Army and put the service in an excellent position to advance rapidly down the timeline of technology evolution.

Lest readers think I overstate the case for the Army’s advancements in modernizing its IT infrastructure, I refer them to a procurement that recently appeared.  The Global Enterprise Fabric acquisition (Solicitation #W91RUS15GEF1) demonstrates that the Army’s Network Enterprise Technology Command also sees the advancements that have been made.  NETCOM is seeking to take advantage of those advancements by implementing a software-defined infrastructure that enables centralized management of the JIE, Joint Regional Security Stacks, and Multi-Protocol Label Switching architecture.

That NETCOM is researching the possibility of implementing an enterprise SDN solution speaks volumes about how far the Army’s network modernization has come and where it is going.  The CONUS deployment of MPLS routers across the enterprise is targeted for completion sometime later this calendar year.  Similarly, the standing up of Joint Regional Security Stacks in the CONUS is also slated for later this year.  Add the Army’s recent transition to Defense Enterprise Email and you have a much more secure network with much higher bandwidth.  These network upgrades will also allow the Army to take advantage of cloud computing services offered by the Defense Information Systems Agency and commercial partners.

The Global Enterprise Fabric envisioned by NETCOM will help deliver computing enterprise services in three broad areas - Infrastructure-as-a-Service, Network Services, and Computer Network Defense – all of which are managed and monitored within a software-defined framework.  NETCOM’s turn to SDN is a harbinger of things to come across the DoD.  Deltek’s recent Emerging Federal Technology Markets, 2015 report documented that throughout the federal government two steps are leading agencies to SDN: modernizing IT infrastructure and planning for/adopting cloud computing. Cloud computing is not necessary for an agency to implement SDN, but in evolutionary terms the adoption (or desired adoption) of cloud may be decisive because it spurs on other foundational investments.

As agencies grow more comfortable with cloud computing, their adoption of SDN will increase or, as NETCOM’s Global Enterprise Fabric concept illustrates, their adoption of SDN and cloud computing will go hand-in-hand.  Herein lays the opportunity for those seeking new business.  Agencies already walking the path toward the cloud, particularly the use of Infrastructure-as-a-Service, will already have some idea of the viability of SDN.  Seek out those agencies making IaaS investments and you’ll find those most interested in discussing SDN as the next step.

 

The 2015 NDAA Mandates Open Architecture for Defense IT Systems

Provisions in the annual National Defense Authorization Act legislation affect the Defense sector of the federal information technology market over many years.  Consider, for example, the mandate in the FY 2012 NDAA calling for the Department of Defense to utilize cloud services provided by commercial partners.  The DoD has been working ever since to find a viable way of implementing this mandate.  The far-reaching impact of NDAA provisions thus make it imperative that federal contractors understand how the legislation will affect their business at the DoD in the future.
 
The FY 2015 NDAA promises to have a significant impact as it features an important provision calling for the DoD to adopt open architecture for all of its IT systems. Specifically, Section 801 calls for the Under Secretary of Defense for Acquisition, Technology, and Logistics to create a plan that “develops standards and defines architectures necessary to enable open systems approaches in the key mission areas.”  The discussion about using modular approaches to acquisitions has been evolving at the DoD for several years, resulting in a shift in the length and complexity of contracted efforts.  Rather than procuring a single end-to-end solution, Defense customers tend increasingly to initiate program procurements in increments.  These increments have shorter time spans and defined objectives that set parameters for the acquisition of the next increment. In Section 801, Congress gives this “modular” approach the weight of law, meaning vendors should expect to see even more short-duration, lower dollar value, limited objective procurements.
 
Equally important is the call for DoD to develop a strategy for using open architecture.  The department is currently in the process of creating a unified transport network based on internet protocol.  This may work well for newer systems, but thousands of legacy systems across the DoD remain locked in proprietary configurations.  A clause in Section 801 mandates that the USD AT&L submit a report which “outlines a process for the potential conversion [of legacy systems] to an open systems approach.” Engineering those systems to operate on an open architecture will unlock data, make the systems interoperable, and enable Defense customers to transition more easily from one IT support vendor to another.
 
If this sounds like the next, deeper level of the Joint Information Environment, you are right on target.  IT vendors should take heed and get ahead of the curve because in all probability open architecture is going to be a requirement for every unclassified (classified too?) solution that the DoD procures in the future.  If your solution isn’t open, it won’t be purchased.  End of story.
 
