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FY 2015 National Defense Authorization Act (NDAA) Set to Pass

The National Defense Authorization Act (NDAA) for Fiscal Year 2015 has crossed a major hurdle to passage before the end of the calendar year as a House-Senate compromise bill has emerged. The final bill has implications for information technology acquisition and management at the Pentagon and beyond.

The legislation is a combination of two bills that each passed last May: HR 4435, which passed the full House, and S 2410, which passed in the Senate Armed Services Committee. As is typical, this year’s NDAA goes well beyond funding of national defense operations to include organizational and acquisition reform efforts and information technology priorities. Below is an overview of the high points of the bill.


  • Authorizes $521.3 billion in base discretionary defense spending and an additional $63.7 billion for Overseas Contingency Operations (OCO), reflecting the President’s initial request of $58.6 billion and the additional request of $5.1 billion to primarily cover counter-ISIL operations. The FY ‘15 NDAA is $48.0 billion less than the enacted FY ‘14 NDAA.
  • Does not reflect a proposed BRAC round as requested by the Administration, citing concerns that previous rounds did not yield the promised savings but rather imposed large up-front costs only to shift property between federal agencies. The current flux of military size and structure is also cited as a reason to postpone a BRAC round.
  • Selectively supports some White House proposals – like limited compensation increases for military personnel, including a for a pay freeze for General and Flag Officers – while adjusting others – like replacing a 5% reduction in basic allowance for housing (BAH) with a 1% decrease. This NDAA also blocks retirement of the A-10 aircraft, but provides for some reprogramming of those funds to higher priorities if needed.

Reform Efforts

  • Restores the Office of Net Assessment (ONA) to an independent status, reporting directly to the Secretary of Defense, and increases the ONA budget for FY ‘15 by $10 million to $18.9 million
  • Directs the SECDEF to report on the feasibility of reducing or consolidating combatant command functions by FY20 and a plan to implement a periodic review and analysis of management headquarters. This NDAA would also task GAO with assessing the DoD’s headquarter reduction efforts as part of GAO’s previous work assessing HQ growth.
  • Directs the Under Secretary for Acquisition, Technology, and Logistics, (USD (AT&L)) and senior acquisition executives for the Navy and the Air Force to issue DoD-wide policies implementing a standard checklist to be completed before issuing a solicitation for any new contract for services or exercising an option under an existing services contract. The FY ‘08 NDAA established an annual services contracts inventory requirement that DoD has yet to fully implement.
  • As a cost-control mechanism, the bill requires the Comptroller General to conduct a review of cases in which an acquisition program office believes that the Director of Operational Test and Evaluation has required testing above the required test plan.
  • Directs the SECDEF to provide the congressional defense committees with frequent reports on DoD’s damage assessment resulting from unauthorized disclosures of classified information and steps the Department is taking to mitigate the damage.
  • Provides for an overhaul of the Quadrennial Defense Review (QDR) process to produce a new Defense Strategy Review that is more long-term and strategic in nature and a more useful oversight tool.

Information Technology and Cyber Operations

  • Directs the President to maintain a list of nation-states or individuals that engage in economic or industrial espionage using cyber tools, and allows for the President to impose sanctions on such individuals or nation-states
  • Directs the SECDEF to designate an executive agency for cyber test ranges and another for cyber training ranges to better coordinate and resource each
  • Requires the development of a Major Force Program for cyber to better account for the budgeting and resourcing of cyber operations capabilities
  • Requires mandatory reporting on penetrations of operationally critical contractor networks
  • Requires the development and implementation of operational metrics for the performance of the Joint Information Environment (JIE)
  • Implements the Federal Information Technology Reform Act (FITARA) that has stalled and been removed from last year’s NDAA, according to Nextgov. FITARA will give additional budgetary and management authorities to agency CIOs, although no so much in the DoD. Nextgov also notes that the NDAA also supports federal data center consolidation efforts, the DoD’s move to cloud computing, and a plan to expand the use special IT acquisition experts.

While the final bill still needs to pass both the full House and Senate and be signed by the president, the FITARA provisions should not be a major reason for a presidential veto, according to a Federal News Radio interview with some members of Congress.  

