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OMB FY 2017 Budget Guidance – Agencies Told to Cut More

While the FY 2016 federal budget appropriations bills are working their way through Congress, the Office of Management and Budget (OMB) is looking to FY 2017 and has again directed agencies to submit lower discretionary budgets.

Following their normal budget process and timelines, federal agencies are beginning to prepare their FY 2017 budgets, which will not be submitted to Congress until February 2016 to take effect that October, more than 16 months from now.  As is customary for this time of year, OMB issued a memo with specific budget preparation guidance for FY 2017 to outline any new or specific parameters that agencies are to follow.

Discretionary Budget Requirements

Key provisions in OMB’s guidance to agencies for their FY 2017 budget submission include:

  • A five percent reduction below the agency’s net discretionary total for FY 20 17 as stated in the FY 2016 Budget (unless otherwise directed by OMB)
    • The 5 percent reduction is to apply equally to defense and non-defense programs. Agencies that are split between the two may not reduce one area more than 5 percent to offset the other area.
  • Requirement to sufficiently fund ongoing Presidential priorities
  • Inclusion of a separate section that identifies recommendations on how they will continue efforts to increase effectiveness and reduce fragmentation, overlap, and duplication
  • Identifying additional investments in programs that support their missions, especially programs with strong evidence of effectiveness. However, the agency’s total net discretionary for FY 2017 may not exceed the FY 2017 total provided in the FY 2016 budget request. Agencies should separately identify and rank these investments by priority.

As in previous years, agencies are to exclude the following:

  • Shifting costs to other parts of the Federal budget
  • Reclassifying existing discretionary spending to mandatory
  • Reductions to mandatory spending to be enacted in appropriations bills
  • Across-the-board reductions
  • Enacting new user fees to offset existing spending, (although agencies may submit these separately as alternative ways to achieve the guidance level.)

Other Parameters

In addition to the directives above, agencies are instructed to continue to support the President's Management Agenda (PMA) focused on agency effectiveness and efficiency as well as government-funded data and research efforts and workforce improvements. In support of the PMA, OMB wants agencies to focus on

  • Implementing CAP goals
  • Using data-driven management reviews (e.g. FedStat)
  • Supporting Agency Digital Service Teams
  • Reducing their real property footprint
  • Reducing improper payments
  • Enhancing shared services
  • Implementing the DATA Act and FITARA.

Further, OMB wants agencies to prioritize institutionalizing the use of data and evidence to drive better decision-making and achieve greater impact at their agencies.

While there are no surprises or major changes in how OMB is directing agencies to develop their budgets over recent years, it seems that the number and complexity of requirements continues to grow.

New Guidance Targets Federal Supply Chain Risk Management Practices

Federal agencies are increasingly relying on commercially provided systems to advance capabilities and deliver cost savings. However, globalization and increasing complexity of technology increases the risks of threats to technology supply chains such as theft, tampering, poor development practices, as well as counterfeit and malicious hardware or software components. In April 2015, the National Institute for Standards and Technology (NIST) published new guidance on securing federal information technology supply chains.

The NIST information and communications technology supply chain risk management (ICT SCRM) program began in 2008 by kicking off development of risk management practices for non-national security information systems aligned with Comprehensive National Cybersecurity Initiative aiming to address global supply chain concerns. In 2012, NIST published an interagency report on methods and practices for supply chain risk management for federal information systems. The interagency report and related activities contributed to the drafting process for this new guidance.

The special publication, “Supply Chain Risk Management Practices for Federal Information Systems and Organizations,” notes that federal information systems and networks are increasingly complex. These systems and networks are composed of information and communications technology (ICT) products and services acquired through suppliers, system integrators, and external service providers.  In order to manage ICT supply chain risks, the integrity, security, and resilience of the supply chain must be ensured as well as the quality of products and services. The new guidance aims to help government organizations understand the risks around ICT and identify approaches to mitigate threats and vulnerabilities. Specifically, the document outlines steps for identifying, assessing, and mitigating risks throughout the ICT supply chain. These guidelines offer an approach to supply chain risk management that addresses key areas around foundational practices, organization-wide implementation, integration with the overall risk management process, and identification of priority components and/or systems.

