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Reviewing President Obama’s Inaugural Address for Implications to the Federal Contracting Community

While it's no State of the Union address in terms of gleaning future business opportunities, President Obama's inaugural address does hold some insight into his top priorities moving forward. As I reviewed Obama's speech, there were obvious references to issues which commanded a high profile on his campaign as well – "Our health care is too costly; our schools fail too many..." In terms of significance, both these issues are pretty obvious, but focusing Health IT messaging around efficiency and cost-savings or performance assessment solutions around schools and education could impact the course of a presentation or spark a new idea within your organization. So, I identify 8 areas mentioned which could redirect your attention and resources in the coming months or perhaps, reinforce a path your organization has already chosen. Either way, this speech provided an interesting precursor to the budget and policy decisions which are on the horizon.

8 Focus Areas for the Federal Contracting Community (in the order they appear in the speech):

  1. Architecture, Engineering and Construction (AEC) and Telecommunications – President Obama is committed to building "the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together."
  2. Science Education – Throughout the House Democrats American reinvestment legislation, the authors followed President Obama's lead in directing more funding for science, math and engineering programs and projects. On Tuesday, Obama promised to "restore science to its rightful place." Be sure to keep an eye on everything from training teachers to teacher and student scholarships focused on these areas.
  3. Healthcare – We can assume from many previous statements on the state of healthcare in this country that Obama will be implementing major healthcare changes. Possibly referencing Healthcare Information Technology (Health IT), Obama offered to "wield technology's wonders" to improve healthcare. From the tone of the House Democrats proposed stimulus legislation, this will involve Health IT in a big way. As for Obama, he said his goal will be "to raise health care's quality and lower its cost."
  4. Energy Innovation and Independence – Another big campaign topic, a new energy strategy seems to be a talking point in almost every industry in this country. In Obama's words, "We will harness the sun and the winds and the soil to fuel our cars and run our factories." While this is vague on the actual processes and technologies which will drive our future, expect at a minimum for green standards and regulations to accompany any new federal AEC or technology project. Indeed, the sky isn't even the limit with how far this policy could go, but in terms of business opportunities any proposal, program or project which has built in "green" certifications, measurements and cost-savings is likely to be the most successful. As Obama hopes to "roll back the specter of a warming planet," it is possible that more strict environmental regulations for corporations could be in our future as well.
  5. Education Improvements – Obama and the proposed House Democrats legislation reference educational improvement in two ways. First, an educational system which supports both teachers and students ensuring that not only is math and science promoted but all disciplines are stressed to create successful students and qualified adults. In his speech, Obama said "we will transform our schools and colleges and universities to meet the demands of a new age." This means that all levels of education are likely to receive increased attention and funding. From studying the proposed stimulus legislation, I know the House Democrats are proposing (similar to Obama's campaign and transition plans) improvements which entail everything from AEC renovations/repairs to increased student loans/grants to adult education programs.
  6. Performance Review, Accountability and Transparency – Perhaps we should have expected Obama's first round of executive orders to deal with government ethics, accountability and transparency when he tied accountability to the public trust in his first speech as President. He said, "And those of us who manage the public's dollar will be held to account – to spend wisely, reform bad habits, and do our business in the light of day." Vendors can expect the themes coming from agency leadership to be those of fiscal responsibility, efficient performance and public accountability. And it's quite possible that programs that consistently appeared on OMB's Management Watch List and High-Risk List could be very clear targets once the Obama Administration begins reviewing programs for performance and accountability. The best way to join this effort is to keep your Government point of contact well stocked with performance statistics and cost-savings should a Congressional committee or new appointee ask for more information.
  7. Armed Forces – It was hard to get a feel for Obama's plan around our involvement in Iraq and Afghanistan (and the business implications) just from his speech on Tuesday. However, he did offer this message about the two fronts, "we will begin to responsibly leave Iraq to its people, and forge a hard-earned peace in Afghanistan." Regardless of what this means for the equipment and technologies of war, it is likely that Defense spending will still go toward logistics, acquisition management/reform, and troop/veteran support services.
  8. Nuclear Deterrence – As President Obama said, "...we will work tirelessly to lessen the nuclear threat." Again, it is difficult to surmise the implications of this phrase. But using what we know about President Obama and the delicate balance of nuclear proliferation, it is likely that all the tools within DoD and the Department of State will impact this work. Regardless of whether this is accomplished through diplomacy or military action, vendors can expect that the intelligence, analysis and recommendations from the military and defense contracting communities will be involved.

