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Net New Development Dollars in Transportation’s FY 2015 Budget Request

Over the last few weeks I’ve been posting analyses of development funding in the FY 2015 president’s IT budget request for the Army and Defense Agencies.  This week the focus shifts to the civilian sector and net new IT development, modernization, and enhancement (DME) funding in the FY 2015 request for the Department of Transportation.

As a reminder, I have been defining “net new” DME funding the last few weeks as DME dollars slated in FY 2015 for programs that received zero total dollars in FY 2014.  According to that definition the DOT’s IT budget contains $14 million net new IT dollars in FY 2015.  These dollars are split evenly at $7 million apiece between two agencies in the DOT – the Pipeline and Hazardous Materials Safety Administration (PHMSA) and the Federal Aviation Administration (FAA).  The table below shows a breakdown of the numbers by project.

The Pipeline and Hazardous Materials Safety Administration

The largest of these programs is the PHMSA’s National Pipeline Information Exchange, a database intended to “collect and standardize state and external agency data, such as unregulated miles [of pipeline], inspection results, enforcement, Safety-Related Condition Reports, and incident investigation on operators so it can be integrated with the PHMSA's data and shared with state partners.”  NPIX was first proposed in FY 2012, but it has received no funding to date.  The PHMSA will therefore try again to secure funding for creation of the database in FY 2015.  Should it receive that funding, work planned for NPIX will begin with a pilot effort to collect data from 5 States (25 data sources) and organize it according to National Information Exchange Model (NIEM) standards to enable sharing with partners.  The success of the pilot will determine the viability of NPIX going forward.

The Pipeline Hotline and Online Reporting Tool is part of NPIX and is intended to be a whistleblower hotline for the collection of complaints and “near miss reports that feeds NPIX to drive inspections and avert potential disasters.  Presumably any procurement that appears for NPIX will also contain a requirement for PHORT.  This may not be the case, however, given that the initial stage of NPIX will be a pilot effort so interested vendors should keep an eye out for market research for both NPIX and PHORT.  I’m also thinking these requirements sound like perfect projects for a small business, so look for a possible set-aside opportunity.

The Federal Aviation Administration

The three projects listed for the FAA look less promising, truth be told.  There is also limited information available about each.

Energy Management Compliance is related to the installation of advanced energy meters (i.e., Smart Meters) at Air Traffic Organization facilities to track electricity usage in compliance with the Energy Policy Act of 2005 and Energy Independence and Security Act of 2007.  If this effort is contracted, it too sounds like a good project for a small business to complete.

The Tower Simulation System tech refresh is the only one of these projects for which background information is available.  Adacel Systems has been providing support for the TSS since 2007 under contract number DTFAWA08D00002 and in 2013 Adacel was awarded a follow-on contract (DTFAWA13D00013) for TSS support.  My guess is that the requested $3 million in FY 2015 tech refresh dollars will go to Adacel as part of ongoing support work.

Finally, the Seismic Safety Risk Mitigation program consists of a network of seismic sensors installed in critical air traffic control facilities that provide real time engineering data and structural safety assessments on buildings following earthquakes.  Without more information it is impossible to know what kind of work this would be going forward, but it sounds like support required expanding the installation of sensors throughout additional FAA facilities.

Final Words

Although $14 million is not a lot of money in the grand scheme of things, the overall DME IT budget request at the department for FY 2015 is over $1.7 billion.  This is down a bit from the $1.73 billion received in FY 2014, but it remains a sizable sum nevertheless.  Ninety-nine percent of this money will be going to fund efforts currently underway, so while this means there are precious few net new IT dollars, there will still be work to compete for, or defend, as the case may be.



Business Opportunities in DOT’s Fiscal 2015 IT Budget

The Department of Transportation’s information technology (IT) budget request for fiscal year 2015 is $3.3 billion, an amount almost identical to that enacted in FY 2014. Of this total 51%, or $1.7 billion, is slated to be development, modernization, and enhancement (DME) funding. Compare this to $1.6 billion in operations and maintenance (O&M) funding for FY 2015 and what appears is yet another year that DME spending on IT surpasses spending on legacy IT assets at the DOT.

This remarkable situation (remarkable because IT budgets have stagnated everywhere) makes the DOT one of the more attractive business development targets in FY 2015. This post takes a look at a few of the programs receiving the highest percentage of DME funding at the DOT and examines the competitive environment surrounding some those programs.

