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IT Market Forecast Finds Bright Spot in Cloud

The latest forecast from Deltek’s Federal Industry Analysis Team predicts a slight decline in total IT spending over the next five years, from $112 billion in FY2013 to $102 billion in FY 2018. The flat to slightly lower spending levels reflect the demands of the federal budget environment, which is driving efforts to increase efficiency and effectiveness of IT investments while bringing increased scrutiny. While this reality has been characterized in the near term by phrases like “do more with less” and “flat is the new up,” government organizations are continuing to spend billions of dollars in contracts for IT products and services. The shift to cloud services is enabling agencies to achieve increased capabilities, like security and mobility, without the burden of traditional implementation and maintenance costs. With the value cloud contract awards nearly quadrupling between FY 2012 and FY 2013, it’s hardly surprising that this area will continue to see investment over the next five years.
 
A new feature in this year’s budget reporting required agencies to publish spending related to cloud computing, including funds required for implementation (hardware, software, professional services) in addition to the cloud service itself. Over the past few years, government spending on cloud computing has favored private deployments. While the reported figures appear to reflect a decline from FY 2013 to FY 2014, we expect to see those numbers for private clouds to increase, although new budget realities may slow the pace.
 

 

 While cloud service provider authorizations have been slowly doled out through the Federal Risk and Authorization Management Program (FedRAMP) office, agencies have pursued cloud procurement through a variety of channels – including government-wide acquisition contracts (GWAC), set asides, sole sourced awards, and GSA schedules. Even as adoption of cloud computing has gained momentum, agencies have remained hesitant about mission critical applications. As cloud providers build trust providing current service offerings, these untapped mission-critical areas may be primed for efficiency improvements and cloud service expansion. Maturation of cloud adoption also stands to support business system transformation, potentially through a shared services model. Trends across defense and civilian agencies that will sustain investments in cloud computing over the forecast period include:
 
Defense
-       While most services are pursuing solutions through DISA, the approach is not uniform.
-       Demand for support of storage, cyber security, and intelligence, surveillance and reconnaissance (ISR) analysis.
-       Implementation of common computing environments, service oriented architecture (SOA), and combat support systems will progress as cloud adoption matures.
 
Civilian
-       Civilian agencies are exploring increased roles for commercial cloud services.
-       Infrastructure consolidation, mobility, data management and shared services are developing in tandem with cloud efforts.
-       Beyond webhosting, email and collaboration, cloud solutions are being targeted for geospatial and scientific data.
-       Agencies are also turning to cloud-based mobile device management.
-       System modernization based on cloud solutions is poised to be an area of high growth, particularly if providers are able to reduce latency and improve up time.
 
So while we’re seeing some decline in market segments overall, cloud computing is one technology area anticipating continued investment and growth. As cloud gains momentum and consolidated technologies require less integration and customized service, spending in IT services is likely to soften. For more information on the IT spending forecast and specific agency outlooks for cloud computing, see Federal Information Technology Market, 2013 – 2018.
 
Originally published for Federal Idustry Analysis: Analysts Perspectives Blog. Stay ahead of them competition by discovering more about GovWinIQ. Follow me on twitter @FIAGovWin.

Satellite Program Audit Highlights Performance Oversight Challenges

The Department of Commerce’s FY 2014 budget request of $8.6 B provides for increased funding to the National Oceanic and Atmospheric Administration (NOAA) to support critical weather satellite programs, Earth observations, and other science stewardship responsibilities. At a time when efficient performance is increasing emphasized, the history of delays and cost overruns makes these satellite programs a target for additional oversight. The mission critical Geostationary Operational Environmental Satellite-R Series (GOES-R) was subject to an investigation by NOAA’s Inspector General (OIG). Recently, OIG released audit results advising that mitigation approaches and cost controls were necessary.
 
The GOES-R satellites are part of NOAA’s National Environmental Satellite, Data and Information Service (NESDIS). These satellites obit 22,300 miles above Earth, generating images every 15 minutes to monitor temperatures, solar activity, and support search and rescue activities. The next generation of GOES satellite is being developed by NOAA in conjunction with NASA. The GOES-R series consists of four satellites (GOES-R, -S, -T, and –U), with the first satellite scheduled for launch in October 2015.
 
Funding stability is now one of the top risks in the program’s risk charts. The expected lifecycle cost for the GOES-R program development and acquisition is $10.9 billion.
 
According to the audit, an increase of $186 million for FY 2013 and an additional $150 million for FY 2014 are needed. Despite over $1 billion in contractor cost increases and $264 million in previous year budget adjustments, the program is not expected to exceed its life-cycle budget. However, the current budget plan must be sustained for the program to stay on track. Delays would mean needing to maintain the contractor workforce for a long time, and, at the current rate of $71 million per month, that would increase the life-cycle costs.
 