The open architecture requirement will also compel Defense customers to take a hard look at commercial cloud as an alternative.  Why spend money engineering an antiquated legacy system to operate on an open architecture when you can hire a vendor to host the data and implement a comparable, new interoperable system? 
 
In short, the 2015 NDAA should stimulate business opportunity at the DoD as funding locked in Operations and Maintenance funding for legacy systems moves into new efforts to re-engineer and/or cloud-enable those systems for use in an open architecture.

 

GSA Progresses with Implementation of Category Management Method of Acquisition

GSA is piloting a Common Acquisition Portal (CAP) as part of its Category Management Initiative launched in April. 

Category Management is the concept of grouping products and services into categories or “hallways” for access by contracting officers and program managers.  Category management is how the most successful Fortune 500 companies approach acquisition.   It focuses on five key areas:  

  • Optimizing contract vehicles and managing the landscape  
  • Managing data collection and analysis  
  • Leveraging supplier relationships  
  • Maximizing customer relationships  
  • Growing and sharing expertise

For GSA’s Federal Acquisition Service, this will mean identifying core categories of business they will develop a higher level of expertise and manage like a strategic business unit.  The expertise will be leveraged to direct buyers to the best solutions for them while streamlining the procurement process. 

GSA officials gave a briefing on the CAP project at the recent ATC/IAC Executive Leadership Conference.   “Right now there are tens of thousands of contracts across our government,” said Tom Sharpe, commissioner of GSA’s Federal Acquisition Service. “One company alone can have hundreds of contracts with the federal government; there is a way to radically change federal procurement, and it’s as simple as working and acting as one.”

Online access to CAP will occur through an “acquisitions gateway,” which will guide users through their category and procurement options.  The gateway is currently under development.   A beta version of the gateway was launched in early October with three hallways:  IT hardware, IT software and office supplies.   

Over time, the hallways will be developed with information and services to continuously improve acquisition outcomes.  Ultimately, the solution will provide the following capabilities:  

  • Procurement Optimizer:  A comprehensive contract-comparison search engine that enhances competition for government acquisition 
  • Market Intelligence Center:  Category-centric market research materials that guide purchase decisions based on category manager’s government-wide expertise  
  • Clear View:  Real-time data on pricing and purchasing, as well as assessment tools that help provide a big-picture view of government and individual agency spending behavior  
  • Collaborative Contracting Library:  Provides a resource to jump-start procurements with a central repository of exemplary contract work for complex buys compiled by community experts.  
  • eMarketplace:  An eCommerce transaction platform for simple purchases

GSA’s goal is to streamline and simplify the federal acquisition process, and to help agencies be more efficient and make smarter buying choices.

 

Spending on DISA’s Encore II Contract Vehicle

Officials from the Defense Information Systems Agency confirmed at their recent Forecast to Industry that the competition for the Encore III contract vehicle will begin in fiscal year 2015.  Encore III’s predecessor, Encore II, has been heavily used by defense customers, with about $5.8 in contract dollars going through it since fiscal year 2008.  Encore III is expected to receive even heavier use, particularly since DISA officials have emphasized the coming consolidation of services contracts that are deemed duplicative.  Given the agency’s shrinking budget, it is not beyond the realm of possibility that in the years to come the overwhelming majority of contract spending on information technology services at DISA will go through Encore III.  This implies that the available pool of competitive opportunities at DISA will be much smaller in the future, necessitating that interested vendors win a spot on Encore III.  Laying the groundwork for bids includes understanding the customer base using Encore II and the top vendors on the vehicle, as all of these will probably be bidding on the follow-on.

Top Customers

Looking first at the top customers using Encore II we can see, not surprisingly, that DISA spends the most contract dollars through the vehicle.

This said there are a number of other defense community users putting millions of dollars through Encore II.  Of these, the Army comes in second with $233 million in obligations.  This is a trend I would expect to continue as the Army also narrows the number of contracts it uses for IT services and as it continues to look to “DISA-first.”  With $87 million in obligations, the Bureau of Alcohol, Tobacco, and Firearms stands out as the lone civilian customer among those listed.

