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Vendors Should Game Out Potential Sequestration Impacts

Deltek has already discussed the likely impacts of federal budget sequestration on Justice and Public Safety programs here. Sequestration arises from the Budget Control Act of 2011, which established new budget enforcement mechanisms for reducing the federal deficit by at least $2.1 trillion over the 10-year period (FFY 2012-FFY 2021).
Vendors should expect state and local buyers to remain fairly uncertain—maybe even confused—about the potential impact of sequestration on their federally funded grant projects. Many agencies will not implement contingency plans for sequestration cuts. They will wait for sequestration to go into effect and let their state budget offices to sound the alarm and issue orders. So, vendors with projects funded by federal grant dollars should think ahead.
The National Association of State Budget Officers (NASBO) has reviewed the federal government’s most recent sequestration report and found that “the report has certain limitations – for example, its calculations are based on fiscal 2012 appropriated levels rather than fiscal 2013, and its organization by federal account rather than grant program may make it less easy for some state agencies to analyze.”
Federal Funds Information for States (FFIS), the leading analyst of federal aid to states and localities, has found that:
While 73% of the programs that FFIS tracks are covered by the sequester, most of the funding states receive via federal grants (82%) would be exempt from sequester. This is because Medicaid (which accounts for almost half of federal aid to states), several highway programs, and a host of other mandatory programs targeting low-income individuals are not subject to sequester.
However, vendors should keep in mind that grant funds underwriting special IT projects that are unrelated to long-established programs are more likely to be in that 18% of non-exempt funding. For example, the Centers for Medicare and Medicaid Services’ (CMS) funding for “State Grants and Demonstrations” is sequestrable. This means that this pot of $530 million (per FFY 2012 budget) would be subject to a 7.6% cut (or $40 million) over the sequestration period. Unfortunately, as NASBO has pointed out above, the White House report on the impact BCA does not provide the level of detail required to assess the impact of sequestration on specific grant awards.
In reviewing relevant federal documents, Deltek does find any indication that federal funding participation (FFP) on IT projects for means-tested benefit programs, such as Medicaid Management Information Systems (MMIS), would be affected by sequestration. This is in keeping with the fact that programs for low-income individuals are exempt from BCA cuts, but we will keep an eye on this. The BCA, which is due to go into effect on January 2, 2013, will immediately become a political hot potato after the November election.
For the time being, all IT vendors doing business with state and local government projects funded by federal grants (not FFP) unrelated to programs for low-income individuals would be well advised to have a contingency plan for sequestration reductions.  It will be a good exercise for the continuing budget battles that are likely to afflict Washington for the next four years, regardless of the November results.

Contractor Survival Tactics: KEYW Continues To Make Acquisitions, Expands Into Commercial Market

