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Federal FY 2014 IT Budget to Grow, but there’s Winners and Losers

Steven VanRoekel, U.S. Chief Information Officer at the Office of Management and Budget (OMB) released a presentation yesterday outlining the Obama Administration’s FY 2014 Information Technology priorities and budget numbers. The bottom line is that they are seeking 2% growth in the overall IT budget year-over-year, but individual department budget changes vary widely, meaning that there are “winners” and “losers.”
 
Preceding the public release of his presentation, VanRoekel posted a series of tweets on Twitter under the theme: All you need to know about the IT budget in 10 tweets. You can find the series under #FedITx10, but here they are in the descending order in which they appeared:
 
10-Flat or declining. IT=$82B in the 2014 Budget 2.1% increase from FY12, flat, 0.78% CAGR since 09, negative adjusted for inflation
9-Cut & Reinvest: Now more than ever we must use IT to drive savings to fund innovations that change how govt works
8-Priorities: IT priorities in 2014Budget: Innovate. Deliver. Protect. Evidence
7-Innovate: 2014 Budget enables the Digital Gov Strategy to build a 21st century govt, increase mobile services and Open Data
6-Deliver: PortfolioStat = +$2.5B in savings through IT consolidations and upgrades (over 3yrs)
5-Protect: Over $15B of the IT 2014 Budget is going to enhance our Nation’s cybersecurity
4-Evidence: 2014 Budget NEW evidence-based innovation initiative in my office to strengthen evaluations & drive results, beyond IT
3-Innovate with Less: Since 09 we flattened IT $ while FY01-FY09 IT increased ~2x At that rate, we’d be at +$110B on IT today
2-Dogfood: For geeks (like me!) interested in an Open Data 2014 Budget, key tables in XML here:
1-Progress: 2014 Budget enables strategic IT investment for a 21st century govt, drives innovation & protects our national assets
 
IT Budget “Winners” and “Losers”
 
The budget submission information included in VanRoekel’s presentation contains some top-line budget numbers which allows for some initial analysis. The IT budget summary table in the presentation calculates the amount and percentage change for FY 2014 based on FY 2012 budgets, even though he provides FY 2013 Continuing Resolution (CR) budget estimates that are different. To provide a more detailed perspective I ran the numbers comparing the dollar and percentage change for all scenarios. 
 
The tables below are grouped by the “Winners” and “Losers” based on the percentage change from FY 2012 to FY 2014. The third table provides a comparison between Defense and Civilian segments, along with total federal IT.
 
 
 
 
 
 
Conclusion
 
While we are still waiting for the release of detailed IT budget information from OMB the proposed $1.4 or $1.7 billion increase for FY 2014, depending on which baseline year you use, is sure to surprise many who watch this market. Certainly, a 2% yearly growth rate is anemic compared to the growth rates we have seen over the last decade or so. (OMB reports a 7.09% compound annual growth rate (CAGR) between FY 2001 and FY 2009 and they are projecting a 0.78% CAGR between FY 2009 and FY 2014) Yet, many expected lower growth – if not an outright decline – in the federal IT budget for this coming fiscal year.  

Now the budget is in the hands of Congress, which has historically appropriated more for IT than what the President requests. With fiscal priorities clashing and sequestration impacts now being felt across the market, federal IT could weather the current fiscal storm in relatively good shape.

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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.

Highlights of the President’s FY2014 Budget Request

Today President Obama delivered a $3.8 trillion spending plan to Congress which includes a $1.2 trillion request in discretionary funding levels and nearly $82 billion for information technology for FY2014.  The budget focuses on jobs creation, economic growth and to strengthen the American middle class.

The budget proposal also includes $1.8 trillion in additional deficit reduction measures over 10 years to reach a total deficit reduction of $4.3 trillion.   The proposed deficit actions would reduce the deficit to 2.8%of GDP by 2016.

Additionally, the budget proposes $400 billion in cuts to health programs including Medicare.  Savings and cuts would come from negotiating better prescription drug prices, fighting waste and fraud, and requiring the wealthiest seniors to pay more.

The table below shows the FY2013 enacted budget levels and the proposed FY2014 levels.