Top DISA Customers

Narrowing the analysis to DISA customers only, we arrive at the following results.

Readers will notice right off the bat that the total amount of dollars represented here does not equal the total amount listed as “DISA” in the first chart above.  This is because of vagaries in the reporting.  Often “DISA” is listed as the major spending agency in the available data, but when one gets down to the level of the office requesting the funding there will not be a customer given, or the customer will actually belong to one of the Services (e.g., Navy’s Space and Naval Warfare Systems Command).  Where the DISA-specific customer is available I have listed them here.

It is most informative when looking at this chart to zero in on the specific customers rather than the general categories, like “DISA” which sits at the top of the chart.  Similarly, the spending listed under the various entities of the Defense IT Contracting Organization (DITCO) doesn’t reveal much.  Digging deeper we find that several organizations now under Chief Technology Officer Dave Bennett’s Enterprise Information Services business unit use Encore II the most.  These organizations include the former Computing Services Directorate, the Systems Management Centers, and the Infrastructure Services Center San Antonio.  I would anticipate this trend to continue in the years ahead as DISA consolidates core data center support contracts and funnels more contract dollars through Encore III.

One other thing worth observing is the relative absence of spending related to the Defense Information Systems Network (DISN), now known as the Defense Information Network (DoDIN).  I suspect there is spending here related to DISA’s transport services, but it cannot be parsed out due to the lack of granularity in the data.

Top Vendors

Lastly, let’s examine the top earning vendors on Encore II.  The chart below shows the top ten highest earning companies by obligations from DISA alone. 

The gap between companies number 2 (Raytheon - $402M) through 5 (HP Enterprise Services - $359M) is relatively slim.  The earnings by Northrop Grumman, however, tower above them all, with $1.4 billion representing almost 4x the next closest competitor.  Noteworthy too is DSA, which the data says has been awarded $271 million in contracts as a small business (partial).  Presumably, DSA will not be able to compete for Encore III as a small business, which should make the competition for large business slots that much more competitive.

 

DISA Contract Consolidation: Which DECC Support Contracts are the Most Likely Targets?

At its recent Forecast to Industry event, officials from the Defense Information Systems Agency (DISA) spent a lot of time talking about two things – driving down costs and consolidating contracts.  The latter, it was explained, is being done to achieve the former, with both trends being driven by the meat-cleaver budget cutting approach known as sequestration.  Sequestration is coming to the fore once again as a result of budget planning that is now taking place for fiscal year 2016.  The Department of Defense received a slight reprieve from budgetary pressure in fiscal 2014 and 2015 due to the passage of the Bipartisan Budget Act of 2013.  Come October 1, 2015, however, sequestration will return with a vengeance.  DISA officials can see the light at the end of the tunnel and they know that light is a fiscal train heading their way.  Therefore, extensive talk of budget cuts and contract consolidation at the industry forecast event is a way of preparing industry for the blows that are about to fall.

Talk of contract consolidation is bound to make vendors nervous, so in today’s post I’ll do my best to identify the contracts supporting DISA’s Defense Enterprise Computing Centers (DECCs) that are most likely to be targeted.  Next week I’ll shift the focus to those supporting the Defense Information Systems Network (DISN).

The available data on DECC support contracts has some holes in it, but I’ll shed light where I can.  By my count, and using data DISA provided in its Exhibit 300 business case for FY 2014, there are currently 53 contracts in place supporting DISA’s DECCs.  These contracts expire in the following timeframes, assuming all of their option years are exercised and assuming the data provided by DISA is accurate.

  • Expiration Year FY 2014 – 4 contracts
  • Expiration Year FY 2015 – 17 contracts
  • Expiration Year FY 2016 – 16 contracts
  • Expiration Year FY 2017 – 10 contracts
  • Expiration Year FY 2018 and Beyond – 6 contracts

For our purposes let’s assume the 43 contracts expiring from FY 2015 to FY 2017 are in the crosshairs for consolidation.  According to Dave Bennett, DISA’s Chief Technology Officer, the contracts that provide support services to the DECCs on a regional basis will be looked at the hardest; the rationale being that as DISA transitions to an enterprise services model, there will be less of a need for location-specific support.  Of the contracts above, here’s how the numbers break out by primary place of performance.