In today’s challenging federal market, contractors of all sizes are evaluating their current strategies to achieve success over the next several years, while bracing for potential budget cuts that could significantly impact the way they do business moving forward.
At FIA, we are always watching the federal marketplace, and I personally have an interest in what’s going on in the mergers and acquisitions (M&A) arena surrounding cybersecurity, a market which is rapidly evolving and always seems to be in the news.
FIA Perspective:
KEYW makes two key acquisitions, which should significantly enhance revenues moving forward. Last week, KEYW said it planned to acquire software maker Poole & Associates Inc. for $126 million in an effort to boost its ability to win more work within the intelligence community.Based in Annapolis Junction, Md., Poole offers a broad range of high-end technical capabilities including systems and software engineering, program management support, and technical training.
For 2012, Poole is expected to generate about $60 million in total revenue, which should significantly enhance KEYW’s projected top-line growth. Poole is also expected to generate about $90 million in revenue for 2013, and had a total backlog of around $225 million at the end of the latest quarter.
In terms of contracts, Poole was recently awarded a five-year $150 million prime contract to provide systems engineering and program management support to an intelligence customer. Looking ahead, KEYW CEO Leonard Moodispaw said the acquisition will expand KEYW's footprint with one of its most important customers, while adding several prime contract vehicles that have significant growth potential with a key customer.
On Thursday (9/13), KEYW also announced that it’s purchasing Sensage Inc., a provider of advanced Security Information and Event Management (SIEM) and event data warehousing software solutions, for $34.5 million. In addition to providing KEYW an expanded commercial market opportunity, this acquisition strategically supports Project G, KEYW’s new cyber awareness and response platform geared towards critical infrastructure.
KEYW expanding its footprint into commercial and adjacent markets. In addition to acquisitions, KEYW has several new initiatives on the horizon in order to expand its addressable markets. KEYW recently said it continues to make strides on its “horizontal path” effort (Project G), which will target security for critical infrastructure. The company noted that Project G includes a national-security derived cyber-defense solution for critical infrastructure, and said the Sensage acquisition will be a key component of a new generation of cyber awareness products and services that KEYW is preparing for commercial launch in early 2013.
Elsewhere, KEYW has also invested (via its Flight Landata acquisition) in building an unclassified geospatial data system that is based on its knowledge of the classified version of a similar capability. This system will provide users in the first responder and national guard communities’ access to intelligence community (IC) quality data on devices, while expanding the company’s footprint beyond cybersecurity. In addition, KEYW said that it’s also pursuing opportunities in cloud computing, mobile device applications, classified and unclassified training programs, and synthetic aperture radar, which should all expand KEYW’s capabilities moving forward.
In the latest second quarter, KEYW saw its revenues jump 25% to $56.2 million, while noting that it’s “continuing to invest in key R&D initiatives, including Project G.” Previously, KEYW said that its “pipeline of new opportunities looks very promising in terms of new proposal activity, growth in existing programs, and opportunistic acquisitions."
Our Take:
Overall, we believe that KEYW will continue to be aggressive in making moves to remain competitive in the ultra-intense cyber market, especially in the wake of proposed defense budget cuts and increased competition from top-tier rivals.
With the cyber market being targeted as one of the few areas slated for growth over the next several years, numerous contractors are currently looking to invest in cybersecurity as an inorganic means of driving revenue growth, which should further fuel competition for cyber-related opportunities, acquisitions and market share in the near-term.
By continuing its aggressive M&A strategy and expanding into new and adjacent markets (and beyond the intelligence community), we believe KEYW is taking the necessary steps to remain competitive and carve out a niche in today’s evolving cyber market, which should ultimately payoff for the company and allow it to achieve success going forward. 


President’s Management Advisory Board Recommends Further Action to Reduce Improper Payments

Along with efforts to expand strategic sourcing, during their meeting on Friday, the President’s Management Advisory Board (PMAB) presented recommendations to further reduce improper payments. Recommendations include enhanced usage of the Do Not Pay List, coordination with states to eliminate unemployment insurance payment errors, and integration of predictive analytics into the Do Not Pay initiative.
Improper payments totaled $115 billion in FY2011. Although this equates to only 5% of total federal payments, according to a recent study by the Association of Government Accountants, the total amount is a significant waste of taxpayer money. 
The PMAB Improper Payments Subcommittee uncovered several critical management challenges during their investigation:
  • No central data source for payment and award decisions
  • Information arrives too late to impact payment decisions
  • Sub-optimal collaboration across federal and state governments
 The subcommittee gathered leading private sector industry practices in order to inform the following recommendations:
  • Focus and prioritize on a subset of the government wide improper payments challenges and develop pilot approaches on topics that address root causes of improper payments
  • Establish effective governance and oversight structures to create a strong “tone at the top”
  • Establish meaningful incentives and deterrents at the organizational and individual level, which could include contingency based incentives for third-parties, incentives for whistleblower hotlines, and recognition of internal control best practices
  • Develop a communications plan to ensure all stakeholders understand their responsibilities and consequences for improper payment error and fraud
  • Analyze relative risk among different types of programs and payment activities, and tailor actions based on the highest value opportunities
  • Create a dedicated team of internal and external specialists in fraud prevention and detection. Use of third party experts in areas such as forensic auditing, data base/analytic research, and error/fraud audits can be very valuable
  • Centralize data and use real time analytics in order to take timely action while information is hot
The subcommittee also proposed specific next steps for the unemployment insurance initiative to include identifying states to serve as “early adopters” and investigating new data analytics with high ROI for reducing state errors.
During a briefing last week, entitled “The Watchful Eye: Preventing Waste, Fraud and Abuse,” Earl Devaney, Chairman of the Government Accountability and Transparency Board, touted the benefits of transparency in rooting out waste, fraud, and abuse. According to Devaney,”[There’s] a lot of talk around technology to cure the accountability piece, but the transparency piece has been sort of missing.”
During the same briefing, Tom Vannoy, Program Manager for the Bureau of Public Debt’s Do Not Pay List, spoke of enhancements to the program. The Do Not Pay List was created in response to a 2010 presidential memo directing agencies to improve payment accuracy. According to Vannoy, the goal is to expand the program from 17 to 24 agencies within the next 18 months. They also have plans to expand from eight data sources to 14.
Kevin Greer, executive director at Accenture’s Federal Finance & Performance Management Practice, stated that to date, agencies are more focused on a “pay-and-chase” model rather than preventing improper payments. Unfortunately, the success rate for recovery is only 10%. In Greer’s opinion, “We actually believe the problem is getting worse, because the quantity of data seems to be increasing and the quality continues to be bad.”
The bottom line is that the federal government will continue to strive to improve its payment accuracy and save taxpayer money, in large part due to implementation of technology solutions to identify erroneous payments. The market remains ripe for continued contractor support such as prescreening, ID authentication, data warehousing, data authentication, analytics, predictive modeling, forensic accounting, and fraud case management to reduce improper payments.