The processes and controls in the guidance can be augmented with organization-specific requirements (e.g. from policies, guidelines, and other documents) to enable organizations to develop technology supply chain risk management mitigation strategies that are tailored to their needs. The guidance does not provide contract language or a complete list of supply chain risk management methods and techniques to mitigate specific threats. While these guidelines have been specified for federal agencies, the recommendations could be applied to all sectors. Contractors can expect to start seeing language related to supply chain risk management in requests for proposals as agencies adopt the approach.


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

SEWP V on Track for May 2015

In March 2015, marking much anticipated progress in the wake of recent protest delays, the National Aeronautics and Space Administration (NASA) announced 84 contract awards associated with its enterprise-wide technology procurement.

Back in October 2014, the NASA program office for Solutions for Enterprisewide Procurement (SEWP) awarded 73 contracts for the fifth iteration of the government-wide acquisitions contract (GWAC). The announcement was met with a series of protests that prevented the contracts from moving forward. The delay led to the fourth iteration of SEWP being extended for an additional six months, set to run out at the end of April 2015. The announcement from NASA provided details 84 contracts under SEWP V, which intends to streamline government buying of IT products and product-based services.

The firm-fixed-price, indefinite delivery/indefinite quantity contracts will have a 10-year ordering period, including the five-year base period from May 2015 through April 2020 and an option to extend the performance period five years (through April 2025). The extended duration of the contract performance period and increased per contract maximum (up to $20 billion) are two elements of this vehicle that have contributed to the interest around the next set of awards. In addition to the scale, the widespread use of SEWP contracts has made this next iteration one to watch.

Government agencies have spent over $14.4 billion through the current version of SEWP since 2004. Spending for 2014 (reported through the end of March 2015) reached an all-time high. The next form SEWP takes will incorporate new capabilities and concerns, making for a more comprehensive set of offerings. So far, award announcements include 36 contracts for computer-based systems and 48 contracts for networking, security, video and conference tools. With strategic sourcing data and supply-chain oversight expected to help fuel future traffic, SEWP V is expected to maintain a strong share of government technology buying.

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


Room for Expansion across Agency Shared Services Adoption

A recent survey of federal agency leadership explored drivers behind the uneven adoption of shared services for acquisition, human resources, and information technology. Delving into agency business cases sheds light on which agencies are leading the way with transitioning major information technology efforts to shared service environments. 

Survey Summary

In March 2015, the Partnership for Public Service and Deloitte released findings from a survey on shared services progress. Researchers interviewed CFOs and leaders from 18 of CFO agencies to take stock of federal shared services including the attitudes and efforts underway across acquisition, human resources (HR), and information technology (IT). The respondents offered varying perspectives on government buying. Some viewed agencies as independent service providers, which may lend a competitive aspect to shared service arrangements. Others are inclined to see government as a single purchaser, which contributes to a more collaborative environment. Over half of respondents (55%) indicated that terminating or transitioning services was difficult. 28% suggested it was a moderate challenge, and 17% said it was easy. Survey respondents identified primary objectives for adopting or expanding shared service use. The top drivers included cost savings (78%), mission delivery (67%), customer service (56%), and cost avoidance (50%).


The survey findings stopped short of offering assessing the status of each of the agencies. However, agency budget materials provide some insight for plans related to shared services. 

Observations from IT business cases

According to the Office of Management and Budget’s exhibit of business cases for major IT investments, federal agencies identified 738 major efforts totaling $43,609.1 million in their FY2016 budget request submissions. Of these investments, 383 include current or planned shared service spending, nearly 52% of those major IT efforts. 