As we move into the "first 100 days," there are high expectations and daunting challenges on this new President yet it will become more and more clear the direction of his agenda and priorities as agency leaders are confirmed and his fiscal year 2010 budget begins to take shape.

Secretary Napolitano Follows the President’s Lead and Hits the Ground Running

Border and transportation security contractors may find a friend in DHS Secretary Janet Napolitano. An Arizona newspaper article reviews the Governor's interview with Phoenix PBS affiliate station KAET-TV in which she discusses border strategy and the need to go beyond "boots on the ground" to technology.

"You're never going to have enough boots on the ground if all you rely on is boots on the ground. You've got to augment them with technology." This is a good sign for DHS and CBP, which receives nearly 50% of total border and transportation security funding (along with TSA, US Coast Guard, the State Department and a handful of other agencies).

Is the Grass Greener?

So, what about areas where this new perspective clashes with Bush administration policy? One area of contention with the out-going DHS strategy has been over tactical infrastructure. Within the Secure Border Initiative (SBI), the previous administration funded and began constructing a wall and other physical barriers along the Southwest border of the United States. Secretary Napolitano is famous for saying, "show me a 50 foot wall and I'll show you a 51 foot ladder." Presumably, this means she is not seeing eye-to-eye with the Bush administration policy; however, that does not answer the question of what she can do about it. Obviously, in this new funding environment, budgets will be tight and everyone will be looking to save money. It will be interesting to see how she handles the funding and operations for SBI's tactical infrastructure projects which are already underway.

What Can Vendors Expect?

Based on Obama's comments during the campaign and transition as well as Secretary Napolitano's during her Senate confirmation, we can expect immediate focus to be paid to collaboration and information sharing, internal processes specifically in transportation security, and intelligence and analysis. Any vendors who can implement technology thus saving resources and improving mission areas, will have the quickest success moving forward, at least in the short-term. Focus on efficiency, technology and results-oriented program evaluation will be the themes and talking points from DHS leadership. We expect that while the DHS mission stays the same and remains vitally important, the way the new administration will prioritize operations and threats as well as how funding is allocated could mark a shift in the focus of many projects. As more DHS officials are confirmed and begin working, the market and industry watchers will get a better idea of how certain personalities, Secretary Napolitano and President Obama will influence day-to-day operations.

As budget cuts loom, Missouri Governor puts Communications System on hold

The state of Missouri had hoped to bring their radio infrastructure up to date with a new statewide system from Motorola. The project was slated to cost approximately $80 million and Gov. Nixon will be pushing $8.5 million for initial installments for the 2010 budget. However, with budget deficits and shortfalls in many states becoming commonplace, newly elected Governor Jay Nixon made the decision to put a hold on the new communications system.

Several state agencies, including the State Highway Patrol, are in dire need of an upgraded communications system. The State Highway Patrol currently uses a 50-year-old system that still utilizes vacuum tubes in its transmitters. A new system would enable the agency to connect to various agencies across the state as well as other regions that may be included in the new system.

In New York, the Office for Technology terminated a contract with M/A Com for a statewide interoperable communications system. The contract was approximately $2 billion, and while it was not canceled due to lack of funding, one wonders if a new vendor will be contracted to build the costly system with such uncertainty in the market and state budgets. In addition, it is also questionable whether New York state and Missouri will be able to meet the FCC deadline for narrowbanding requirements by Jan. 1, 2013.

It is essential that states that are still upgrading their communications systems move forward quickly with the FCC deadline several years down the road and the fact that waiting will raise costs for the states because of radio frequencies being unavailable. Existing towers could be used by other communications systems and therefore new costly towers would be necessary. Gov. Nixon will have an important decision to make and other states may need to determine how they will bring their state into full interoperability in a time where a lack of communications can bring devastating consequences.

House Economic Stimulus Plan is Rich with Potential Federal Opportunities

This morning I attended an event entitled, "Federal IT Trends in the Obama Era: What's Hot and What's Not." For me, the most informational and timely information came from the former e-Gov Administrator Karen Evans. The House Appropriations Committee recently released its stimulus package proposal (known as the American Recovery and Reinvestment Act). It still has to work its way through the House (and the Senate has yet to release its version), but Ms. Evans saw three distinct government needs if this plan or something similar passes:

  • Financial systems - Contractors that offer ready-to-go solutions to help government track all of the stimulus dollars stand to gain a market edge. Add in assistance in feeding the data into usaspending.gov and you've got a competitive advantage.
  • Project management - With all of the oversight and transparency attached to stimulus spending, agencies will need significant project management capabilities, which has been challenging for many of them. Start talking to agencies and the Hill about ways to structure project plans for implementation.
  • Grant management - Much of the stimulus money will be distributed through block grant programs. Agencies could use help in managing the grant applications that will pour in. Also consider helping entities applying for grants.
  • These are just a few areas of opportunity. Reading through the 258-page bill revealed a number of programs that could represent significant opportunities for federal contractors. GovWin's Federal Analysis team just released a new report, "Federal Opportunities in the House Economic Stimulus Plan" which analyzes opportunities in technology, facilities modernization, science and technology/R&D, training, and professional services. With nearly $60 billion in federal programs in these areas, federal contractors could find new revenue in the federal government if this bill passes.