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


Agencies Continue to Trudge Toward Data Center Consolidation and Strive for Mobility

As part of agencies’ ongoing efforts to reduce costs and gain efficiencies, they are continuing to pursue data center consolidation and optimization.  At the same time, they are implementing mobile applications and environments for the convenience of constituents and employees.

Deltek’s new Federal Update:  Cloud, Data Center, Big Data and Mobility, 2014-2019 report delves into the status of federal data center consolidation and mobility efforts, as well as cloud computing and big data. 

The evolution of FDDCI resulted in a shift in focus from consolidation to optimization of core data centers, which helps agencies focus resources on investments and strategies with the highest return.  However, measuring success and ROI is complex and challenging, and has resulted in mixed information regarding progress. 

The number of identified data centers continues to grow and change with the shifting definition of a data center.   At the start of the Federal Data Center Consolidation Initiative (FDCCI) in 2010, agencies identified approximately 2,000 data centers, but over time, with more detailed inventorying efforts and a change in the size of what is considered a data center, agencies have now found over 9,600 data centers.  242 of these data centers are considered core data centers.  Agencies plan to close an additional 3,127 of non-core data centers.

A September GAO report highlighted agency cost savings and avoidance due to data center consolidation.  19 out of the 24 agencies participating in the FDCCI reported achieving an estimated $1.1 billion in cost savings and avoidances between FY 2011 and FY 2013.  21 agencies collectively reported planned savings of $2.1 billion in cost savings and avoidance by the end of FY 2015 for a total of $3.3 billion by FY 2015, $300 million above OMB’s original $3 billion goal.  Between FY 2011 and FY 2017, agencies plan to have achieved total cost savings or avoidance of $5.3 billion.

But signals are mixed regarding progress.  GAO stated that agency savings and avoidance calculations were not consistent among agencies.  Additionally, some agencies experience difficulties determining or uncovering baseline spending.  A Meritalk survey of federal IT managers showed that 52% of respondents rated their agency’s FDCCI efforts at a “C” or below, while only 6% gave their agency an “A.” 72% said that the number of data centers in their agency had stayed the same or increased since the FDCCI launched in 2010.

Mobility programs in the federal government continue to advance, driven by cloud platforms and Virtual Desktop Infrastructure (VDI), although securing mobile devices and data remain areas of focus.  Continued expansion in the use of mobile communications and computing solutions is expected to rely on accelerating network modernization and optimization, including the use of Internet Protocol and cloud-based technologies.

The purpose of the Federal Mobility Strategy is to accelerate the federal government’s adoption of mobile technologies to improve delivery of government information and services, engage citizens more fully, reduce the costs of government operations, and increase federal workforce productivity.  Much of federal agencies’ mobile computing direction is driven by the Federal Digital Strategy, released in May 2012.  Its goal was to move agencies to an enterprise-wide model for procurement of mobile devices and services.  The strategy outlined objectives aimed at taking a baseline of current mobile assets and usage, followed by the consolidation and streamlining of purchasing, invoicing, and asset management.

Top trends in federal mobile computing include resolving security issues, expanding mobile applications, and leveraging enterprise-wide contracts.  Security concerns run the gamut from employee mobile device security training, to authentication, encryption and application vetting and management.  Application rationalization and the need for more self-serve citizen services are driving agencies to expand the roster of applications made available via mobile devices.  The flexibility of carrier reach, pooling, bundling, etc. has driven demand for enterprise-wide contracts, while driving costs efficiencies.  

Contractors targeting data center consolidation should focus on optimization, look to existing customers for opportunities, and take advantage of the variety of contract vehicles at your exposure to fulfill requirements.   Contractors looking to address the mobility market should work with agency customers to assess infrastructure readiness for mobile computing,

promote key security features of their offering, and develop mobile applications that are specifically designed for federal government challenges.


New CIO at the Helm of the FDCCI Task Force

Shortly after becoming the CIO of the Department of Justice, Joe Klimavicz also took the helm as chair of the Federal Data Center Consolidation Initiative Task Force.  In this role, he aims to focus on the promotion and adoption of private sector best practices that are applicable to government.