Across the Department of Defense’s 124 major investments, 41 include current or planned efforts for shared services. Total funding associated with these efforts totals over $7.3 billion. Due the nature of the data reported, it is unclear what portion of those resources will be directed toward shared services. Of the major investments planned Defense-wide, 58% involve shared services. Across the Army’s 31 major efforts, 23% have current or planned shared service elements.  19%of the Air Force’s 31 major investments include shared services, and 16% of the 19 major IT projects for the Navy and Marine Corps do as well.

Analysis of the major investments across civilian agencies highlights the range of adoption progress across organizations. By the level of spending associated with those investments, the top five civilian agencies for shared services are Veterans Affairs, Homeland Security, Health and Human Services, the Department of Commerce, and the Department of Agriculture. 79% of the 24 major investments at the Department of Veterans Affairs include current or planned spending on shared services. At the Department of Homeland Security, 66% of 89 major investments involved shared services. Within Health and Human Services, 60% of 94 major efforts include shared services components. 72% of the 23 major investments detailed for the Department of Commerce have shared service elements. The Department of Agriculture reported on 24 major IT efforts, 83% of which include shared services.  Total funding associated with these major investments across the top five agencies combines to roughly $12,070 million. As with the Defense Department, the portion of each fund intended for shared services is not specified.

Take Away


Agencies are approaching shared services as a means to increase operational and cost efficiencies. In some cases, concerns about mission delivery contribute to some reluctance to relinquish program control.  In others, the ability to standardize and ensure consistency of services is helping shared services gain traction. Additionally, agency leaders are working to resolve uncertainty about specific benefits and costs associated with the move to shared services in order to decide if it’s right for a particular organization. Given the varied landscape of mission and program requirements across the government, it’s hardly surprising that there’s a range of positions and approaches in play for how shared services are being implemented. 


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

2020 Census Needs Investment in Enabling Technology and Infrastructure Requirements

Preparations for the 2020 Decennial Census are a key factor shaping the Census Bureau’s budget. Plans for the 2020 Census aim to drive cost efficiencies by leveraging lessons learned and improving census procedures. FY2015 marked the launch of the second phase of R&D for the effort, which aims to overhaul the census process and achieve dramatic cost savings through technology implementation and process updates. A recent review of the Census Bureau’s plans highlights technology hurdles that may provide business opportunities for contractors. 

The Census Bureau approach to the 2020 Census intends to complete the survey for the same or less cost than 2010. So far, the efforts have encountered a number of planning hurdles, in particular challenges producing reliable schedules and cost inaccuracies. Insufficiently resolved issues underlying these problems will continues to be plague progress as work moves along with the second phase of research, testing, and operational development. The bureau’s FY 2016 discretionary budget request included $1.5 billion to support research, development, and implementation of the 2020 Census. The bureau’s information technology budget has $199 million slated for undertakings at this phase, an increase of 169% over FY 2015 enacted levels. Further, all of the FY 2016 funds are expected to support development, modification, and enhancement activities. All in all, just over 91% of the FY 2016 investment is potentially contractor addressable (based on the portion of resources that provides associated government personnel). 

Among other activities, these funds are intended to help roll out an internet response option for collecting enumeration data. In order to provide an option for collecting self-responses from households via the internet, the Census Bureau needs to make a number of investments. These enabling capabilities include designing and developing an application for internet response, developing and acquiring IT infrastructure to support the large volume of data processing and storage, and planning communication and outreach strategies to facilitate households’ submission of responses via the internet. Preliminary cost estimates for the internet response were calculated at $73 million, but these figures were deemed unreliable for not conforming to best practices. Issues included not updating the estimates to reflect changes related to the option that occurred since 2011. Another snag is the lack of time frames for decisions around implementation of cloud computing solutions. As a result of these problems, additional concerns are being raised about the estimated cost savings that is expected to result from these efforts. With field tests for various components anticipated during the fall of 2015, addressing these underlying complications will be necessary in order for the program to continue on schedule.