 

Other budget highlights:

  • Includes $50 billion for upfront infrastructure investments to invest in repairs to highways, bridges, airports, transit systems, and to encourage innovative infrastructure projects 
  • Invests in in education reforms and training with a commitment to early childhood education
  • Simplifies the tax code and raises $580 billion for deficit reduction by limiting tax benefits, but not raising tax rates
  • Creates new “ladders of opportunity” to ensure that hard work leads to a decent living by developing pathways to jobs and partnering with communities to rebuild after the recession 
  • Includes $200 billion in savings from other mandatory programs, such as reductions to farm subsidies and reforms to retirement benefits 
  • Proposes $200 billion in discretionary savings from both defense and non-defense programs 
  • Offers $230 billion in savings from changes in the way the government calculates inflation for annual cost-of-living adjustments for benefits programs

Information Technology

The president’s budget proposes nearly $82 billion in IT funding, a 1.8% increase from the FY 2013 CR and a 2.1% increase over FY 2012 estimated level.

IT-related budget highlights:

  • $575 million in savings is anticipated from DoD Data Center Closures. 
  • $324 million is being cut from the DoD’s Global Hawk UAV program. 
  • $22 million is being cut from Computer and Information Science and Engineering Research Programs at the National Science Foundation; CISE is the organization responsible for promoting R&D on big data.  NSF’s budget takes big hits for its small size, which will affect grant spending on technology R&D.  
  • $81 million is being cut from the DoD’s Precision Tracking and Space System, which is part of Ballistic Missile Defense at the Missile Defense Agency. 
  • $38 million in savings related to the Joint Polar Satellite System is anticipated at the Department of Commerce. 
  • $29 million in savings is anticipated from IRS Business Systems Modernization at the Treasury. 

All told, the president’s budget request includes 215 cuts, consolidations, and savings proposals, which according to the administration, are projected to save more than $25 billion in FY2014.  The budget proposal outlines the administration’s priorities and proposed methods for generating more revenue, cutting costs, and reducing the deficit.  However, it joins competing budget plans in the House and Senate.  Serious Capitol Hill budget negotiations are not likely to take place until this summer.

 

 

 

 

Surviving Sequestration: The 2nd Half of FY 2013 Could See $300 Billion in Federal Contract Dollars

Increasingly, we hear from companies in the federal marketplace that they struggle to plan and forecast their business prospects. There have been so many delays, false starts, and misaligned priorities that it is sometimes hard to know what opportunities are real and how to position your firm to compete. Now, the impacts of sequestration are beginning to ripple through an already skittish market, adding to the uncertainty. Yet, there are some things to consider that might indicate the contracting potential for the rest of fiscal 2013 and beyond.
Whenever things get unbearably uncertain it is important to have access to good data and information, plus a little creative thinking. It is the only way I know how to keep from making reactionary decisions and to get into proactive mode. So when it comes to thinking about the business prospects for the remainder of fiscal year (FY) 2013 it helps to build some historical context.
To get a sense of the historical pace and relative magnitude of federal spending for the remaining two fiscal quarters of 2013 I looked at the reported quarterly contract obligations across the federal government for the last five years. As I have noted in the past, we have seen a shift in federal spending to later and later in the fiscal year. Spending in Q1 and Q2 (in varying degrees) has shifted to Q3 and Q4. Even with some yearly fluctuation, the trend has been fairly stable. (See chart below.)
These shifts have occurred during a period where we have seen increasing use of continuing resolutions (CR), omnibus appropriations and other delays to funding federal agencies. FY 2013 is not particularly unique in this respect, so it does not seem unreasonable to conclude that the trend will hold this year as well. 
Projected Spending for the Rest of FY 2013 – a Possible Scenario
Now that we have received data for the first two quarters of FY 2013 it becomes possible to perform some rough projections of what might be still on the table for Q3 and Q4. I used FY 2012 data as a basis to make these projections. For FY 2012, adding together Q1 and Q2 departmental obligations and then dividing that sum by the department’s total obligations gave me the relative percentage of total obligations that occurred in Q1 and Q2. (See the table below for the top 20 federal departments and agencies.)
Assuming that agency contracted spending in FY 2013 will be at least 90% of what it was in FY 2012 (sequestration may represent about a 7% cut, so this 10% difference seemed reasonable to me) I followed a similar approach to calculate estimates for Q1 and Q2 percentages and potential remaining obligations for the remainder of FY 2013. 
For example, in the table below the Army had combined FY 2012 Q1 and Q2 obligations of $41.6 billion, which was 38% of their total FY 2012 obligations. The Army had a total of $17.8 billion in contract obligations for Q1 and Q2 of FY 2013, which represents 18% of the projected potential total FY 2013 spend, using my 90% of FY’12 assumption. Applying the percentage left over (i.e. 82%) to my total FY 2013 estimate results in a potential remaining obligation balance for Q3 and Q4 of $79.6 billion for the Army.
 