    The final bill could take weeks to work its way through the process and it could look very different once it does. But the massive scale required to make a stimulus plan impactful means that it can't be accomplished by government alone. However, Ms. Evans and other speakers (including DoD Deput CIO David Wennergren and Navy CIO Robert Carey) made it clear that industry should expect to see higher levels of smaller procurements rather than a handful of massive billion dollar programs like we've seen in the past.

    Base Operating Support Services: A Continuing Need in the Department of the Navy

    President Barack Obama was sworn in this week, and with a new administration now in the driver's seat, there is the possibility that some favored Government programs and requirements may be re-examined in the years to come. One type of requirement, however, will almost certainly persevere; the Base Operating Support Services (BOSS) contracts are proving to be a mission critical need for the Department of the Navy. In fact, the Department of Defense's (DoD) Operations & Maintenance (O&M) funding continues to be highly reliable, as evidenced by the FY2009 Defense Authorization Act, which has set-aside $34.8B in O&M funding for the Navy alone, in 2009.

    The Department of the Navy introduced its Fleet Response Plan (FRP) in 2003, and the GAO issued a report on February 2008, that examined and assessed the program's progress thus far. The goal of the FRP is to assure that naval forces are trained and ready to deploy as soon as possible. Ideally, the Navy would like to have 3 Carrier Strike groups ready to deploy within 30 days of being activated, and 1 more group deployable within 90 days. In order to do this, it is important for the Navy to ensure that home bases and personnel are maintained at the highest level possible. This is where the BOSS contracts come into play, and why the need for these services continues to be an important need in the Department of the Navy.

    The current contract durations range from 5 to 10 years (including option periods) and have values ranging from $4M to more than $400M. These services are required at both CONUS and OCONUS installations, and may include:

    • Management and administration
    • Public safety, supply, housing, facilities support (excluding grounds and janitorial services)
    • Utilities
    • Base support vehicles and equipment
    • Environmental services

    GovWin is tracking the following upcoming Naval BOSS contracts:

    Program Name Competition Type Status Anticipated Value
    Base Operating Support for Kings Bay Naval Base Full and Open Pre-RFP $445M
    Regional Base Operating Services for NAS Jacksonville Full and Open Pre-RFP $420M
    Base Operating and Support for Facilities in the Washington DC Area Full and Open Pre-RFP $200M
    North Sound Base Operations Support Contract Full and Open Forecast Pre-RFP $220M
    West Sound Base Operations Support Contract Full and Open Forecast Pre-RFP $406M
    Base Operations Services at Djibouti Full and Open Forecast Pre-RFP $150M
    Patuxent River Base Operations Full and Open Forecast Pre-RFP $85M
    Regional Base Operations for the Naval District Washington Full and Open Pre-RFP $112M

    In closing, it remains to be seen what opportunities the New Administration will bring in 2009. But in times such as these when the procurement outlook is in flux, stable and predictable contracts such as Navy BOSS opportunities are a welcome sight to business development and capture management personnel alike. These opportunities allow for long-term, steady work with considerable financial returns and favorable prospects for follow-on work. And if the new administration's stated commitment to support and build the military is an indication of its intentions, BOSS opportunities should prove to be a continuing requirement for the foreseeable future.

    Conversations Continue Around DISN Global Services Management Contract

    Continuing GovWin's on-going discussion with Jason Miller at Federal News Radio, we recently reviewed DISA's upcoming Defense Information Systems Network (DISN) Global Services Management (GSM) procurement. This is the potential recompete of a contract currently being fulfilled by SAIC through September 30, 2010. Considering the fact that the SAIC contract has over $2 B of order as of FY07, the support services required for the operation and maintenance of the DISN are likely to continue beyond 2010.

    As Jason mentions in the interview, the industry is actively researching and watching this procurement to find out how DISA plans to move forward procuring these needed services. The previous procurement and award occurred in 2001 and it is likely that DISA will review the procurement strategy given the contractual and financial changes which have occurred in the last nine years.