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


Federal Acquisition Improvement Takes Aim at IT

With over 3,300 contract units across the government, collaborating to share information and best practices can be challenging. Back in December 2014, the Office of Management and Budget’s Office of Federal Procurement Policy (OFPP) described near-term to transform federal procurement. 

OFPP administrator Anne Rung’s memo to federal agencies outlined current priorities to transform government buying. These areas include category management, acquisition workforce and processes, and government-industry communication. Milestones for many of the efforts and actions associated with these areas will be approaching in the next few months. 

Category Management

OFPP aims to shift from managing government purchases and prices individually to establishing categories for common spending and costs. Unnecessary duplication of contracts across government for similar goods and services burdens vendors with proposal preparation costs and administrative expenses, which can have a significant impact on small businesses. This shift in government buying includes promotion of strategic sourcing, in particular looking to optimize the $25 billion the government spends annually on commodity IT. To support this push, the General Services Administration is cataloging prices paid for IT goods and providing access to contract details for related products to highlight best practices. 

Talent Management and Innovation

The Office of Science and Technology Policy (OSTP) and OFPP are taking steps to encourage adoption of best practices within government purchasing of digital services and fostering innovation. These steps have included releasing a draft of the TechFAR Handbook and exploring case studies of resourceful contracting practices. OSTP and OFPP are collaborating on a plan to increase the government’s digital acquisition capabilities. To further support these efforts, the U.S. Digital Services is expected to launch a pilot program for training agency personnel in digital acquisition. One of the areas targeted for these activities is agile development. 

Strengthen Government-Industry Relationships

OFPP is developing an approach to improve communication between government and industry. Guidance is in the works to allow open feedback from industry on acquisition process improvement and to identify trends and issues. The guidance will shape Acquisition 360, an effort to formalize the agency collection of feedback related to acquisition processes and identify areas for improvement. The focus on strengthening relationships includes establishing enterprise-wide vendor managers, a step that will begin with recruiting vendor managers to support relationships with key IT commercial contractors. 

While these efforts will address all government buying, near-term efforts are zeroing in on agency IT. In particular, activities related to category management are expected to really dig into how agencies are buying technology products and services. It is worth noting, however, that the plans associated with this transformation initiative do not paint a picture of a sudden, new reality. Rather, they suggest ongoing activities to strategically reshape the landscape of government acquisition. As these current transformation efforts continue, pockets of advancement in different contracting organizations will contribute to gradual change across the government.


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


Does Chief Data Scientist Appointment Signal Boost for Analytics Spending?

Mid February 2015, the White House announced the appointment of its first Chief Data Scientist in the Office of Science and Technology Policy (OSTP). In addition to his post as Chief Data Scientist, Dr. Dhanurjay ‘DJ’ Patil will also serve as the Deputy Chief Technology Officer for Data Policy. This announcement comes as federal agencies continue to juggle resource limitations and competing priorities. 

According to the Chief Technology Officer’s post on the White House blog, the Chief Data Scientist will work closely with the Federal Chief Information Officer and U.S. Digital Service, but the particular objectives of the role remain unclear. Patil is expected to help shape policies for technology and innovation, to develop partnerships to get more from the nation’s data investments, and to recruit talented data scientists into public service. He is also expected to support the Administration’s Precision Medicine Initiative, which targets advances at the crossroads of health and data. 

Over the last several years, government agencies have been working to harness the data they generate and steward. In fact, a number of agencies – the Department of Transportation, the Federal Communications Commission, the Department of Energy, the Department of Agriculture, and the Department of Commerce - have already carved out posts for chief data officers in their organizations or filled role. The appointments reflect renewed efforts across the government to tap into agency information through open data and analytics. 