Granted, performing estimates at this macro level has its limitations and it requires certain broad assumptions for consistency, like a comparable year-over-year obligation rate and that, to some degree, these expenditures are for recurring needs. Some departments have a measure of cyclicality that is underrepresented in a chart covering just a few years. For example, Energy tends to run cyclically between 40% and 68% for Q1 and Q2 every other year or so like a pendulum. Further analysis into the specific contracts is needed to understand why.
Implications
Comparing the 2012 and 2013 percentages reveals that nearly all of the top 20 departments are behind in obligating funds, even with an assumed 10% reduction in spending from FY 2012. While the one-two punch of delayed budgets and sequestration might explain much of this it still remains that these agencies will need to obligate their remaining budgets by the end of the fiscal year. Even (or especially) in this uncertain budgetary environment, agencies will not likely leave money unspent. It is still a “use it or lose it” world out there. So there may likely be some significant pent-up demand that we could see play out in the remaining two quarters.

If this simple analysis holds even close to reality the potential remaining total contract obligations across all federal departments and agencies could be over $300 billion in Q3 and Q4, or 70% of total FY 2013 contract obligations. The second half of fiscal 2013 could potentially see federal contract dollars really flow.

Latest FISMA Report Reveals Federal Cyber Challenges are Mostly Internal

The current season of federal budget uncertainty, exacerbated by sequestration, raises concerns of how federal departments and agencies will allocate funds to implement and improve their information security. As OMB describes in the latest Federal Information Security Management Act (FISMA) report to Congress, agencies continue to be the target of increased attacks. But digging a little deeper reveals that many of the challenges may stem from internal practices rather than external attacks.
 
The latest OMB FY 2012 FISMA report provides OMB’s FY 2012 assessment on what agencies have achieved in FISMA-related information security in the previous fiscal year. Of particular interest is the number of security incidents that are being reported to the US Computer Emergency Readiness Team (US-CERT). (See chart below.) 
 
 
 
  
From FY 2011 to FY 2012 agencies report an increase of 11%, which is more than the 5% increase they reported from 2010 to 2011 but less than the 40% reported from 2009 to 2010. Reported incidents are up 200% since FY 2008. In an earlier blog I mentioned comments by a former CIA CISO who noted that the counting method used by FISMA actually understates the threat levels, so these numbers are more like baselines than actualities.
 
A deeper look into the specific types of security incidents and their frequency reveals that the vast majority of these incidents fall into 5 categories:
 
  • Non Cyber – Non Cyber is used for filing all reports of Personally Identifiable Information (PII) spillages or possible mishandling of PII which involve hard copies or printed material as opposed to digital records.

  • Policy Violation – This subset of Improper Usage is primarily used to categorize incidents of mishandling data in storage or transit, such as digital PII records or procurement sensitive information found unsecured or PII being emailed without proper encryption.

  • Malicious Code – Used for all successful executions or installations of malicious software which are not immediately quarantined and cleaned by preventative measures such as anti-virus tools.

  • Equipment – This subset of Unauthorized Access is used for all incidents involving lost, stolen or confiscated equipment, including mobile devices, laptops, backup disks or removable media.

  • Suspicious Network Activity – This category is primarily utilized for incident reports and notifications created from EINSTEIN and EINSTEIN 2 data analyzed by US-CERT.

These top 5 categories account for 87% of all incidents reported by federal agencies. Factoring out the Non Cyber category, the remaining top 4 make up nearly 60% of all reported federal security incidents. (See chart below.) 

 

 

Delving into the data a bit further shows where these incidents are most widely occurring among the 15 departments spending the most on their IT security, according to their FISMA submissions. (See table below.)