  • Mechanicsburg, PA – 12
  • Chambersburg, PA – 6
  • Oklahoma City, OK – 6
  • Ogden, UT – 4
  • Montgomery, AL – 3
  • St. Louis, MO – 2
  • Columbus, OH – 2
  • Falls Church, VA – 2
  • Other Locations – 12

Clearly, the lion’s share of support work is centered around the DECC located in Mechanicsburg, PA.  I am going to assume based simply on the range of customers using them, that the Mechanicsburg and Ogden DECCs are the largest and closest to the “center.”  They will therefore be subject to the least amount of contract consolidation.  This leaves the greatest possibility of contract consolidation at OKC, Chambersburg, Montgomery, St. Louis, Columbus, Falls Church, and in other locations.  Of these places, I would suggest that OKC and the other locations will see the most contract consolidation.  Presumably, Chambersburg can be left out of the equation because data center operations there were phased out earlier this year.  I suggest OKC because it has the second highest number of support contracts.  I suggest the other locations because these are single-contracts for individual locations, meeting Mr. Bennett’s criteria as “regional” support contracts.  Here is a list of the contracts and vendors working in OKC and in the other locations.

Oklahoma City

  • HC102812F0280 – Global Commerce & Services, Small Business
  • HC102812C0039 – Indigenous Technologies, Small Business, 8a Sole Source
  • HC102811C0115 – KNWEBS, Small Business, 8a Competed
  • HC102812P0027 – KNWEBS, Small, Business, 8a Sole Source
  • HC102812F0030 – IS Technologies, Small Business, 8a Competed
  • HC102812C0084 – KNWEBS, Small Business, 8a Sole Source

Read into this what you’d like, but to me all these sole source awards scream consolidation.  Why?  Because at the forecast event MG Al Lynn, the Senior Procurement Executive at DISA, promised that DISA would compete contracts to drive down costs.  Even Sharon Jones, DISA’s Small Business Representative, stated that contracts would be consolidated.  In other words, small businesses too will feel the pain of consolidation and for my money these sole source awards stick out like a sore thumb.  How about the other locations?

Other Locations

  • HC101307D2009 – Vion, Washington, DC
  • HC102812F0563 – Security Walls, San Antonio, TX
  • HC102811D0102 – Knight Point Systems, Reston, VA
  • HC102813D0004 – Oracle, Redwood City, CA
  • HC102810F2166 – Advanced Systems, Greenwood Village, CO
  • HC102812C0006 – Nova Corporation, Ft. Meade, MD, 8a Sole Source
  • HC102812D0004 – Gem Companies, Denver, CO
  • HC102813D0001 – URS Corporation, Chantilly, VA
  • HC101307D2004 – HP Federal, Bethesda, MD
  • HC102812C0063 – Deloitte, Alexandria, VA

Of these contracts only the one held by Nova Corporation is an 8a sole source award.  The work, however, is also being done at DISA HQ, so it is up in the air.  The contract held by Vion is the Enterprise Storage Solutions contract that is already in the process of being recompeted.  The rest of these contracts are all one offs providing support at locations that are not in close proximity to DISA DECCs.  If we take Mr. Bennett at his word, presumably these contracts too are prime candidates for consolidation.

Readers will please take into consideration the fact that I don’t have any information suggesting these contracts are definitely targeted for consolidation.  Similarly, I have no information suggesting the other contracts not listed here are not also being considered for consolidation.  The safest bet would be to assume that all DECC support contracts will be reviewed.  This said, based on the few comments made so far about consolidation, the contracts listed above best fit the bill.  For this reason they are the ones worth watching the closest in the years to come.

NASA Seeks Industry Guidance on Data Center Solutions

Mid July 2014, The National Aeronautics and Space Administration's Goddard released a request for information on data center consolidation strategies for near-term, interim, and long-term strategies to address federal mandates for reducing IT footprint and improving energy efficiency.

Although federal agencies they've continued monitoring progress, agencies have not publicly released any recent updates to their data center consolidation plans. As part of the Federal Data Center Consolidation Initiative (FDCCI), NASA initially reported 79 data centers, closed 14 centers and revised the count to 58 after a physical inventory. The target is to retain 22, and at the end of 2014, NASA is expected to have 16 data centers to close before reaching its goal.