Federal Aviation Administration

Not surprisingly, all of the top programs receiving 2015 DME funding are at the Federal Aviation Administration (FAA). I noted in a previous post that the FAA is slated to receive $836 million in FY 2015, plus an additional $186 million if Congress chooses to fund the president’s so-called “Opportunity, Growth, and Security Initiative” for the Department of Transportation. The programs listed in Table 1 will benefit from those DME dollars, as all are related to either the Next Generation Air Transportation System or the legacy National Airspace System that preceded it. Table 2 below shows that major support contracts related to some of those programs are due to expire by the end of fiscal 2015, providing a potential business opportunity for competitors and follow-on opportunity for incumbents.
Non-FAA Programs

Having looked at NextGen/NAS related programs at the FAA, what about other programs across the DOT that may be of interest and have DME funding in FY 2015? Table 3 below lists several programs offering potential business opportunities based on new funding in FY 2015.
Contract information for the DOT Common Operating Environment is readily available, but the opportunity here is limited given the long-term support contracts (#DTOS59D1000008 and #DTOS59D1000009) held by ActioNet which don’t expire until 2019. This leaves the remaining programs to consider. Of these, available details are hit or miss. Here is what could be found.
  • National Pipeline Information Exchange (NIPX) – A program planned by the Pipeline and Hazardous Materials Safety Administration, the NIPX is an integrated database of state and non-PHMSA data sources tracking “unregulated miles, inspection results, enforcements, SRCR and incident investigation on operators” that will enable information sharing between the PHMSA and state partners. No incumbent contract could be found, suggesting this may be a new requirement.
  • FMCSA Drug and Alcohol Clearinghouse – A program planned by the Federal Motor Carrier Safety Administration to create a controlled substances and alcohol test results database for Commercial Driver's License holders, the D&A Clearinghouse is part of MAP-21 legislation requirements intended to improve safety by ensuring the effectiveness of testing programs. No incumbent contract could be found.
  • MARAD Ready Reserve Force (RRF) Support – Automation capabilities provided by the Nautical System 5 (NS5) and Ready Reserve Force Management System (RMS) for the Maritime Administration’s RRF program. The current support contract (#DTMA91C20120008) held by Management Systems and Consultants expires in December 2016.
  • DOT Departmental Procurement Platform – A program for which the DOT last carried out market research in 2010, the DPP consolidates departmental procurement systems that integrate with DOT's Delphi financial system. An incumbent contract for DPP support couldn’t be found.
Summing up, this handful of programs illustrates that there are pockets of opportunity in the DOT’s $3.3 billion IT budget for FY 2015.  These aren’t multi-million dollar programs the size of many FAA investments, but winning contracts for this work would provide respectable revenue for small and mid-sized businesses in particular.


FAA’s NextGen Remains a Winner in Fiscal 2015 Budget Request

The Federal Aviation Administration, a perennial “winner” when it comes to appropriations, is slated to once again receive nearly $1 billion in funding for work related to the Next Generation Air Transportation System (NextGen).  The president’s budget request for the FAA actually works out to $836 million, plus an additional $186 million if Congress also chooses to fund the so-called “Opportunity, Growth, and Security Initiative” for the Department of Transportation.  One billion dollars per fiscal year is a lot of money under good circumstances.  In the context of the United States’ currently dire fiscal condition, it is an eye-popping amount

What has the DOT/FAA been doing with this annual budgetary largesse, generally untouched even in the face of sequestration?  Falling behind schedule and making bad business decisions, according to a recent audit by the DOT’s Office of the Inspector General.  To quote from the report “While FAA is making progress with elements of NextGen, [its] work continues to find longstanding problems with cost increases, schedule slips, and performance shortfalls.”  Some specific problems cited in the report include:

  • Failing to make “key Enterprise Architecture decisions … such as investments needed for a NextGen weather-related system that was scheduled for 2010.”
  • Failing “to develop an executable implementation plan that addresses costs and technology development and integration.”
  • Allowing the production schedules of “key modernization projects … needed to implement NextGen capabilities” to slip.

The result of these “challenges” is that members of the aerospace industry are becoming increasingly skeptical of spending money on the installation of NextGen electronic components in their aircraft given the lack of clear benefits to do so.  This is a remarkable observation considering NextGen has been touted for years as the future of air travel in the United States.

The picture that emerges from the OIG audit is not uniformly bleak.  In fact, for IT providers there is considerable opportunity in the FAA’s chaos.  NextGen schedule slips suggest the potential for more contractor work in the future and if the government is going to continue throwing close to $1 billion at the problem, who are industry partners to complain? 