Klimavicz aims to push shared services and cloud computing as proven means for consolidation and optimization in the public sector.  “Whenever possible, interagency sharing of data centers and their assets increases efficiency across the federal government,” Klimavicz stated in a recent blog post on

The task force will continue to focus on hardware and software utilization.  Sharing these assets across an agency, department or the federal government can allow the hosting organization to charge for usage, while eliminating IT duplication and creating standardization across the agency.

Klimavicz is also a supporter of cloud computing.  As former CIO at NOAA, he saw first-hand the benefits of consolidating 19 different e-mail systems onto a single cloud platform.  The move freed up floor space across NOAA data centers. 

The Task Force will also work to establish benchmarks and metrics to measure progress toward core data center optimization. 

I’m curious to see if Klimavicz will bring more visibility to data center consolidation and optimization progress.   Since becoming part of the PortfolioStat process in 2013, few statistics are available to the public regarding data center optimization progress.   Counts of core vs. non-core data centers by agency have not been published, nor have the final criteria for agencies to use to select their core data centers. 

Agencies continue to say that they are pursuing data center optimization and consolidation.  However without data to support efforts, it’s difficult for the public to assess progress or accomplishments.


Justice to Streamline IT Buying through Service Broker

In the coming year, the Justice Department will join the ranks of agencies leveraging service broker arrangements for acquisition of IT infrastructure and services.

In recent years, Department of Justice (DOJ) has progressed efforts to consolidate contracts, reducing redundancy of acquisition efforts and improving enterprise capabilities. Some of these initiatives began as informal strategic sourcing efforts. The department has actively leveraged Enterprise License Agreements (ELAs) and Blanket Purchase Agreements (BPAs) to achieve cost savings. The majority of the department’s mobile device and wireless services were consolidated through several contract vehicles. By leveraging strategic sourcing and shared services for wireless and telecom needs, DOJ can lower equipment expenditures by moving to contracts with best negotiated prices.

Now, it seems that the Justice Department is taking the next step by pursuing service broker. Other federal agencies that have adopted a service broker model include Defense Department and the National Nuclear Security Administration (NNSA). These broker arrangements allow agencies to identify solutions for common requirements and simplify technology buying within organizations.

According to recent reports, DOJ expects to target infrastructure and commodity IT services initially. These technologies would include wide area network (WAN), data centers, storage, email, telecommunications, security, and Trusted Internet Connection (TIC) services. The “next tier” of services that would be addressed, according to Justice’s CIO Klimavicz, cover business enterprise services, such as voice and collaboration.

The decision to formally adopt service brokerage aligns with the department’s strategic plans and technology initiatives. For a number of years, DOJ has actively leveraged Enterprise Level Agreements and Blanket Purchase Agreements to achieve cost savings. In 2012, Justice established ten commodity area working groups focus on IT functions, like data centers, email, and mobility. These groups provide recommendations to the DOJ CIO Council to address commodity investment areas, to identify potential for consolidation and cost savings, as well as to manage milestone and performance metrics.

DOJ’s near term information resource planning highlights 5 goals including institutionalizing IT portfolio management, streamlining operations, enhancing IT security, delivering innovative solutions, and expanding information sharing. The shift to centralized delivery of IT capabilities, such as multi-component (enterprise) IT services, and use of enterprise platforms is expected to drive greater value than silo solutions. Ongoing assessments and continuous enhancement of existing IT assets and vendor relationships will improve the value of the IT portfolio by evaluating the risks of adopting new technologies too soon or sustaining legacy technology for too long.

Brokerage would facilitate increased use of shared services, enable enterprise capabilities, and consolidate departmental purchasing power to improve pricing through strategic sourcing. The Department of Justice’s vision for strategic sourcing has led to the establishment of a Vendor Management Office (VMO) targeting improvement of buying practices for IT infrastructure. The VMO will lead efforts to analyze procurement data, to identify best practices, and to centralize enterprise procurement vehicles.

As with other federal markets being impacted by strategic sourcing, vendors will need to be increasingly mindful of market positioning. IT spending will be increasingly directed through agencies strategic sourcing and preferred contract vehicles, but that shift inhibits spending as government organizations look to achieve economies of scale for commodity IT purchases. The establishment of Vendor Management Offices means contractors can expect increased oversight and greater need to partner smartly.