Along with the request for information around the Data Efficiency and Containerization effort, NASA GSFC released details regarding the several approaches under consideration. The first approach targets retrofitting technologies and solutions with a high return on investment (ROI) as short term and interim measures. A number of technologies to address cooling, power, and software management are under consideration. Approaches for cooling include rear door heat exchanger, direct liquid cooling, and application of water-side economizers. For power, NASA is looking at transformer-free uninterruptible power supply (UPS), power distribution units (PDU) that convert power from AC to DC, and fuel cells. Management software technologies being explored include remote power monitoring, power management based on the impact on energy consumption, and server utilization management. The potential for heat reuse applications is also on the table for deliberation. The second approach for data center consolidation targets standalone, containerized solutions for two possible use cases. One use case involves a management information systems computing scenario with power requirement up to 10 kW per rack. The other user case scenario involves high power computing with power requirements up to 30 kW per rack. The third approach aims to establish a long term strategic data center plan leveraging containerized data center solutions with a high return on investment. All of the approach must meet compliance requirements for Federal Data Center Consolidation and Green mandates.

Beyond the efforts at Goddard, NASA's consolidation of Agency and Center-specific data centers will continue through efforts to simplify IT architecture by reducing duplication within the IT footprint. Some of the savings expected to result from these efficiencies will be reinvested to support mission programs and projects. NASA intends to reinvest a portion of these savings to fund critical IT innovations in order to drive further efficiencies and cost savings. Candidate investments to drive efficiencies include standardization of mobile and collaboration capabilities, continued consolidation of IT security tools and computing services, and shifting web services to a cloud platform. Analytics will be one significant area that will benefit from data center improvements. NASA's vision for big data includes improving the capability to extract value and insight from the data it already has. To this end, NASA may explore the potential for creating a new, virtual mission to examine the data it possesses. With the vast volume and variety of data on its systems, NASA will need to overcome storage and accessibility challenges to ensure timely availability of information.

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Originally published in the GovWin FIA Analysts Perspectives Blog. Follow me on Twitter @FIAGovWin .

FITARA: The Pros and Cons of Cloud Services Working Capital Funds

The news has been replete recently with stories about the slow progress of the Federal Information Technology and Acquisition Reform Act (FITARA) through Congress.  If passed in its current form, FITARA, as it is known in the acronym-soup of the National Capitol Region, would be the single most important piece of legislation pertaining to federal IT enacted in many years.  FITARA has many important elements.  This post, however, focuses on just one – cloud computing working capital funds – and provides a few thoughts about the potential impact these funds could have on cloud adoption across the federal government.

“Section 303: Transition to the Cloud” of House Resolution 1232 (Section 5303 as written into the FY 2015 National Defense Authorization Act), authorizes agency Chief Information Officers to work with relevant fiscal authorities at their agency to establish cloud service working capital funds.  These funds would establish a ready pool of money to be used for investments in cloud computing.  Using working capital funds for cloud services would have several important effects on agency cloud procurement. 

First, funding available via working capital funds would provide increased flexibility for agencies seeking to leverage the “buy by the drink” benefit of cloud computing.  With a steady and reliable funding stream agencies would be able to realize the promise of utility-based computing.  This is not a benefit that many have been able to use so far.  A quick review of the contract language in many cloud procurements reveals that agency contracting shops are taking a standard firm fixed price approach to the acquisition of cloud services.  Agencies are thus squeezing square pegs into round holes and not getting the full benefits promised by a cloud approach.

Second, the use of cloud services working capital funds would centralize investment in cloud services.  Think of the impact this could have.  Authority centralized in the CIO’s office would enable the CIO to coordinate the use of cloud computing on an enterprise level.  Agencies are already moving toward common operating environments.  The cloud working capital fund provision of FITARA would basically enable the integration of cloud services into that common environment.  CIOs are also already deep into the process of inventorying applications and all other IT assets to comply with PortfolioStat.  Having gleaned an enterprise-wide picture of redundant capabilities an agency CIO with centralized investment authority could compete a single cloud contract for those capabilities in short order.  Duplication of buying would be removed from the environment.  So far so good, right?