The GOES-R Satellite Ground Segment monitors and controls NOAA’s GOES-R satellites. The FY2014 IT budget request included $246.8 million for this investment, entirely for development, modernization and enhancement (DME). This total is a four percent drop from FY 2012 levels. The core ground segment is performed under a contract awarded in May 2009, for $736 million over a 10-year period. OIG audit found that NOAA accepted a development approach that was not flexible, which resulted in increased costs.
 
OIG’s audit made seven recommendations. Four recommendations were addressed to NOAA’s Deputy Under Secretary for Operations:
1.       Develop and communicate tradeoff approaches to mitigate launch delays.
2.       Disseminate information to stakeholders and users about tradeoffs made to meet the target launch date.
3.       Maintain robust systems engineering by directing NESDIS to provide periodic reports to the NOAA Program Management Council.
4.       Improve contract administration and management by directing the policy for managing contract actions.
 
Three recommendations were directed to NOAA’s Assistant Administrator for Satellite and Information Services to ensure steps were taken by NASA to limit cost overruns and improper award fees:
5.       Evaluate contractors’ proposals and subsequent plans to verify technology readiness requirements.
6.       Modify contract award-fee structures for the Advanced Baseline Imager (ABI), Geostationary Lightning Mapper (GLM), and GOES-R spacecraft to align with the current NASA’s Federal Acquisition Regulations (FAR) Supplement.
7.       Adjust future award fee structures to incentivize contractors and control costs.
 
NOAA agreed with five of the seven recommendations from the audit. The two that NOAA did not concur with involved the award-fee structure and incentivizing contractors.
 
NOAA asserts that the contract awards for ABI, GLM and the spacecraft pre-dated NASA’s 2011 FAR Supplement, effectively exempting them from compliance. In response, OIG suggested that NOAA consider the use of the current Supplement as a way of improving contractor incentives, rather than looking at the awards as a situation of compliance. Since NOAA is in the process of determining award fees for contractors, the suggested that collaboration with NASA would improve methods and plans for setting award fees.
 
As for the future award fees for ABI, NOAA appealed to an example where the current method resulted in improved performance. The OIG was not satisfied with this explanation, noting that this example occurred prior to the periods addressed in their findings
 
The report also detailed the ban on OIG and Government Accountability Office (GAO) attendance of Program Management Council (PMC) meetings. NOAA offered that one reason for restricting access stemmed from a recommendation received in July 2012 by the NESDIS Independent Review Team (IRT) to limit satellite oversight activities. According to the audit report: "Over the past 3 months, while OIG has been banned from PMC meetings and waiting for NOAA to resolve this issue, NOAA has spent approximately $429 million on its GOES-R and JPSS programs. Restricting OIG attendance hampers our oversight of these high-cost, challenging, primary mission-essential programs and our ability to effectively provide independent assessments to Congress and our other stakeholders."
 
The strain between NOAA and its OIG could draw out points for organizations to be mindful of as they work to share improve return on investments and effectively share information and best practices. As agencies look to increase program oversight, points of contention around management practices and incentivizing contractors will need to be ironed out to avoid impeding efforts to drive performance efficiency and savings.
 
Originally published for Federal Idustry Analysis: Analysts Perspectives Blog. Stay ahead of them competition by discovering more about GovWinIQ. Follow me on twitter @FIAGovWin.

 

Geospatial Solutions in the Cloud: What Agency Moves are Telling Us

Several years ago, geospatial technology was touted as the new must have capability. Federal agencies agreed and today every department operates a geospatial program to one degree or another. Geospatial data is now also one of the areas where a shared services approach is being implemented in earnest. The Geospatial Platform, a program run by the partner agencies of the Federal Geographic Data Committee (FGDC), collects agency data and makes it available to users as a cloud service run by the General Services Administration. The shift of geospatial services to the cloud is an under-the-radar step in the evolution of federal cloud computing. Halting agency efforts to move email, collaboration, and content management capabilities to the cloud get much more attention and yet the development of cloud-based geospatial services is arguably more important because geospatial data interfaces with many mission critical capabilities. The movement of these capabilities to the cloud blazes a trail for the migration of other mission critical applications. Similarly, the sharing of geospatial data by agencies illustrates the viability of a shared services approach, a path other applications are sure to follow.
Despite the move toward shared services there is also a contrary trend to consider. Some agencies are either migrating their geospatial data to the cloud independent of FGDC related efforts or they have been acquiring cloud-based geospatial capabilities into their own data centers. By my count six agencies so far have begun testing or otherwise working with geospatial capabilities in the cloud. Table 1 below lists the agencies and the names of the projects.

Table 1: Federal Agency Geospatial Cloud Projects

What exactly are these projects and what can being familiar with them tell us about the ongoing evolution of the federal cloud market? Details on most projects could not be found, but information is available for a couple of them. Even this limited data, provides insight into how the landscape of cloud-based geospatial capabilities is changing and where viable future business opportunities may be found.