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


NASA Seeks Industry Guidance on Data Center Solutions

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

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

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

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


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

Update on Defense Cloud Computing from the JIE Mission Partners Symposium

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

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

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

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

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

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


Agencies Not Poised to Meet Data Center Consolidation Goals

Four years after the launch of the Federal Data Center Consolidation Initiative (FDCCI), agencies have only closed 746 data centers.  With less than six months to go before the end of the fiscal year, it’s unlikely agencies will meet the goal of closing 1200 data centers. 

New data released via shows agencies only plan to close an additional 352 data centers by the end of the fiscal year, for a total of 1098.  However, all of these numbers may be moot given the ever evolving definition of a data center and end goals of the consolidation initiative. 

Announced in February 2010, the FDCCI intended to promote the use of Green IT by lowering the energy and real estate footprint of government data centers; reduce the cost of data center hardware, software, and operations; shift IT investments to more efficient computing platforms; and increase the overall IT security posture of the government.  In doing so, the administration planned to save $5 billion by closing 40% of federal data centers by 2015.

2010 data center inventories uncovered 2,094 data centers over 500 square feet, with a goal of closing 800.  A change in the definition of a data center to include spaces down to 100 square feet grew that number to 3,133 and resulted in a new closure goal of shuttering 1200 data centers.  Since then, with even further changes to the definition of a data center, GAO efforts uncovered over 7,000 data centers to date.  All the while, agencies have plodded away at closing data centers and optimizing those that remain. 

The latest closure data shows 1098 total closures planned by the end of the fiscal year.

No baseline data has been published regarding the total number of original data centers or targeted number of closures by agency given new definitions.  Additionally, the focus of FDCCI has shifted to data center optimization versus data center closures or reductions, and it has moved to the PortfolioStat program for continued monitoring and reporting.  However, I thought it would be interesting to compare today’s data center closure goals as reported to to the original closure goals which would have resulted in 800 closures.

In many ways, this is an apples to oranges comparison, because the definition of a data center changed since the original targets were established.  The logical assumption would be that agencies would be able to close more data centers than originally targeted back in 2010, because the definition of a data center now includes small data centers, upping each agency’s baseline number of data centers.  For some agencies, this holds true.  Commerce has closed 54 data centers opposed to its original target of only closing 18.  The same holds true for Justice and GSA. 

However, other agencies are not even close to meeting their original closure goals.  The Department of State originally planned to close 79 data centers, but to date has only closed four.  Veterans Affairs planned to close 83, but has only closed eleven to date.   And DOD planned to close 344, but has only closed 277.

Maybe closure numbers are irrelevant at this point, but even GAO has criticized OMB for not putting in place proper leadership and mechanisms for measuring progress. 

Investments are paying off in the form of freed up floor space, savings on energy expenses, decreases in O&M costs, improved visibility into the IT infrastructure, and better utilization of IT staff.  However, savings have fallen well short of the original intent of saving $5 billion.   At the end of FY 2013, FDCCI had documented about $63 million in savings. DOD projected savings of $575 million through FY 2014.




Army Network Modernization, Cloud Services, and the Joint Information Environment