The potentially not-so-good-for-industry part of this scenario is that these cloud working capital funds could eventually drive down IT spending.  Agencies continue to spend upward of 70% of their annual IT budgets maintaining legacy systems.  This funding flows into revolving generations of operations and maintenance contracts for those systems.  Conceivably, the centralized acquisition authority described above would also enable CIOs to direct greater percentages of funding toward work cloud-enabling older systems and applications.  While great in the short-run for vendors providing such services, once the transition to the cloud had been implemented, expenditures maintaining the operation of those systems would be set to a new and lower baseline.

In short, the passage and enactment of FITARA could be a mixed blessing for commercial cloud services providers.  Vendors offering cloud services would benefit in the near-term from the creation of cloud services working capital funds, but the eventual result of FITARA could be to drive significant reductions in IT spending at federal agencies.  By necessity this trend would result in a smaller market, a development that would be great for agencies and taxpayers, but not so great for those whose jobs depend on selling IT products and services to the federal government.  

 

Capacity on Demand: The Next Phase of Defense Cloud Adoption?

If one thing has become clear over the last few months concerning the Department of Defense’s plan to use commercial cloud services, it is that Infrastructure-as-a-Service (IaaS) providers will have more near-term business opportunities available to them than any other type of provider.  The DoD may seek out specific kinds of applications offered by commercial partners on a Software-as-a-Service (SaaS) basis (think analytics, cyber security, unified communications, network management, etc.), but the evidence points to infrastructure providers deriving the highest demand and earning the highest profits.

The evidence I refer to is pretty straightforward.

First, the DoD is awash in duplicative applications.  The Army alone, according to Doug Wiltsie, the Army’s Program Executive Officer Enterprise Information Systems, has as many as 25,000 applications that must be de-duplicated, decommissioned, and migrated to the DoD Core Data Centers provided by the Defense Information Systems Agency (DISA).  The situation is similar in the Air Force, with as many as 8,000 apps in need of rationalization, and Navy, which seeks to cut its 7,000 applications in half.  That’s 40,000 applications the DoD has, not counting other defense agencies.  You can see why buying new apps is not a priority for the department.

Second, so far DISA’s Enterprise Cloud Broker Program Management Office has approved Amazon Web Services, CGI Federal, and Autonomic Resources to run cloud services for DoD customers.  Unless I am mistaken, all of these are cloud hosting vendors that provide massive computing and storage infrastructure.

Third, and finally, one of the major thrusts behind the establishment of the Joint Information Environment is to remove throughput limits as a roadblock.  Eliminating bandwidth constraints goes hand-in-hand with using commercial services for capacity on demand, since greater bandwidth enables expanded use of enterprise services, including analytics, and greater ability to “surge” data across the network as it is required.  To again cite comments recently made by PEO EIS Wiltsie, the Army requires commercial capacity enhancement for a number of purposes, including end of year auditing activities related to Enterprise Resource Planning programs and to reduce costs that the Army is currently passing on to DISA.

Given the evidence above it seems likely a veritable tidal wave of DoD requirements for commercial IaaS services is on the way.  As always, it is useful to watch what Army’s PEO EIS does, as well as what its leadership says.  In first quarter of this fiscal year, EIS released market research requesting industry feedback on, you guessed it, Information Technology Capacity on Demand (ICOD).  The ICOD RFI sought to “identify potential sources capable of providing a capacity processing infrastructure / solution required to deliver on-demand IT capacity for a variety of application and processing environments.”  Information gathered from the ICOD RFI will probably be used to establish a baseline understanding of the commercial landscape; call it creating a “stable” of potential commercial partners, if you’d like.

As the number of cloud services providers receiving FedRAMP and DISA Cloud PMO ATOs increases, the likelihood that Requests for Proposals related to application migration and hosting services for DoD will also grow.  DoD use of DISA’s milCloud solution will have to grow first, however, and reach a mass critical enough for DoD customers to confidently use commercial partners.  By critical mass I mean enabling Defense applications for the cloud using DISA’s Orchestrator tool.  Once DISA has proven that apps migrated to the cloud are on a cloud footing, expect them to flood back out into the waiting arms of approved commercial providers.

In effect, DISA is acting as the DoD’s cloud gatekeeper and way-station for putting Defense applications on a cloud footing.  Engineering applications to function in a cloud environment is essential for protecting the data they handle.  DISA will do this via its automated solution, determine the data impact level the data falls under, and then use one acquisition vehicle or another to farm out management of the approved, engineered capability to industry.  It’s not a cheap way of doing things, but it does address the DoD’s concerns about data security while also ensuring that the department complies with legislative mandates for it to utilize commercial cloud providers. 