 

Implications

While a data comparison among categories and agencies has its limitations, it does lead us to ask further questions and draw some possible conclusions. The most obvious to me is noticing the clustering of incidents within categories that relate to internal behaviors.

Combining the frequency of Policy Violations, lost or stolen Equipment, and Non-Cyber (non-digital) incidents consisting of the physical spillage or mishandling of PII in paper form drives home that there appears to be much left to do in the area of cybersecurity training for IT users at these departments. If the Malicious Code category accounts for much in the way of code insertion through unsafe user practices then that incident frequency too underscores the ongoing training need. OMB notes in the report that federal agencies spent less than 1% of their IT security budgets in FY 2012 on training. In previous FISMA reports training accounted for roughly 2.5% in FY 2010 and FY 2011, but according to OMB, the DOD portion of the data for those years was incomplete so adjusting for DOD might show that 1% is consistent across all of these years.

The sheer number of departments in the top 15 above that list Policy Violations and/or Equipment incidents in their top 2 or 3 for frequency suggests that some of the greatest information security challenges facing federal agencies are internal – whether through lack of awareness or training or through outright disregard for approved security practices. In a fiscally constrained environment where return on investment for each dollar is scrutinized agencies might actually save money that they would spend on cleaning up security mistakes by users if they could more effectively prevent many of these incidents in the first place.

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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.

Congress Passes FY 2013 Funding – No Shutdown, Sequestration Intact

This week the Congress passed a fiscal year (FY) 2013 funding bill that provides budgets for a handful of federal departments and continuing resolution (CR) level funding for the remaining departments and agencies through the end of fiscal 2013 on September 30. The final bill averts the potential for a government shutdown and funds key priorities while leaving intact the sequestration rules set under the Budget Control Act (BCA).

When all was said and done, the House passed a Senate amended version of the original H.R. 933 House funding bill. The House original appropriated new budgets for the Department of Defense (DoD), military construction (MilCon) and the Veterans Affairs department.
 
The Senate added new budgets for Agriculture, Commerce, Justice, Homeland Security, NASA, and select other agencies. All others will be funded at FY 2012 levels. (For our take on the overall impacts of the House bill check out this recent blog and for some DoD, VA and DHS implications see this blog.)
 
Year-over-Year Changes
 
Of the handful of appropriations bills that were finally passed, Congress did make some changes to fund select departments and agencies to reflect current priorities and give some flexibility in dealing with spending caps. A summary of these appropriations are presented in the table below.
 
 
 
 
Department of Defense
 
Total FY 2013 discretionary spending for DoD is set at totals $604.9 billion, including $87 billion for Overseas Contingency Operations. This is roughly $30 billion less than the FY 2012 appropriations, representing a decrease of 4.5%. Other highlights and funding priorities in the bill include:
  • Complies with the Budget Control Act spending caps by eliminating unneeded, unrequested funding that would be provided if the CR was extended
  • Directs 671 cuts to unnecessary or under-performing programs and eliminates excess funding due to schedule delays, program terminations, redundancies, and budgeting errors
  • Rescinds nearly $4 billion in unspent prior year funds
  • Aligns funding to new Defense strategy to fund current needs and reprioritizes funds to address known shortfalls
  • Fully complies with Senate Rule XLIV for transparency and maintains earmark moratorium
  • Bill provides the necessary funding for training and military health care
  • Adds $1.5 billion to the National Guard and Reserve Equipment account
  • $486 million to repair aging base facilities
  • Adds $463 million to mitigate shortfalls in day-to-day operation costs for installations
  • Increases funding for nanotechnology, advanced materials, silicon carbide, and manufacturing technologies
 