Agency investments in big data aspire to spur technology innovation and deliver improvements to digital services. As part of the Digital Government Strategy, agencies are continuing to achieve and maintain high quality data sets, and to make data open and useable to the public. The administration has set a clear goal of open and machine-readable data the default for government information. Currently, there are over 138,000 datasets available on for public use. Agency oversight organizations will be better equipped to combat waste and fraud. Meanwhile, decision-makers anticipate improved resource allocation. Technologists and research organizations are looking to advance scientific investigations by harnessing greater analytical capabilities. There are numerous health care applications from enhancing medical services to informing public health activities. Education stands to gain from data analytics through tailored lesson plans, online platforms, and increased efficiency for school operations. In short, cracking big data challenges stands to bring a wide array of benefits in areas like health, energy, education, public safety, finance, and development. 

Amid these promises, concerns have been raised around personal privacy and civil liberties. Current government efforts are targeting improvements to agency use and storage of data as well as strengthening cybersecurity. Additional efforts are likely to address accountability, oversight, and relevant privacy requirements for both public and private organizations. 

Federal agencies are working towards various data science goals like better decision-making support and more comprehensive situational awareness for areas like cybersecurity. Many of these efforts are well established and underway. Unless they are managing resources and bringing additional funding to the table, the primary impact of chief data officers is likely to be guidance. In the case of the new Chief Data Scientist, guidance focused on building the government’s capabilities may aim to temper reliance on industry for support.


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


Defense Business Transformation Lacks Clear Priorities

The Defense Department (DOD) spends billions of dollars annually on business systems. Since 2005, investments aiming to transform the way the DOD does business have been called out on a high risk list for government efforts. Despite making some improvements in recent years, the DOD’s business modernization initiatives continue on a precarious path. 

Every two years, the Government Accountability Office (GAO) identifies government programs that are more vulnerable to fraud, waste, abuse, and mismanagement or need changes to address major challenges. Recently, the GAO released its updated list of these programs. Not surprisingly, the GAO’s High Risk List for 2015 includes several efforts related to DOD business transformation (e.g. DOD Approach to Business Transformation, DOD Business Systems Modernization, DOD Financial Management). 

Since concerns about defense business transformation arose, the DOD has established management responsibilities and issued an updated strategy for business transformation. Despite these steps, a number of elements contribute to the DOD’s business transformation appearing to be on uncertain footing. Over the past several years, turnover has been high in the Chief Management Officer (CMO) and Deputy Chief Management Office (DCMO) as well as within the Office of the DCMO. This personnel issue is compounded by the fact that no performance management practices are in place. In the absence of leading performance management practices, DOD’s CMO and DCMO have neglected to communicate priorities for its business goals. Further, the focus of leadership has been on reviewing modernization efforts rather than monitoring the overall progress of the defense business functions. 

Over the last year, Defense Business Council meetings have occurred with more consistency and have increasingly emphasized the performance of DOD’s business functions. However, no plans are currently in place to correct the issues that have been hindering business transformation progress. (The lack of corrective actions plans are particularly significant in the eyes of the government watchdog organization. These plans would meet one of the five criteria for this area to be removed from GAO’s High-Risk List.) 

Ultimately, until the DOD addresses numerous issues underlying its approach, challenges will continue to arise around its business transformation efforts. These weaknesses include the continued use of outdated processes and systems for key business functions, like financial management and logistics. For more insight on DOD business systems modernization and efforts across the government, check out Deltek’s recent Federal Industry Analysis report Federal Enterprise Business Systems, 2015.


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


NASA Tech Proves Windfall for Army

Under pressure to deliver cost savings and efficiency improvements, federal agencies are looking at each other’s achievements with increased interest. Through a recent technology transfer, the Army is getting a boost in software development from the National Aeronautics and Space Administration (NASA).