 

DISA’s FY 2015 IT Budget: Implications for Industry

The Defense Information Systems Agency (DISA) is playing an increasingly important role in Defense IT, a role that is expected to grow with maturation of the Joint Information Environment (JIE).  Funding for DISA’s programs garners a lot of attention, therefore, as vendors seek to understand where contract dollars in the agency’s IT budget may be going and which Defense organizations are buying DISA’s services.  Today’s post takes a look at the broad outlines of DISA’s budget for upcoming fiscal year 2015 and breaks down some salient points vendors need to know.

DISA’s IT Budget in Context

Before diving into the numbers it’s worth taking some time to understand where DISA’s IT budget fits into the broader IT budget for the Department of Defense.  Figure 1 below shows the Defense-Wide IT budgets for FY 2014 and 2015 alongside DISA’s IT budget for those same years.

Why the big drop in DISA’s FY 2015 IT budget if the agency is assuming a bigger role providing enterprise IT services?  Simple, it’s because the DoD CIO changed the way it calculates the Defense Working Capital Fund in the FY 2015 budget.  For FY 2015, funding is now identified in the ‘senders’ accounts (i.e., Defense customers) rather than the investment owner's (i.e., DISA’s) account.  Therefore, the FY 2015 IT budget number for DISA shown in Figure 1 includes $1.85B for the Defense Working Capital Fund.  In FY 2014 this number was $3.9B because it included operations costs for investments not under DISA’s operational control.

Assuming, however, that the proportion of operational costs reflected in DISA’s FY 2015 number were roughly the same in FY 2014, we can conclude that DISA’s IT budget typically makes up 29% of the total Defense-Wide IT budget annually.

Defense Customer Appropriations – Computing Services

Moving now to the specific services that DISA provides, Figure 2 shows what Defense customers have “appropriated” (i.e., spent) or intend to spend on DISA’s computing services from FY 2013 to FY 2015.  The computing services DISA supplies include Core Data Center services, DoD Enterprise Email, DoD Enterprise Portal Service, GIG Content Delivery Service, and the agency’s new milCloud infrastructure service.  The data for these services reveals a few interesting trends.

First, Army and Air Force appropriations have jumped significantly in the last two years.  This should come as no surprise both Services have fallen solidly behind implementing the JIE.  Army’s appropriations will rise by 52% from $112M to a projected $170M.  Air Force’s appropriations show a slightly larger increase percentage-wise, rising 52.5% from $101M to a projected $154M over the same period.

Second, Defense-Wide appropriations show massive jump on a percentage basis of 132%, from $25M to a projected $58M, indicating that the Defense Agencies are also enthusiastically embracing the enterprise services provided by DISA under the JIE concept.

Third, Navy and Marine Corps appropriations register as relatively flat or declining.  In the Marine Corps’ case, there is a small jump of 3.6% from $28M in FY 2014 to a projected $29M in FY 2015.  Conversely, Navy appropriations show a modest increase of 3% over the same period from $32M in FY 2014 to a projected $33M in FY 2015.  It is worth noting, however, that from FY 2013 to FY 2015, Navy appropriations show a decrease of 5.7%, from $35M to a projected $33M.

In short, while Navy officials may publicly toe the line with respect to the JIE and enterprise services provided by DISA, the data does not reflect growing support financially.  If anything, the data reflects the Navy’s intent to continue down its own path with NGEN.

Defense Customer Appropriations – Telecom/Enterprise Acquisition Services

Turning now to DISA’s transport and enterprise acquisition services, Defense customer appropriations show trends similar to those in computing services.  As Figure 3 shows, use of DISA for telecom and acquisition support has risen significantly over the last three years.

Army’s appropriations show the greatest growth, rising 38.5%, from $1.55B in FY 2013 to a projected $2.1B in FY 2015.  Air Force’s appropriations over the same period show similar growth, rising roughly 30% from $1B in FY 2013 to a projected $1.3B in FY 2015.  Even Navy’s use of DISA transport and acquisition services has increased, rising 10.3% from $560M in FY 2013 to a projected $618M in FY 2015.  Finally, growth of Defense-Wide appropriations has also accelerated, rising 8.5% from $423M in FY 2013 to a projected $459M in FY 2015.