Homeland Security
 
Overall FY 2013 discretionary spending for DHS is $39.6 billion, excluding $254 million for Overseas Contingency and $6.4 billion for the disaster relief cap adjustment.
  • Coast Guard: $10.4 billion overall, of which $9 billion is discretionary spending. The bill also provides targeted increases above the FY 2013 request to support front line personnel with resources, including $8 million for initial acquisition planning and design of a new polar icebreaker and $20 million to reverse cuts proposed in the request for critical operational assets.
  • Transportation Security Administration (TSA): $7.5 billion for TSA is reduced by $2.4 billion in offsetting collections and fees. The bill includes funding for investments in explosives detection systems, passenger screening technologies, and air cargo security. The bill includes several funding oversight requirements including expenditure plans for checkpoint security technology investments, explosives detection systems for checked baggage, and air cargo security. In addition, language is included requiring TSA to provide a five-year investment plan forecast for passenger screening technologies.
  • U.S. Customs and Border Protection (CBP): $11.9 billion, which adds $79 million above the request for procurement, operations, and maintenance of critical air and marine assets used to defend our borders – including one additional multi-role enforcement aircraft, enhanced radar for unmanned aerial systems, and $28 million to increase flight hours.
  • U.S. Immigration and Customs Enforcement (ICE): $5.7 billion for ICE, primarily supporting personnel and operations, including border patrol, special agents and immigration officials.
  • United States Citizenship and Immigration Services (USCIS): $112 million in direct appropriations for USCIS and fully funds the E-Verify employment eligibility verification system.
  • United States Secret Service: $1.6 billion, adding $3.5 million for priority domestic and electronic crimes investigations and continues the multi-year modernization of critical White House and other Secret Service information technology and communications systems.
  • Science and Technology (S&T): $835 million, returning to FY 2011 levels, for R&D in biological defense, explosives defense, cyber security, first responders, border security, chemical countermeasures, and interoperability.
  • Domestic Nuclear Detection Office (DNDO): $318 million, including $28 million for handheld portable radiation detectors and $75 million for research and development of next-generation detection technologies.
  • National Protection and Programs Directorate (NPPD): $1.4 billion, including the following:
    • $232 million for a new account, the Office of Biometric Identity Management (OBIM). Instead of realigning the US-VISIT program as proposed in the FY 2013 budget, the bill creates a new account for OBIM, the DHS lead responsible for biometric identity management services.
    • $756 million for cybersecurity programs including Einstein intrusion detection and a critical cyber diagnostic strategy for the 118 federal agencies. Also included in cybersecurity funding is $16.8 million for cyber education programs.
    • $260 million in infrastructure protection programs to bolster against natural and man-made disasters, including $78 million to implement the Chemical Facility Anti-Terrorism Standards Program.
  • Office of Health Affairs (OHA): $132 million, including $85 million for the Bio-Watch Program and $2 million to complete demonstration projects through the Chemical Defense Program.
 
Veterans Affairs
 
The VA receives $134 billion for FY 2013, which consists of $72.9B for mandatory programs ($9.1B above FY 2012) and $60.9 B for discretionary funding ($2.5B above FY 2012.)
  • Homeless Veterans Programs: $5.76B for health care and support services for homeless veterans.
  • Iraq and Afghanistan Veterans: $3.28b to meet the health care needs of veterans who have served in Iraq and Afghanistan, a $510M increase over FY 2012.
  • Long Term Care: $7.2M for long term care for the nation’s aging veterans as well as severely wounded combat veterans from the wars in Iraq and Afghanistan.
  • Information Technology (IT): $3.3 billion for IT projects.
    • $1B for pay and associated costs
    • $1.8B for operations and maintenance
    • $494B for DME including $169m for the iEHR and $38.5m the development of paperless claims systems. Requires approval for iEHR spending over 25% of total allotted. 
 
Health and Human Services
  • National Institutes of Health: Provides $1.5b for NIH, a $71m increase including $165m for the National Children’s Study.
  • Food and Drug Administration: Provides $2.5b for the FDA including $50m for implementation of the Food Safety Modernization Act.
  • Child Care and Development Block Grant: Provides $2.3b for the program, which is a $50m increase for grants to states to improve working families’ access to quality, affordable child care.
  • HHS Lease Assistance: Provides additional funding to address imminent lease expirations and consolidations to allow HHS to save millions in annual lease costs and reduce its real property portfolio.
  • Head Start:  Provides a $33.5m increase for the Head Start program.
 