The impact of sequestration on justice and public safety funds

The Office of Management and Budget (OMB) recently released a report pursuant to the Sequestration Transparency Act (STA) of 2012, which lists funds that will be in jeopardy should Congress fail to produce and accept a plan to reduce the budget by $1.2 trillion. The budget reduction plan was required by the Budget Control Act of 2011. The list of budget accounts that could be hit by sequestration is staggering, and will have a significant impact on all areas of government should the act be put into effect.

Not only will the federal government be affected, state and local governments will be as well, due mostly to the fact that they rely heavily on the federal government to provide grant funding in many areas, including public safety and emergency management, both of which are slated to be cut. Though 100 percent of the Public Safety Trust Fund is subject to sequestration, a decision was made to sequester 7.6 percent ($8 million). According to the report, under sequestration, “The Federal Emergency Management Agency’s ability to respond to incidents of terrorism and other catastrophic events would be undermined.” FEMA’s budget account for just the Flood Hazard Mapping and Risk Analysis Program holds $98 million, of which 8.2 percent (nearly $8 million) is subject to sequestration. Non-defense function state and local programs are slated to see a cut of $183 million.

Below are two tables delineating the impact of sequestration on several key programs. All numbers are in millions.



As mentioned by Joanna Salini last week, states depend on grants that are provided from these funds, and should a disaster occur, many states would be at a loss with how to even begin rebuilding without the aid of federal funds. However, that’s exactly what states may have to do since disaster relief could be cut by $580 million (all but $1 million of the budget was sequestrable). This could have significant impact, particularly if a disaster strikes a state still working to rebuild after the floods, hurricanes and tornados of last year.

Analyst’s Take

While the chances of sequestration actually occurring are still minimal at this point, vendors should be aware of areas that could be affected, and be ready to adjust their business plans and expectations accordingly. Vendors who focus in the area of emergency preparedness and disaster recovery should be particularly in tune with sequestration plans. While post-disaster clean up will surely be completed, it will likely be on a much smaller scale and longer timeframe.

Vendors in the public safety sector should be aware that grants for E911 and next generation 911 systems (both of which are covered under the Public Safety Trust Fund) are likely to be heavily impacted. While other grant options still exist for NG911 programs, such as those under the Homeland Security Grant Program, it is likely that those grants will receive even more applications than normal. By cutting federal funding in so many areas, funding will be stretched across the board. This means that many smaller state and local entities moving forward with upgrades or replacements might be required to hold off on making improvements until federal funding becomes available again. 



DISA’s GIG Convergence Master Plan: Is a Cloud/Big Data Contract Opportunity on the Horizon?