Implications

The data discussed above has several implications that are critical for vendors:

First, the DoD’s shift to enterprise IT services and rollout of the JIE is real.  This trend has momentum and is expected to accelerate.  Even contracting is being affected.  For example, anyone following Army procurements in particular (i.e., Unified Capabilities) has noticed the shift toward using DISA’s contracting services more frequently.

Second, a greater, in some cases much greater, percentage of Defense IT dollars are being spent at DISA and not on contracts with vendors.  Army, for example, is projected to spend $2.3B with DISA in FY 2015 while Air Force is projected to spend $1.46B and Navy is projected to spend $651M.  This is real money being taken out of the Defense IT market.  Those who benefit are vendors already working at DISA.  Given the amount of funding flowing into DISA, the agency is rapidly becoming the number one recommended focus for business development related activity.  Any company seeking to sustain itself in the IT business at DoD must devote more time, funding, and staff to developing relationships and shaping requirements at DISA.

Third, for the time being the Navy is an exception to this trend, as it continues to chart its own course.  Navy is already proving this with its use of Amazon Web Services to host large collections of unclassified data.  This situation may change in the near future, if comments by Navy officials are any indication.  Until then the potential business opportunity is greater with Navy than with the other Military Departments.

 

 

Update on Defense Cloud Computing from the JIE Mission Partners Symposium

Recently the professional association AFCEA hosted a major conference at the Baltimore Convention Center on the future of the Defense Department’s Joint Information Environment.  The JIE, as it’s known in acronym land, is a major DoD effort to engineer a common operating environment for the Defense community.  This effort currently focuses on two areas: installing new network hardware equipment to boost bandwidth globally and implementing a Single Security Architecture that’s easier for the DoD to defend.  Improving security is a critical reason for implementing the JIE, but from a fiscal perspective enabling the Defense community to use a host of shared enterprise services via a unified infrastructure is perhaps the most important rationale.  Put simply, the DoD cannot afford business as usual given the expense of maintaining countless redundant applications in stovepiped environments.

In this context cloud computing plays an important role in the DoD’s plans.  Contrary to what one typically reads in the trade press, the DoD has not stood still when it comes to finding ways for Defense customers to employ cloud solutions.  Lieutenant General Ronnie Hawkins, Director of the Defense Information Systems Agency (DISA), set the tone early in the Symposium by blowing up the myth that his agency’s development of its own cloud environment, dubbed the milCloud, is an end-run around industry.  “[The] reality is,” Hawkins noted, “that more than 60% of milCloud is run by industry partners and more than 80% of the Defense Information Systems Network (DISN) is run by industry partners.”  In making this point, General Hawkins gave voice to something I’ve argued in this blog for more than a year; namely, that the DoD is making progress using cloud computing largely behind the scenes.

On the second day of the conference, John Hale, Chief of Strategic Planning for Enterprise Services at DISA, provided details on where opportunities in the milCloud might present themselves to cloud service providers.  Hale described enterprise services in the milCloud that DISA currently provides, including Defense Enterprise Email, the Defense Enterprise Portal Service, Defense Connect Online, and Enterprise Directory Services.  He noted, however, that hosting of these services in the future will not necessarily reside in the DISA’s Defense Enterprise Computing Centers (DECCs).

There is the potential of “more outsourcing to commercial partners coming,” Hale said; with the goal of making “blended use of enterprise services across the DoD,” including both commercial and DoD providers. 

The best example of this approach that Hale could provide is DEE, the hosting of which DISA intends to outsource to a commercial provider in the future.  Hale said industry should expect a “huge shift” to commercial providers over the next 2-3 years.  This shift will take place once current network consolidation efforts are completed to a satisfactory degree and once additional commercial providers receive the Authority to Operate (ATO) from DISA.  Lastly, concerning how commercial cloud services will be procured, Hale expects DISA will “use a multi-pronged approach” that leverages a revamped version of the Commercial Cloud Services Provider contract vehicle in tandem with various Blanket Purchase Agreements it awards.

In conclusion, although a little patience might be required, the opportunity looks good in the next few years for cloud service providers to compete for significant business at DISA.

 

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