For example, the longer NextGen systems remain under development, the longer legacy National Airspace System components will require sustainment.  The DOT proposes to fund the FAA’s NAS Sustainment Strategy to the tune of $370 million in FY 2015 “to reduce some of FAA’s multi-billion dollar maintenance backlog.”  Therefore, what we are really talking about in FY 2015 is a total of $1.37 billion for NextGen/NAS sustainment funding.

Finally, if all this screams legacy contract recompetition to you, then we’re on the same page as the DOT OIG.  To again quote from the report, the “FAA will need a sufficient workforce to manage FAA’s increasing acquisition workload.”  By my count there are at least 7 NextGen/NAS related contracts expiring by the end of FY 2015.

Of these contracts, two stand out – the ERAM support contract held by Lockheed Martin and the System Wide Information Management (SWIM) System Engineering and Business Support Services contract held by the North Star Group.  The ERAM contract deserves attention because it is by far and away the largest of the contracts listed and because the implementation of ERAM has experienced repeated delays over the years.  The SWIM support contract is worth knowing because the SWIM system is the SOA-based information sharing interface that sits at the center of NextGen.  Obviously, the others are worth having on the radar as well.  It’s just that these efforts stand out to me more than the others.



The Federal Aviation Administration Turns to the Cloud for NextGen Solutions

It has been 14 months since the Federal Aviation Administration (FAA) published its cloud computing strategy.  In that time, the agency has made progress toward using cloud solutions on a large-scale.  The going so far has been slow, just as the agency promised it would be in its strategy document, and as former acting DOT CIO Tim Schmidt reiterated at an industry event in January of this year.  Recent events suggest, however, that the FAA is poised to enter the cloud market in a big way, providing business opportunities for infrastructure providers and systems engineering firms alike.

FAA Cloud Services

In terms of infrastructure, the FAA has settled on a strategy that leverages an industry partner capable of hosting government owned computing and storage hardware in a commercial facility.  The selected partner will also provide additional cloud infrastructure as required, as well as platform-as-a-service (PaaS) and software-as-a-service (SaaS) cloud services.  These services are all required as part of a large acquisition the FAA is conducting for FAA Cloud Services (FCS).  After releasing a Request for Information for FCS in July 2012, there had been little activity associated with the procurement.  Then, in April of this year, the agency released a draft procurement package outlining the requirements in greater detail.  This package makes it clear that much like the Intelligence Community and the Department of Defense, the FAA will spend a majority of its cloud dollars in the near-term on industry provided infrastructure.  Additional cloud services, e.g., the migration of applications, will be required as the model proves itself.  The industry partner will also be required to ensure that the facility and services provided operate smoothly with the FAA’s Telecommunications Infrastructure (FTI) and other networks and systems.  The solicitation for FCS is currently anticipated to be released in August 2013.

Systems Engineering Efforts

This brings me to the other cloud-related efforts underway at the FAA.  The most important of these is the System Wide Information Management, or SWIM, program.  SWIM was developed on a service-oriented architecture to be a data sharing hub between the various elements of the Next Generation Airspace Transportation System (NextGen).  The effort to cloud-enable SWIM has been underway since 2011, with work being performed by Noblis (Order #18 on contract #DTFAWA11D00051) and the North Star Group (Order #2004 on contract #DTFAWA10C00032).  The SWIM program has been well over budget and it is years behind schedule.  Currently, the SWIM program office anticipates Segment 1 of this system will be fully operational in FY 2015.  Presumably work on Segment 2a, introducing an enterprise messaging system via nodes in the National Airspace System, will also have begun by this time.  My expectation is that SWIM will be hosted in the FCS cloud facility.

Another system that appears destined for the cloud is the Common Support Services-Weather (CSS-Wx) program.  CSS-Wx is intended to be the single source of aviation weather information for the FAA and the data will be distributed via the SWIM system.  So, work will be required to engineer CSS-Wx for interoperability with SWIM.  CSS-Wx also will be hosted in the facility provided by the FCS vendor.

Finally, there is the Aeronautical Information Management Modernization (AIMMS2) effort to consider.  AIMMS2 provides an automated interface through which “Management of Airspace for Special Use Special Activity Airspace (SAA) assignments, schedules, coordination, and status changes” are communicated.  Like CSS-Wx, AIMMS2 is supposed “to take advantage of FAA-provided cloud infrastructure for its implementation,” and it leverages the SWIM program for data sharing, meaning that it too will require development, testing, and engineering to be interoperable.