DISA recently released its GIG Convergence Master Plan. This plan outlines the agency's strategy for employing cloud computing in the greatest detail to date. It also strongly hints that one or more contracts will be competed to secure commercial support for DISA's implementation of enterprise cloud solutions for DoD.
The Defense Systems Information Agency (DISA) released a document at the end of August called the “GIG Convergence Master Plan (GCMP).” In this document the agency provided the most detailed description to date of how it intends to use cloud computing to deliver enterprise services to DoD customers. These details have implications for IT vendors hoping to win work at DISA. They also provide insight into where cloud related opportunities at DISA may lie.
Defining DISA’s Role as a “Cloud Provider”
DISA’s goals as the “cloud provider” for the DoD focus on delivering mission-enabling IT capability to users, increasing security, and improving efficiency via the Global Information Grid (GIG) and the nascent Joint Information Environment (JIE). DISA intends to leverage cloud computing to achieve these goals by providing two private clouds: an unclassified DoD cloud and a classified DoD cloud. These clouds will be in a hybrid commercial-government environment with DoD retaining the role of identity provider. As part of this shift, DISA will work with commercial cloud providers to develop feasible methods of protecting data in transit and at rest, authenticating users, and applying appropriate access controls. Authentication and access control will likely be accomplished by linking the cloud service provided with the identity management capabilities developed as part of DoD Enterprise Email.
Where is the Opportunity?
The key here for vendors is DISA’s stated intention to compete a contract for “one or more” commercial cloud providers to implement and manage the cloud for unclassified data. It is unclear if DISA will conduct a single contract competition or if it will compete multiple contracts. In my opinion the scope of effort required practically begs for a multiple award IDIQ contract vehicle featuring several vendor teams and valued in a range from 500 million to several billion dollars. Whatever path DISA chooses, vendors should be prepared to respond to market research and an eventual solicitation. My guess is that we would see this in late FY 2013, but this is just speculation on my part. Given what we know so far, preparation for this competition presumably would include:
·         Reviewing DISA’s cyber security policies and programs
·         Understanding how DoD Enterprise Email functions and the role it plays in identity access management
·         Providing a solution addressing DISA’s data security concerns based on the understanding developed above
·         Demonstrating experience tackling these issues in other cloud efforts and providing secure solutions that go above and beyond the call
I suspect that addressing security concerns will be the deciding factor for the vendor or vendors that win this competition; at least more so than price.
What Enterprise Services Does DISA Want?
According to the GCMP, DISA intends to provide the enterprise services to Defense customers via all three types of service deployment models. Some of these capabilities are or will be provided by DISA itself. It is unclear which capabilities vendors will be asked to provide. The proposed services breakdown is as follows:
Software-as-a-Service (SaaS)-Based Capabilities
·         Email - Electronic messaging (e-mail), calendaring, and people discovery in the form of a global persona directory
·         Unified Communications and Collaboration Services (UCCS) - Telephony (including IP telephony), video conferencing, instant messaging (chat), presence information, real-time data sharing (including web conferencing), call control, and speech recognition
·         Content Discovery
·         Enterprise Portal Services - Document libraries, team rooms & calendars, wikis, blogs, user profiles, and personal sites for individual users
Platform-as-a-Service (PaaS)-Based Capabilities
·         Application Hosting Services (AHS)
·         Identity and Access Management (IdAM) services
·         Machine-Facing Utility Services (MFUS)
Infrastructure-as-a-Service (IaaS)-Based Capabilities
·         Computing and storage capacity
·         Transport, data, SATCOM, and wireless
·         Facility services
Enterprise Architecture Support
As we can see, DISA proposes creating a “360 degree” cloud environment. The GCMP makes clear that DISA is also going to require enterprise architecture support to enable the capabilities desired. This new target technical architecture is to be based on a cloud computing centric model, not the previous net-centric model. The cloud model will enable ubiquitous access to services using any device in any secure location. I may be jumping the gun here, but I read this proposed shift in architecture model as a potential opportunity for systems integrators who also happen to offer cloud services. I conclude this because the GCMP also states that collapsing infrastructure and networks into the proposed cloud “platforms” requires significant systems engineering expertise. Vendor teams with the best chance to win work will likely include those with systems integration and cloud services delivery experience.
Where Big Data Fits
In its recently released Strategic Plan, DISA outlines acquiring Big Data analytical capabilities as a goal within the next five years. There are several ways DISA could acquire these capabilities, but I believe that two possibilities in particular are the most likely. The first is writing the requirement for advanced analytics into the solicitation for the Enterprise Storage Solution II (ESS II) follow-on competition. The second is to get these capabilities from DISA’s commercial cloud services providers. I think the former a possibility because of the close link between advanced analytics and advanced storage capacity. The latter is a possibility, I believe, because the GCMP calls out DISA’s concerns about tracking the location of data and segregating it according to classification level. Then there is the DISA cloud computing strategy, which explicitly calls for the agency to establish a Data-as-a-Service (DaaS) capability. If that does not sound like a cloud opportunity, I do not know what does.