Transportation
  • Section 1801 of the legislation increases funding for highway, highway safety, and motor carrier safety programs to make them consistent with the levels previously authorized under the Moving Ahead for Progress in the 21st Century (MAP-21) Act. Total funding provided by MAP-21 was $561 million in FY 2013 and $572 million in FY 2014.
  • Normalized MAP-21 funding potentially has an impact on initiatives related to the improvement of travel data collection and safety management. These initiatives would include active procurements for Compliance Test Procedures for Electronic Logging Devices and the Road Inventory Program, as well as task orders under contract # DTFAAC09D00081 held by SAIC for NextGen Initiatives Support Services.
 
Commerce
  • Department of Commerce will receive $7.7B in total funding.
  • The National Oceanic and Atmospheric Administration (NOAA) will receive $5B, including funding for satellite programs.
  • The Patents and Trademark Office (PTO) provides $2.88B.
  • The National Institute of Standards and Technology (NIST) receives $809M for laboratories and research.
  • Bureau of the Census will receive $906M.
 
Justice
  • Department of Justice will receive $27.3B in total funding.
  • Grants to State and Local Law Enforcement and crime victims total $2.2B. This includes funding for the National Instant Criminal Background Check System (NICS) improvements.
  • Federal Bureau of Investigation (FBI) receives$8B for salaries and expenses for national security and counterterrorism investigations, combating cyber threats.
  • Drug Enforcement Administration (DEA) receives $2.36B.
 
Energy
  • Energy Department funding was reduced by a total of $44M.
  • Energy Efficiency and Renewable Energy reduced by $11 M
  • Nuclear Energy reduced by $10M.
  • Science reduced by $13M.
  • Advanced Research Projects Agency –Energy reduced by $10M to $265M.
  • Atomic Energy Defense Activities, National Nuclear Security Administration (NNSA) $7.577B, an increase of $363M.
  • Atomic Energy Defense Activities, Defense Nuclear Proliferation receive an additional $110M.
 
Agriculture
  • USDA’s operating budget is a winner this time around as FY 2013 discretionary funding of $20.5 billion represents a 5% increase over the FY 2012 level of $19.5 billion. Funding includes:
  • $24 million for USDA Departmental Administration to provide for necessary expenses for management support services and general administration. These support services include enterprise IT services provided by the National IT Center (NITC) and investments in enterprise IT modernization called for by the USDA’s Optimized Computing Environment (OCE) initiative.
  • $44 million for the Office of the Chief Information Officer and $6 million for the Office of the Chief Financial Officer.
  • $89 million for the Office of Inspector General that the legislation states may be used for contracting.
  • $811 thousand for the Office of the Under Secretary for Food Safety and calls out that funding shall be directed to the Public Health Data Communication Infrastructure System (PHDCIS) until expended. This potentially affects the following vendors and contracts: General Dynamics, # AG3A94D090194 & Dell, # AG3A94D090137.
  • $75 million for the Risk Management Agency (RMA), including funding that may be used for the Common Information Management System (CIMS). This affects the IT Support Services contract, # GST0011AJ0019, held by SAIC.
 
NASA
  • National Aeronautics and Space Administration receives $17.5B in total funding.
  • Space Launch System receives $2.1 B including funding for ground operations and construction and related test facilities.
  • Funding for the International Space Station (ISS) includes $515M for commercial crew transportation to the ISS and $2.9B for operations and research.
  • NASA Science includes $630M for Space Technology to support human and robotic missions.
 
Education
  • Safe Schools and Citizenship: Allows funds available under the Department of Education Safe Schools and Citizenship account to be used to assist educational institutions impacted by school violence.
 
Interior
  • Bureau of Land Management $951M for Management of Lands and Resources, $0 for construction.
  • US Fish and Wildlife Service, $1.2B for Resources Management
 
Labor
  • Job Corps Program: Provides an additional $30m for the program.
  • Unemployment Insurance: Decreases funding for grants to state agencies that administer federal and state unemployment insurance (UI) by $60m.
 
Fellow GovWin Federal Industry Analysis (FIA) analysts Kyra Fussell, Angela Petty, and Alex Rossino contributed to this entry.