These efforts illustrate that work related to both NextGen and cloud computing is beginning to appear in FAA procurements.  Industry should expect more projects to appear in the years to come, as the FAA gets its cloud infrastructure established and gains experience with a cloud-based approach.  This is a welcome surprise in a market where finding business opportunities can be challenging, particularly because as of last year it appeared that the FAA was going to use its own internal cloud infrastructure to host NextGen components.  One other thing to note about these efforts is that the FAA is not thinking short-term for them.  The potential duration of the FCS, CSS-Wx, and AIMMS2 awards is in the range of 10 years apiece, so vendors who lock up this work will have it for a long time.


Will FAA Spending on NextGen to Remain Strong through 2020?

A few weeks ago the U.S. Government Accountability Office (GAO) published a report entitled Department of Transportation: Key Issues and Management Challenges, 2013. This report examined challenges the DOT is facing when it comes to “leveraging investment in surface transportation networks to meet national goals and priorities.” Being a market analyst focused on federal IT I read through the report seeking insight into department pain points and future technology needs. This was time well spent, because I hit pay dirt. Check out this doozy of a revelation on page 19 - the Federal Aviation Administration’s “NextGen modeling indicates that even if all ongoing and planned NextGen technologies are implemented, 14 airports—including some of the 35 busiest—may not be able to meet the projected increases in demand.”
Among these 14 airports could be found Newark International, LaGuardia, and Philadelphia, or, in other words, major airports serving major population centers. A look through DOT line items in the fiscal 2013 Exhibit 53 shows that spending related to the FAA’s Next Generation Air Transportation System is expected to make up $2.2 billion of the DOT’s $3.1 billion IT budget in FY 13 alone. Spending on this level is not an aberration either. Every year an overwhelming majority of the DOT’s IT dollars are dedicated to NextGen related investments.
The results of the FAA’s NextGen modeling suggest a significant amount of IT dollars will continue flowing into NextGen related procurements for at least the next decade. In today’s climate of shrinking IT budgets, this revelation is akin to discovering an unexpected oasis in a desert. The question is figuring out where these dollars will materialize. The GAO report does not provide any clues so those of us looking in from the outside are left to speculate about potential investments. In my opinion, two general possibilities present themselves at this time.
First, current contracts supporting NextGen investments could be extended and/or scope increased to provide the extra capacity.  By my count there are more than 30 currently active contracts related to NextGen components expiring between September 2014 and October 2018. Still others expire up to 2020. Competing for the follow-ons to these contracts (assuming follow-ons are planned) is a no-brainer.

Second, the FAA may choose to compete brand new contracts for NextGen requirements. The $64,000 question at this point is will the FAA leverage cloud computing for its needs? Publicly, the FAA’s progress toward the cloud has been slow. Behind the scenes, however, it is beginning to look like the agency is growing more comfortable with using cloud-based solutions. For example, Noblis has been providing cloud computing support for the FAA’s System-Wide Information Management (SWIM) program since June 2012. That order was awarded via Enterprise Communications Support Services (ECSS) contract # DTFAWA11D00051. More recently the FAA Office of Airports awarded a contract to L-3 Services (a subsidiary of L-3 Communications) for its System of Airports Reporting (SOAR) II requirement. Section 4.2.3 of the Statement of Work called specifically for the awardee to complete an assessment of a potential cloud computing solution for SOAR II. Strictly speaking, SOAR II is not a NextGen system, but because it interfaces with NextGen systems I am wondering how long it will be before a lot more Market Surveys calling for NextGen related cloud solutions start appearing on

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

Cloud Computing at the Federal Aviation Administration: Data Hugging and Performance Anxiety