California bill to keep call center contractors in state

On September 11, 2012, California Assembly Bill 2508 became law. This bill, sponsored by Assemblywoman Susan Bonilla, prohibits state agencies from awarding call center contractors whose employees reside outside the United States and the state of California. In this respect, it is very similar to a federal bill in Congress, the “United States Call Center Worker and Consumer Protection Act of 2012.”The bill is currently awaiting passage in the Senate Committee on Commerce, Science and Transportation.
The new California law provides for a civil penalty for giving false information about where call center operations are performed. However, the bill is not necessarily far-reaching; it only addresses call centers that directly serve recipients of public benefits, including unemployment insurance, TANF, and other social services programs.
Analyst’s Take
This is an increasingly common effort in many states due to the economic downturn. In addition to public backlash over outsourced jobs, many politicians have been inundated with outraged constituents concerned about state tax dollars being sent overseas. This is a popular bipartisan issue that will likely see results in the majority of the U.S., whether the federal bill is passed or not.

Colorado joins Montana in requiring vendor proposals submitted on iPads

Back in June, Deltek reported on a new procurement trend in Montana: requiring the submission of vendor proposals on iPads. During my daily news scouring, I saw this same issue brought up in the Denver Business Journal regarding the state’s upcoming Medicaid management information system (MMIS) procurement. Colorado is going to require proposal submissions on seven iPads, which will not be returned. According to the publication, regional leaders say the practice is “outrageous” and sets an unreasonable precedent.
In the draft RFP, the state calls for second-generation or newer iPads, in an effort to reduce the expense of physically printing copies of the proposals. Later in the RFP, it calls for the submission of iPads in place of printed copies. So, logically, if the vendor was the one paying for the submission of printed proposal copies, how is it saving the state printing costs? Isn’t it, instead, costing the vendors more to send iPads that the state gets to keep for “future use as deemed appropriate by the department”?
Whatever this new practice is, it does not seem to be limited to one state, as now Montana and Colorado are potentially receiving thousands of dollars in free technology. Vendors reading our blogs: Do you care about submitting a couple thousand dollars in iPads to states in the hopes of a $100 million contract? Are states crossing the line? Personally, I’d ask for the proposals to be delivered in a Maserati to cut down shipping costs, but that’s just me.

Teacher performance evaluation systems strike again: This time, in Chicago

The Chicago Public Schools (CPS) teacher strike is an instance where education reform meets education technology. New teacher performance standards in the form of a new evaluation system are at the heart of the conflict between the Chicago Teachers Union (CTU) and the CPS. In years past, CPS conducted its more than 25,000 teacher evaluations using a paper-based process. The new Web-based system streamlines the process by allowing teacher evaluation data to be collected quickly and accurately.

It all started in 2010 when Illinois Governor Pat Quinn signed the Performance Evaluation Reform Act (PERA), which required all Illinois school districts to change their performance evaluation standards for teachers and principals by September 1, 2012. PERA requires local school districts to assess a teachers’ professional skills against their students’ academic growth. PERA also requires all school districts in the state to implement a teacher performance evaluation system by 2016. The enacted legislation was supported by a coalition of stakeholders, including union leaders.

After PERA was introduced, an appointed 32 member Performance Evaluation Advisory Council (PEAC), made up of teachers, administrators, education leaders, as well as respective representatives from the CPS Labor Relations Office and the CTU Teacher Development Center, participated in drafting the recommendations for the state’s performance evaluation system standards and requirements.

The PEAC decided that the new teacher performance evaluation systems would be phased in through a multiyear process, with CPS and eight other school districts being the first adopters in the 2012-2013 school year. The Chicago Board of Education released a request for proposals (RFP) on February 14, 2012, seeking a vendor to provide software, configuration and installation, integration, testing, implementation, training, and ongoing software maintenance and technical support for the performance evaluation and development (PED) system.