    The good news is that with over 6 months until the RFP and likely 18 months before an award is made, vendors have plenty of time to prepare innovative solutions for DISN support. We expect much more information to be released in the coming weeks and months as DISA prepares for a new GSM contract. For more information please visit GovWin Opportunity Report # 14291. And for additional details and commentary, please listen to our interview on Federal News Radio.

    2008 Reflections: Why Cyber-Security Will be Big in 2009

    Since the end of 2008, many in the government contracting community have been reflecting upon the events of this past year, hoping to predict trends in federal procurement in 2009. Washington Technology recently released its 2008 Year-End Review, in which it interviewed several contracting experts, asking for their insights and forecasts for the new year. From these interviews, one common theme emerged: In 2009, information assurance (IA) and cyber-security will continue to be active and growing sources for government business.

    Several key events in 2008 will contribute to an unprecedented emphasis on IT security services in 2009 in the federal marketplace. The U.S. financial crisis will prompt government agencies more than ever to not only streamline, but also protect and secure their information. The presidential election of Barack Obama will also prove significant for IT security; in summer 2008, president-elect Obama pledged to make cyber-security "the top priority that it should be in the 21st century." Furthermore, 2008 witnessed countless occasions where prime contractors acquired smaller IT companies specializing in IA and cyber-security, such as Hewlett-Packard's acquisition of EDS Corp. Anticipating a surge in federal procurement for IT security services, several prime contractors recently created departments within their organizations solely focused on IT security services, including Lockheed Martin and Raytheon. GovWin also tracked the major IT security opportunities throughout 2008, watching government agencies pursue these services in increasing measure. Among these acquisitions from 2008 were the FAA's continuing requirement for a Cyber Security Management Center (CSMC) and the DoD/DHS' requirement for information assurance (IA), both of which were being tracked by GovWin in opportunity reports 31454 and 15269.

    So what does all of this mean for you as a government contractor? GovWin is tracking several opportunities that are anticipated to be procured in 2009 in the areas of information assurance (IA) and cyber-security. Two of the largest opportunities are the Defense Technical Information Center's (DTIC) requirement for the operation of an Information Assurance Technical Analysis Center (IATAC) and the Military Sealift Command's (MSC) requirement for Information Assurance Support for the MSC Information Technology Systems, both of which were being tracked by GovWin in opportunity reports 34916 and 33287. While this is just a sample of the potential competitions, it could mean billions of dollars for contractors specializing in these services. GovWin will be following all developments concerning IA and cyber-security throughout 2009. Stay tuned.

    New York State cancels $2 billion public safety network contract leaving $123 million up for grabs

    The New York State Office for Technology (OFT) announced its termination of M/A Com's contract for the statewide wireless public safety network.

    Due to the size of New York State, it was estimated that this project would take closer to 10 years to implement. The risk is that the technology would be outdated by the time the network was fully functional/complete. This project may have been better off if it were done by the individual counties or regions. This way each entity could implement similar technology at the same time. This may have been a better option because it would allow each region to control/update their own systems as they see necessary.

    I think this is the direction in which the state will take this project. The state's information technology initiatives for fiscal year 2009-2010 include $123 million for the statewide network. Without a state contract in place, that money will sit there. The state's best alternative would be to pass that money down to some of the smaller counties/regions who cannot afford to implement a new interoperable system. Awarding another contract, which will most likely be valued much higher than $2 billion, could take a few years to do, putting the state further behind in this technology. GovWin will be inquiring into this project more in the upcoming months and will report on any decisions that are made.

    California Implements Sex Offender Monitoring Ahead of Schedule

    The California Department of Corrections and Rehabilitation (CDCR) recently announced that the Department now keeps tabs on all 6,622 active sex offender parolees in the state via GPS ankle bracelets. The CDCR originally planned for this project to be completed by June but was able to finish well ahead of schedule. This is especially surprising given the State's current fiscal crisis that has slowed many other State functions.

    As I mentioned in a previous blog , expect this technology to gain traction in this economic climate as a way to extend the capabilities of probation/parole officers and reduce costs versus incarceration. In general, funding for projects related to this sector of the inmate population can be easier to come by at the state level because the crimes committed by these offenders garner such a strong public and political reaction.

    Officials in Washington State are considering taking electronic monitoring of sex offenders a step further. A bill has been proposed that would require that sex offenders have a tiny tracking device inserted under their skin. If passed, this bill will undoubtedly draw criticism from right to privacy groups. However to say that the level of public sympathy for the rights of this community is low is an understatement.

    Next week I will post a blog on the efforts of states to create online sex offender monitoring registries.