As the Department of Defense moves toward the Joint Information Environment (JIE), it is becoming clear that the Army is leading the way.  The Navy and Marines have expressed agreement with the concept of the JIE, but each remains wary about the approach.  Despite a directive from the DoD Chief Information Officer, the Navy has resisted transitioning Defense Enterprise Email.  The Marines, meanwhile, have gone so far as to argue that the rest of the DoD should adopt their network approach because the current Marine Corps Enterprise Services (MCES) environment is already a joint environment.  Then there is the Air Force, which is slowly falling into line with the Army behind the JIE concept.
This leaves the Army (and the Defense Information Systems Agency) as the “tip of the spear” when it comes to building the JIE.  Why the Army has assumed this role is known only to those at the heart of the effort.  My own speculation is that the Army was chosen to lead the JIE effort because it was the Service in the direst need of network consolidation and modernization.  After more than a decade of fighting overseas, Army network capabilities in the continental U.S. had become sub-par and were open to cyber-attack from any number of directions.  This was a potential disaster waiting to happen so addressing it became priority number one.
The Army’s network modernization efforts to enable interoperability and enhance security began in fiscal 2011 and accelerated in FY 2012 as it pushed toward the “Network 2020” goals set out by the CIO/G-6.  These goals coincide conveniently with the goals of the JIE, including
  • Application Inventory – Planned for completion in FY 2014 and leading to the elimination of duplicate applications and consolidation of widely used apps into enterprise services.
  • Data Center Consolidation – Planned to begin in FY 2014 and continue into FY 2015 with the goal of consolidating 185 Army data centers into the DISA DECCS and a handful (# unknown) of Core Data Centers (CDCs), supplemented by Installation Processing Nodes (IPNs) for Army and DoD customers.
  • Network Consolidation – In FY 2013/2014, deploy new network equipment (i.e., Multi-Protocol Label Switching technology) to create an MPLS “cloud” that increases bandwidth, reduces latency, and enables provision of standardized capabilities.
  • Cloud-Based Enterprise Services – From FY 2014 to FY 2019 utilize some DISA-provided enterprise services like Defense Enterprise Email, but also provide a large number of enterprise services in Army Core Data Centers.
The Army and DISA’s CDCs and IPNs are expected to operate as the cloud infrastructure that the Army, Air Force, and other DoD components will use for cloud-based shared services.  But while the enterprise services to be delivered by DISA are generally well known – email, directory, unified capabilities, collaboration, etc. – less well known are the capabilities that the Army intends to procure for hosting in its cloud.  Pardon me, “Core Data Centers.”  Some of these capabilities include the following:
Competition for the ESMS is just starting, but procurement of the other capabilities should only be a matter of time.  By my count there are as many as 25 other capabilities that the Army says it will need.  I’ll be listing these capabilities in a forthcoming report on Defense IT that Deltek has scheduled for publication just before Christmas.
Cloud services are critical to the shape that the JIE eventually assumes.  These services will be delivered from the Core Data Centers run by DISA and by the MILDEPs, so there will be business opportunity in both places.  The opportunity in the Army for cloud providers may in fact be better than that presented by DISA’s Commercial Cloud Services procurement, even though the DISA competition gets more press.  Who knows?  Maybe it is the Army’s cloud strategy and the Navy and Air Force’s stated intent to use commercial cloud services that are the reasons why DISA found less demand across the DoD for the commercial cloud services it intended to provide.


ESPCs to fund DCC: Great idea, what’s the problem?

Energy savings performance contracts (ESPCs) appear to be a logical way to fund federal data center consolidation projects without the upfront costs to the agency.  However, Department of Energy (DOE) efforts to use an ESPC to fund data consider consolidation have floundered for over two years. 


ESPCs allow federal agencies to accomplish energy savings projects without up-front capital costs by partnering with an energy service company (ESCO).  The ESCO provides the upfront funding and guarantees that the improvements will generate energy cost savings over the life of the contract.  The ESCO receives payments generated from the cost savings over time.  Currently, sixteen contractors hold umbrella ESPC IDIQ contracts with DOE for use by all federal agencies.


ESPCs have been used for years by federal agencies to fund projects to improve facility energy efficiency and reduce operation and maintenance costs.  In an innovative move in July 2011, DOE chose Lockheed Martin to consolidate their data centers under a $70 million ESPC.   A recent Federal Times article stated that DOE is still reviewing the contract, but that OMB appears to be stalling the project.

An anonymous industry source told the Federal Times that “OMB is holding up the project because too much of the projected savings – about 70% – comes from operations and maintenance as opposed to energy savings. “

Several congressmen are supporting the use of ESPCs for funding data center consolidation and expressed their concerns about the delay of the DOE contract in a July letter to the DOE Secretary and OMB Budget Director, according to the same Federal Times article.  In a December 2011 memo to the heads of all executive departments and agencies, the administration also encouraged the implementation of energy savings projects to make federal facilities more energy efficient.

Meanwhile, Lockheed Martin has invested millions in upfront funding at its own risk on the DOE project to optimize a New Mexico and Maryland data center.  The project is predicted to generate $6 million in annual cost savings and achieve a 70% reduction in energy consumption.

Other agencies considering using an ESPC for data center consolidation initiatives include DOT, Interior, GSA, NASA, Navy and Air Force.  All are anxiously awaiting a resolution of the maiden Lockheed/DOE ESPC which will set the stage for future use of ESPCs for consolidation efforts. 