The school board requires the PED to be a district-wide system that incorporates three solutions in one: a talent, a performance, and a professional development/learning management system. The board also requested the PED have the ability to integrate with the CPS human resources management system. On June 27, 2012, True North Logic was awarded the PED system contract, which was valued at $1.5 million over two years, along with two optional, two-year renewals valued at $1 million each.

Analyst’s Take

Solicitations seeking both teacher and student performance evaluation systems are expected to increase over the next three years. Additionally, with more than 14,000 public school districts in the United States, I expect a majority will be collecting teacher and student performance data, to some degree, through a Web or cloud-based performance tracking system over the next five years.

These systems do not appear to be a passing trend. The U.S. Department of Education (USDOE), in conjunction with all 50 state education agencies and the District of Columbia, has pledged to build student and teacher performance tracking systems to improve not only classroom learning, but the sinking U.S. education system rankings as well. Since 2006, the USDOE has been making grant funding available to state education agencies to aggressively attack the initiative and push education reform.

Knowing more about a teachers’ training and experience, along with who their students are and how those students perform, provides education policy-makers with a bevy of data to improve education in the classroom. In the future, this data could affect teacher preparation programs, class sizes, school budgets, teaching methods, and professional development requirements. In an effort to see a return on investment from K-12 statewide longitudinal data systems (LDSs), states are requiring their local school districts to collect and submit teacher and student data. Once state K-12 longitudinal data systems are fully built out, Pre-K, higher education, and even workforce data will be next. The goal of most states is to create a cradle-to-grave longitudinal data system to track student performance.

Though the standard of measurement for which these systems are based is currently under fire in Chicago, the technology itself has revolutionized the teacher performance evaluation process for CPS.

Deltek will be releasing an education IT market report on state-level and district-level teacher/student performance tracking systems this October.

Also, be sure to follow Deltek's General Government Team on Twitter @GovWin_GenGov.

Future of Federal IT Environment Requires Fundamental Changes of Hardware Vendors