    For a more in depth look into this segment of the corrections market see GovWin's report: Sex Offenders – New Federal Mandates, No Funding, and Competition-Limiting Provisions

    Congress unveils $800B stimulus plan with many state and local investments

    The House Committee on Appropriations has unveiled the draft legislation for the American Recovery & Reinvestment Act.

    From the executive summary:

    "In the next two weeks, the Congress will be considering the American Recovery and Reinvestment Bill of 2009. This package is the first crucial step in a concerted effort to create and save 3 to 4 million jobs, jumpstart our economy, and begin the process of transforming it for the 21st century with $275 billion in economic recovery tax cuts and $550 billion in thoughtful and carefully targeted priority investments with unprecedented accountability measures built in."

    Key highlights that will be of interest to state and local government IT contractors:

    Unprecedented Accountability:

    • In many instances funds are distributed through existing formulas to programs with proven track records and accountability measures already in place.
    • How funds are spent, all announcements of contract and grant competitions and awards, and formula grant allocations must be posted on a special website created by the President. Program managers will also be listed so the public knows who to hold accountable.
    • Public notification of funding must include a description of the investment funded, the purpose, the total cost and why the activity should be funded with recovery dollars. Governors, mayors or others making funding decisions must personally certify that the investment has been fully vetted and is an appropriate use of taxpayer dollars. This will also be placed on the recovery website.
    • A Recovery Act Accountability and Transparency Board will be created to review management of recovery dollars and provide early warning of problems. The seven member board includes Inspectors General and Deputy Cabinet secretaries.
    • The Government Accountability Office and the Inspectors General are provided additional funding and access for special review of recovery funding.
    • Federal and state whistleblowers who report fraud and abuse are protected.
    • There are no earmarks in this package.

    Clean, Efficient, American Energy:

    • $16 billion to repair public housing and make key energy efficiency retrofits.
    • $200 million to support $1.2 billion in grants and loans to rural areas for critical community facilities, such as for healthcare, education, fire and rescue, day care, community centers, and libraries.
    • $11 billion for research and development, pilot projects, and federal matching funds for the Smart Grid Investment Program to modernize the electricity grid making it more efficient, secure, and reliable and build new power lines to transmit clean, renewable energy from sources throughout the nation.
    • $6.9 billion to help state and local governments make investments that make them more energy efficient and reduce carbon emissions.

    Transform our Economy with Science and Technology:

    • $10 billion for science facilities, research, and instrumentation.
    • $6 billion for broadband and wireless services in underserved areas to strengthen the economy and provide business and job opportunities in every section of America with benefits to e-commerce, education, and healthcare.

    Modernize Roads, Bridges, Transit and Waterways:

    • $30 billion for highway construction;
    • $31 billion to modernize federal and other public infrastructure with investments that lead to long term energy cost savings;
    • $10 billion for transit and rail to reduce traffic congestion and gas consumption.
    • $3 billion for airport improvement projects that will improve safety and reduce congestion.

    Education for the 21st Century:

    • $41 billion to local school districts through Title I ($13 billion), IDEA ($13 billion), a new School Modernization and Repair Program ($14 billion), and the Education Technology program ($1 billion).
    • $250 million for competitive grants to states to design and develop data systems that analyze individual student data to find ways to improve student achievement, providing teachers and administrators with effective tools.
    • $79 billion in state fiscal relief to prevent cutbacks to key services, including $39 billion to local school districts and public colleges and universities distributed through existing state and federal formulas, $15 billion to states as bonus grants as a reward for meeting key performance measures, and $25 billion to states for other high priority needs such as public safety and other critical services, which may include education.
    • $6 billion for higher education modernization.

    Lower Healthcare Costs:

    • $20 billion for health information technology to prevent medical mistakes, provide better care to patients and introduce cost-saving efficiencies.

    Help Workers Hurt by the Economy:

    • $43 billion for increased unemployment benefits and job training.
    • $500 million to match unemployed individuals to job openings through state employment service agencies and allow states to provide customized services.
    • $20 billion to increase the food stamp benefit by over 13% in order to help defray rising food costs.
    • $100 million to improve state management information systems for the WIC program.

    Save Public Sector Jobs and Protect Vital Services:

    • $87 billion for a temporary increase in the Medicaid matching rate.
    • $4 billion to support state and local law enforcement including $3 billion for the Byrne Justice Assistance formula grants to support local law enforcement efforts with equipment and operating costs, and $1 billion for the COPS hiring grant program, to hire about 13,000 new police officers for three years.

    These are only the highlights. GovWin will have more comprehensve analysis available next week.

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