The FAA recently released its cloud computing strategy. This document explains where the FAA sees obstacles to cloud computing adoption and it provides a snapshot of the federal cloud computing market.
May 2012 was a big month for cloud computing at the Federal Aviation Administration (FAA). In the space of a few weeks, the FAA released Version 1.0 of its FAA Cloud Computing Strategy and it awarded a $91 million contract to Computer Sciences Corporation (CSC) to stand up an Enterprise Messaging System in a CSC-hosted cloud. The award to CSC is part of the FAA’s new cloud computing strategy, Phase One of which entails assessing and then selecting “low-risk, high-value cloud services that can deliver and demonstrate early value to the FAA.” Migrating email to a Cloud Service Provider (CSP) is a proven winner in this respect, as it has become one of the first major services to move to the cloud. The same holds true for the FAA’s other early foray into the cloud, the award of a contract to Akamai to provide on-demand web content. That the FAA’s early steps into the cloud are represented by low-risk services like email hosting and web content delivery illustrates the fundamentally conservative approach that the agency is taking toward cloud computing adoption. In this sense, the FAA is an excellent example of how federal agencies go about embracing a new technology paradigm like cloud computing and an informative illustration of trends currently dominating the federal cloud computing market.
Agency Concerns Slow Cloud Adoption
Two obstacles to rapid cloud adoption evident in the federal market as a whole stand out in the FAA’s cloud strategy document. The first is security in Public clouds. This is no surprise as the safety of data in Public clouds has been a central concern from the beginning. What is surprising in this context is that agencies like the FAA remain concerned about the security of Public cloud computing despite years of studies and published expert opinions showing that Public cloud solutions like those provided by  Google, Amazon, and Microsoft, are likely safer than many of the government systems on which the data currently resides. Still the security concern persists, suggesting that ingrained cultural bias against outsourced data hosting is the real culprit, not holes in Public cloud security.
In addition to “data hugging,” the second big concern for the FAA around cloud computing is performance. Issues like system latency and reliability are cited as big areas of worry for the FAA, especially in connection with the potential hosting of National Airspace System (NAS) components in the cloud. Much like the Army’s tactical networks and combat ISR systems, NAS components must transmit data in real-time and they must operate without fail 24x7x365. The FAA remains committed to exploring the use of cloud solutions for hosting NAS systems, but it will do so only after it has been proven to their satisfaction that hosting the NAS in the cloud does not impair reliability and performance. The need for ironclad assurance that systems in the cloud are reliable suggests it will take time for the FAA to adopt vendor hosted solutions extensively.  Moreover, this observation extends to other federal departments where systems must be on at all times and must deliver data in real-time.
Turning to an Internal Solution
IT leadership at the FAA understands the transformative nature of cloud computing. It is because of this understanding that the agency is moving toward the cloud paradigm. However, because of cultural resistance, risk aversion, and abiding doubts about the performance and reliability of outsourced cloud solutions, that same leadership is turning predominantly toward the more time consuming and expensive path of creating its own internal cloud environment before it invests in vendor provided solutions. The center of this FAA cloud environment appears to be its Herndon, Virginia data center, into which the FAA is planning to relocate already virtualized, lowest-risk applications. The FAA will then use this data center to “begin hosting a community cloud as a shared resource for government agencies … the Herndon facility will [also] offer a self-service interface in which customers can request their own infrastructure and provision it based on the need of the project.”
This approach illustrates the findings in FIA’s recent Federal Cloud Computing Services Outlook, 2012-2017 report. Agencies are often turning toward internal cloud solutions based on the use of their own virtualized data centers. The FAA specifically and DOT in general have a leg up on other agencies in this respect because for years the FAA/DOT has engineered many of its systems on a Service-Oriented Architecture (SOA). Now, with the advent of cloud computing, the FAA intends to develop an FAA Cloud Computing Architecture that will interface with its Enterprise Architecture (EA). The result will be “an IT environment that takes advantage of cloud computing to support, enable or leverage key Federal and FAA initiatives including data center consolidation, net-centric operations, shared services, SOA, innovation, and sustainability.”
The Result: A Dr. Jekyll and Mr. Hyde Market
For several months now FIA has been commenting how the federal cloud computing market shows signs of having a dual nature. On the one hand agencies are competing contracts for low-risk systems like email and web content delivery, while on the other they are utilizing in-house resources and contracts, like those for managing their data centers, to implement private clouds based on their own IT infrastructures. The cloud strategy document just released by FAA illustrates this trend clearly. The results of these bi-polar market trends are as follows. To begin with, it only appears as if cloud adoption across the federal government is slow. Few cloud contracts are competed in comparison to the data showing that cloud adoption is on the rise. The data shows the trend, however, illustrating that agencies are adopting cloud computing. They are simply doing it on their own terms. Those terms are highly risk-averse, informed by cultural tendencies toward “data hugging” and resulting in the creation of internal private clouds. To be sure, the FAA does state in its cloud strategy that as its systems come up for technology refresh, the agency will evaluate the possibility of outsourcing the system to a Cloud Service Provider. The question worth asking, however, is if the FAA possesses an internal, scalable, private cloud environment, what would it gain from hosting the system in a vendor provided cloud? Knowing the answer in advance could make the difference between profiting in the federal cloud computing market or being left out of it.