In our newly published Federal Information Technology Hardware Market report, we forecast that demand for vendor-furnished IT hardware by the U.S. government will decrease from $28.7 billion in 2012 down to $20.2 billion in 2017, a compound annual growth rate (CAGR) of almost -7%. Our team started by envisioning what the federal IT environment will look like in 2017 and the game-changing trends that will shape that future.
In preparation for writing the report, entitled Federal Information Technology Hardware Market, 2012-2017, we looked at many trends to envision the year 2017 and the most impactful trend, by far, is the fiscal state of the federal government. Risks from China's and Japan's flagging economies (undermining their ability to continue financing our government's out of control spending), the Eurozone crisis, and continued federal revenue shortfalls indicate a tougher time annually financing federal government spending.  Those threats and the ballooning national debt and interest payments on it mean that annual pressure to cut agency budgets will only intensify.
In 2014 alone, the administration is asking agencies to cut their IT budgets 10% and make suggestions of how to reinvest that money to save even more (though no sure promises to allow agencies to re-invest have been forthcoming). However, the continued agency approach of cutting spending while making only incremental changes in what they fundamentally do and how they do it, won’t meet the challenges that lie ahead. Moreover, no matter who is elected president, the administration through OMB will continue to challenge agencies to ‘Do More With Less.’  
However, changing technology approaches, such as cloud computing, and eventually some degree of wholesale ‘IT-as-a-Service,’ can enable agencies to keep doing more with less.  Amidst consolidation initiatives to increase efficiencies and reduce spending, agencies have been experimenting, with some degree of hard-won success, with the technology capabilities offered by innovative vendors and utilized more broadly in the commercial market. In the future, agencies will continue to quickly evolve their technology strategies and approaches and shift how they invest.  With greater budget pressure, agencies will become less and less risk adverse, especially as a generation of federal IT professionals retires, and the next generation of young innovative IT professionals take charge. 
Game-Changing Trends
In the report, our team highlights five game-changing trends that portend to disrupt and reshape the federal IT environment and market over the next five years. These trends spell the final death-knell business-as-usual, as well as strategies to morph over time for federal contractors as a whole, and hardware vendors in particular:  
·         Managing Data Not Infrastructure – Agencies will realigning their IT investments to focus on managing and securing data instead of managing infrastructure. The data-centric approach is anticipated to increase the agility of agency IT environments, reduce costs, and enable agencies to adopt emerging technologies more easily. Cloud computing and hardware agnostic mobility are driving this change. SOA, data center consolidation, and data management are enablers.
·         Increasing Efficiency – Agencies are seeking ways to improve operational efficiency and increase employee productivity while at the same time reducing costs.  Mobility and Big Data are two factors forcing this change.
·         Enterprise Services – Agencies are moving from IT environments characterized by system-specific siloes to environments based on services oriented architectures that emphasize system interoperability and the ubiquitous availability of data. This transition toward enterprise services is not only breaking system specific siloes, it is also changing the way agencies invest in and utilize technology solutions.  Shared services, cloud computing, and network computing are examples.
·         Accelerating Innovation – Agencies are introducing standards-based common operating environments (COE), adopting data-centric policies, and turning toward services oriented open architectures to increase the agility of their IT environments. This enables them to leverage innovative new technologies, such as cloud computing, mobility, and Big Data more rapidly.
·         Consolidating Acquisition Avenues – Agencies are being pushed by OMB to drive down the cost of buying commodity IT products.  Agency CIOs are establishing strategic sourcing contracts or turning to GSA vehicles to consolidate commodity IT acquisitions. Agencies with long standing sourcing programs already in place are relying more heavily on these contracts, while agencies without established programs are taking steps to introduce them within the next one to two years.
To the degree and speed that these game-changing trends fundamental change the federal IT landscape, they could cause a shake-up in the federal IT competitive environment which will hit unprepared hardware vendors especially hard.  If the trends bring about fundamental change in the federal landscape too slowly and the fiscal pressures continue unabated, the future scenario will be even more dire and disruptive. 
Hardware vendors selling in the federal market need to adjust what they offer and how they sell to federal customers.  Cloud computing, thin-client adoption, mobile computing, and enterprise services will transform the hardware market and present both challenges and opportunities for hardware vendors. Hardware vendors need to be determining and implementing go-forward strategies now that will keep them viable in the federal market into the future.
About the Report
Our Federal Information Technology Hardware Market, 2012-2017 report provides companies with a detailed view of the future federal IT hardware market and a market forecast for the next five years. It includes forecasts for the federal hardware market overall and the following technology segments:
·         End-User Devices
·         Storage and Peripherals
·         Infrastructure (Servers and Mainframes)
·         Communications and Network Equipment
It also includes hardware profiles for the top ten agencies with agency drivers in each of those technology segments. The report is designed to enhance a vendor’s federal planning process with relevant strategic analysis and provides recommendations that guide hardware vendors to maximize their market positioning to best take advantage of the changing federal IT environment.


States looking to streamline procurement

The 2014 deadline to set up a health insurance exchange has been taunting many states, especially those that feel like they may not be ready in time. During the 45th Annual IT Solutions Management (ISM) Conference, a session was held on effective procurement in attempt to alleviate some of these fears and highlight latest efforts to reform and streamlined procurement. The session kicked off by emphasizing how competition is still a good thing, and that the demand for accountability in public spending has increased tremendously. This is largely due to higher expectations coming from the federal government.
At this year’s ISM conference, Dugan Petty, CIO of the Oregon Department of Administrative Services, began his presentation by illustrating the current IT landscape for most states, including how all states are trying to recover fiscally and deal with legacy and IT workforce. Petty described stabilizing the economy and revenue as one of the main drivers, and highlighted what Oregon is trying to achieve, such as leveraging systems and building them more broadly. He shared how Oregon is trying to utilize master contracts, and outlined better outcomes in procurement from a state perspective, including:  
1. More business needs supported from a common system
2. Sustainable models delivering value in the long run
3. Success achieved and measured on an ongoing basis, including ROI
4. Mutual incentives with the contractor and the business
5. State interest protected through effective contract and contract management
It goes without saying that states still have a ton of work to do between now and 2014.The deadline is right around the corner, and states are being forced to come up with strategies that will streamline procurements. At the end of the day, all these efforts revolve around the people. These technologies must not only be user-friendly, but client-oriented as well. In doing so, true meaningful use, the main driving factor in many of these health-related initiatives, can be achieved.  To learn more about streamlining procurement, check out Deltek’s latest Analyst Perspective, “Procurement under Pressure,” which can be downloaded here.



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