Given the current budget environment, the inability to use ESPCs to avoid upfront investments for data center consolidation, optimization and improved data center energy efficiency, could likely stall further federal data center consolidation progress.


DOI’s $10 Billion in Cloud Contracts: It’s a Ceiling, Not a Promise

The recent Foundation Cloud Services award for from the Department of Interior (DOI) stands to shell out as much as $10 billion to ten companies for cloud computing adoption. The high ceiling value of the awards has attracted a lot of attention. While the strategic effort underscores the agency’s focus on changing their IT operations, the potential value may not reflect the investment Interior will be making.
According to the FY 2012 Annual Report from DOI’s CIO, the cloud contract awards will support a number of different initiatives:
The Foundation Cloud Service Contract will streamline access to commercial cloud services in support of the Federal Data Center Consolidation Initiative (FDCCI), the Federal Cloud-First policy, the DOI Information Technology Transformation (ITT) Initiative, as well as emerging system owner demand for application and data hosting services. This contract will provide an attractive alternative to purchasing and maintaining hardware and software. Additionally, it will help improve “speed to market” for developing and modernizing applications by providing our developers and system owners with access to computing and storage resources on demand.
In short, transitioning the data and applications housed in more than 400 data centers, rooms, and closets to the cloud will improve the operating efficiency of DOI as well as supporting FDCCI goals. In a recent blog, Andrew Jackson, Interior’s Deputy Assistant for Technology, Information and Business Service, wrote:
The approach we've chosen also allows us to speed up our acquisition process, which in turn allows us to leverage this technology more quickly. We can now make our data and applications more accessible to the public, and to DOI employees across the country. We'll also be able to provide a wider variety of services, security solutions, and support than we currently do. 
The Foundation Cloud Services awards target a variety of cloud computing services, including storage, secure file transfer, virtual machine, database, web hosting, and a development and testing environment. These initial service offerings address the agency’s most urgent requirements and will be the building blocks for future service developments. To this end, ten different vendors were selected for the IDIQ awards, listed below.

Individual projects are expected to be competed among the awardees and assigned via task order. One of the aims of compiling a pool of ten vendors is to produce more competitive and innovative offerings. The first task order was awarded in June to Unisys for migrating DOI’s Financial and Business Management System (FBMS) to the cloud. Under the $44 million arrangement, the transition will occur over the next eight years, helping to reduce the costs of the enterprise resource planning system (ERP).
Budget Environment
Under recent budget pressure across the federal IT market, we’ve seen reductions in contracts, increased performance scrutiny, and more judiciousness around investment decisions. Although DOI’s total discretionary budget request for FY 2014 amounted to $11.4 billion, less than a tenth of which goes toward IT, contractor addressable spending that’s decreased in recent years. The current budget environment suggests these spending patterns are likely to endure for some time.
Although it does not capture the entirety of the agency’s IT spending, Department of Interior’s 2014 IT budget totals $1012.9 million. The department completed business cases for forty-five major programs with a combined total of $974.15 million, just over 96 percent of the amount accounted for in the IT budget. Of those funds for major programs, approximately 61.2 percent is directed to either operations and maintenance (O&M) or development, modernization, and enhancement (DME). Also, fourteen of those major programs, totaling around $85.8 million in FY 2014 spending, are expected to conclude by 2018. Starting with a relatively modest IT budget, DOI expects expediting their move to the cloud to save DOI $100 million annually from 2016 to 2020. Unless, DOI foregoes legacy system operations in favor of devoting all of their IT budget to cloud adoption, it unlikely that these contracts will approach their ceilings.
Originally published for Federal Industry Analysis: Analysts Perspectives Blog. Stay ahead of the competition by discovering more about GovWinIQ. Follow me on twitter @FIAGovWin.

It’s worth noting that only four of these vendors have completed the Federal Risk and Authorization Management Program (FedRAMP) process and received authority to operation (ATO) from the FedRAMP Joint Authorization Board. These vendors are AT&T, Autonomic Resources, CGI Federal, and Lockheed Martin. All of the accredited offerings are for Infrastructure as a Service models.

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