The Meteorology Calibration Laboratory (MCL) at NASA’s Marshall Space Flight Center is located on the Army’s Redstone Arsenal campus in Alabama. According to an announcement from NASA, Army officials “became aware” of NASA’s considerable work on automated software development during a tour of the MCL. Over the past decade, NASA has generated over 2,400 automated software procedures for calibration and testing. Around 1,700 were developed for the Space Shuttle Program and another 300 were produced for general use. In the last two years, an additional 400 have been developed for NASA projects and programs including the Space Launch System. By using a standardized set of procedures, the control of instrumentation can be automated. This automation minimizes risk by reducing the probability of errors related to human involvement. Limiting the necessary human interference, it also increases the consistency in the data recorded from technician to technician.

During a period of four months, programmers at the Army’s Test, Measurement and Diagnostic Equipment Activity completed around 25 automation procedures. (Assuming a constant rate, it would take several decades to amass a volume of procedures equal to the current size of NASA’s collection.) With the recent transfer from NASA, the Army benefits from over twelve years of work on calibration and testing, sparing them the costs of the software development. Government officials estimate that the move marks a potential savings of nearly $4 million. Beyond time and money, this represents a win for the service in terms improving the quality of the Army’s measurements.

NASA has shared these procedures between its centers, but this Army transfer is the first to a non-NASA recipient. The agency expects additional interest from other Defense Department organizations is likely to follow.  It’s no surprise that sharing technology is saving agencies time and money. Various initiatives like shared services and common standards (e.g. for security or for electronic reporting) are encouraging organizations to more closely consider potential existing solutions. Going forward, we’re likely to see more and more examples of agencies reaping benefits from other agency’s advances. As with other cost cutting moves, the trend will eat into the contractor addressable spending in some areas but may free up funds for other investments.


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


Federal Spending on Enterprise Business Systems Stays Strong

Ongoing initiatives to modernize government business systems offer prime examples of the ways federal agencies are looking to leverage technology transformation to achieve cost savings and efficiency gains. 

At end of 2014, Deltek’s Federal Industry Analysis team completed analysis of the market for business systems, identifying four segments characterized by different types of enterprise solutions. These four segments are financial management, asset and material management, human resources management, and administration and government management. 

Financial Management – The goal of improving financial management across the government has led to updated guidance for financial management system and shared services initiatives. Systems in this segment include solutions for payroll, accounting, invoice processing, budget formulation, and collections. This segment is expected to grow by 4.7% from FY 2014 to reach $3.4 billion in FY 2015.


Asset and Materials Management – Business systems for asset and materials management facilitate tighter asset control. Systems in this segment include solutions for supply chain management, inventory control, and fleet management. This segment remains flat from FY 2014 to 2015.


Human Resources Management – These systems support efforts to improve workforce performance. Solutions include personnel management, performance management, recruiting, and compensation management. This segment is expected to grow by 8.3% over FY 2014 levels to $3 billion.


Administration and Government Management – These systems include solutions for contract management, program management, customer relationship management, and travel management. Spending in this segment continues near FY2014 levels.


Deltek predicts contractor addressable spending on federal business systems to total $10.6 billion for FY 2015, increasing slightly over FY 2014 spending levels.  While many government efforts to improve business systems have been underway for some time, policies and legislative mandates continue to shape both the strategic direction and agency progress. For example, demand for improved business performance is underscored by reporting requirements and the need for increased financial transparency. The goal of reducing spending is also linked to efforts like adoption of shared services and plans to address auditability of financial systems. Ongoing budget pressure has increased the tendency to take an incremental approach to streamlining and enhancing government business operations.


Agencies making the largest investments in modernizations efforts include the Department of Defense, Treasury, and Veterans Affairs. Going forward, agencies are looking to continue advancing business system capabilities through mobile access and business analytics. The role of cloud environments is expected to expand, as only a small percentage of systems have completed migrated to cloud environments. Further exploration of the government initiatives targeting modernization of business systems is available in the recent Federal Industry Analysis report Federal Enterprise Business Systems, 2015.

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


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