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

Cloud Computing Adoption at the Department of Labor

Over the last few fiscal years, the U.S. Department of Labor (DOL) has been implementing cloud solutions in stages aligned with its overall DOL IT Infrastructure Modernization strategy. The objective of this strategy, otherwise known as DITIM, is to transform the department’s “nine major, independently funded and managed IT infrastructure silos at the sub-agency level into a unified IT infrastructure that provides … general purpose business productivity tools, a shared environment for common data sources, and the underlying hardware, software, and facilities to support it.” This goal should sound familiar. Every federal agency has stated something like it as its desired IT end-state. Yet few have gone as far as the DOL or had as much success implementing cloud solutions as part of their IT modernization strategy.
DOL Cloud Efforts: FY 2010-FY 2013
The table below includes major cloud contracts that the DOL has awarded in the last three fiscal years.
 
The DOL’s first step into the cloud was a modest one as the department migrated its electronic capital planning and investment control process to the Government off the Shelf (GOTS) eCPIC system provided as a Software-as-a-Service (SaaS) solution by the General Services Administration (GSA). The DOL was one of many agencies that chose eCPIC as their first venture into the cloud, demonstrating that federal agencies are inherently risk averse when it comes to using new technologies.
Labor’s first commercial investment came in 2010 with the award of a $4.3 million contract to Global Computer Enterprises (GCE) for the migration of DOL financial systems to the cloud. In this case the DOL appears to have chosen a private cloud SaaS solution hosted by a vendor.
DOL cloud investments picked up steam in fiscal 2011, indicating that the agency was growing increasingly comfortable with cloud-based solutions. These investments included two contract awards in September 2011, including a $6.5 million Blanket Purchase Agreement (BPA) to Development Infostructure for the migration and hosting of the Office of Disability Employment Services’ Disability.gov website, and a $50 million award to CGI Federal to “plan, design, configure, implement, operate, administer, and maintain a cloud computing-based Enterprise Case and Content Management System/Federal Contract Compliance System.” This latter award was consistent with a goal of the DITIM to “modernize or incorporate include email, online collaboration, document management, records management, eDiscovery, and remote access.” Here we see cloud computing used to fulfill one of the agency’s publicly stated strategic goals.
DOL continued the trend in fiscal 2012, awarding in September a $59.4 million contract to Lockheed Martin Integrated Services for the Collocation, Infrastructure, Managed Hosting and Cloud Services for the Federal Data Center Consolidation Initiative. A second contract award was made to Concept Analysis Integration for Customer Relationship Management Product and Integration Services, but this award remains under protest at the GAO.
Most recently, the DOL awarded a $50 million contract in January 2013 to InfoReliance for Email, Collaboration, Office Automation, eDiscovery, & Records Management Services. Another competition for a Business Process Model and Notation Platform is currently underway, with the solicitation expected to be released soon.
Takeaway – In the last three fiscal years we have seen the DOL follow a normal, but accelerated, trajectory for the adoption of an emerging technology. The DOL began its move to the cloud with the use of GSA’s eCPIC system and then moved to award large contracts to commercial cloud service providers. To date the DOL has awarded cloud contracts with a total value of $170 million. These contracts have been for everything from email and records management systems to website hosting and cloud data center services.
Deployment Types
The DOL has turned to a number of different cloud deployment types. Data was not available for every contract awarded and some of these conclusions are estimations based on available information.
 
Takeaway – Consistent with most agencies, DOL seems to favor the use of private commercial cloud solutions.
Competition Types
The DOL has also used a variety of competition types to award cloud contracts, making it difficult for vendors to predict which acquisition avenue the department might use next.
 
Takeaway – The DOL has used a number of contracting approaches to fulfill its cloud requirements. No consistent pattern emerges.
Service Delivery Types
Similarly, the DOL has chosen to employ different service delivery types. Like the information concerning cloud deployment types, data was not available for every contract awarded. Some of these conclusions are estimations based on available information.
 
Takeaway – So far, the DOL has turned to SaaS solutions far more than IaaS solutions. No contracts for Platform-as-a-Service have been awarded.
As readers can see from this brief analysis, the DOL has taken multiple steps to meet the “Cloud First” mandate. The contract dollars devoted to these efforts spiked upward in 2011 and 2012, reflecting the overall trend toward greater federal cloud adoption.
Vendors should anticipate this trend will continue across the federal government, especially as fiscal necessity forces agencies to move systems to the cloud. This is more evidence that cloud computing is where an increasing percentage of IT work will be found in the years to come.