This BAA, awarded to LMN Solutions in April 2012, is a consulting engagement intended to help the Army Geospatial Center understand how cloud computing can be used to fulfill the mission goals of the Army Geospatial Enterprise. The AGE supports the “Army's Mission Command networks and systems by facilitating the dissemination of relevant geospatial information to every echelon across the operational environment.”
Implication – The Army is actively researching the viability of using cloud solutions in tactical combat environments. Geospatial data is already critical for combat operations, but delivering this data via the cloud is new for the Army. The result of these research efforts could be future investment in cloud services for the AGE, if not for other elements of Army Mission Command as well. Vendors positioned to provide these solutions, especially with zero or near zero-latency, may be able to develop business in this area. The demand is clearly there.
Although this market research released in 2011 did not turn into a formal contract opportunity, the research announcement indicated NASA’s interest in how a cloud-based approach could be used to collect and process climate data. The idea behind the project was to build a virtual climate simulation supercomputer that incorporated local citizen input on climate change, resulting in the development of new climate change models and simulations that utilize geospatial data. The data, processing power, and visualization capabilities requested were to be provided in a cloud environment.
Implication – NASA’s Climate @ Home approach illustrates the rapidly approaching nexus of cloud computing and big data. NASA never proceeded with the project, but the interest expressed in the market research shows how agencies like NASA are looking for new ways to collect, parse, and analyze data via the cloud. Many of the desired goals and capabilities listed in the Request for Information fall under the category of big data analytics. I suspect the Climate @ Home RFI is but a sample of the demand at agencies with scientific missions for analytics solutions in the cloud. Vendors that can demonstrate value and a rapid Return on Investment of cloud-based analytics that work with geospatial data will certainly find interest at NASA, the DOE, and elsewhere. 

 

Hawaii Details 12-Year IT Roadmap To Streamline Business Processes While Improving Efficiency

Earlier this month, Hawaii unveiled a plan to overhaul the state’s use of technology to streamline business processes to improve the delivery of government programs and services.
As part of this, the newly-created Office of Information Management and Technology developed a 12-year roadmap which outlines the necessary steps that will drive the decade-long business and technology transformation. The Transformation Plan was developed in consultation with state agencies and after a thorough review of national best practices and lessons learned from other states. The effort is one of the key initiatives under Governor Neil Abercrombie’s New Day Plan, which calls for a transformation focused on jobs and investments in people to “ensure long-term economic prosperity and resilience.”
“A solid foundation must be built that will enable the state to continuously adapt in order to provide services, now and in the future,” said Hawaii CIO Sanjeev “Sonny” Bhagowalia. “This 12-year plan, which includes two years of planning and 10 years of implementation in multiple phases, will revolutionize the way information is managed to improve how programs and services are delivered to the public.”
As reported, Governor Abercrombie appointed Bhagowalia as its first chief information officer in 2011, after recognizing that a large-scale effort was needed. Hawaii said the state has “not significantly invested in technology for more than 30 years,” while noting that “transforming the state’s $11 billion business enterprise with 220 business functions and services across 35 distinct lines of business is an enormous endeavor.”
The Transformation Plan will morph the current paper-based and inefficient business environment into a future environment that is more cost-efficient, digital, and mobile-accessible. It will also consolidate the state’s 743 fragmented legacy systems into fewer, but, integrated, enterprise-wide solutions that facilitate improved information sharing.
Currently, Hawaii spends about 1.4% of its annual budget on technology, while most states invest around 2% to 3%. Industry best practices suggest spending between 3% and 5% of the annual budget on technology to realize the greatest benefits.
  1. Streamlining and improving current business processes and applications to directly benefit the public.
  2. Leveraging the state’s investment in shared support services and technology infrastructure.
  3. Establishing a strong organization-wide management and oversight framework, including policies, processes, performance measures, program management and organizational change management.
As part of the transformation, Hawaii has identified 11 top strategic technology priorities, which include:
  1. Enterprise Resource Planning (ERP) - Hawaii is moving forward with implementation of an enterprise-wide ERP system that will replace the large majority of the current central systems within the Enterprise Support Services band.
  2. Tax Modernization - This involves a strategic initiative to explore ways to streamline and modernize tax processing away from the current Integrated Tax Information Management System (ITIMS). It will expand the overall use of electronic tax filing, electronic payment, improved analytics, and improved case management processing to streamline and decrease cycle times for the citizens of the state.
  3. Health IT - Envisioning a more effective, efficient, patient-focused healthcare system, Hawaii’s Transformation Plan includes a four-point strategy of innovations for Delivery System Improvements, Payment Reforms, Health IT and Healthcare Purchasing. Hawaii is seeking systemic improvements in public health through measuring health status, performing assessments, and the tracking of preventions, promotion, and outcomes. The State will look to use Electronic Health Records and a secure exchange of information to improve care coordination, reduce duplication and waste, empower patient engagement in their health, and enable public health analytics to shape policy decisions that will improve the overall health system.
  4. OneNet/Enterprise Services Network - A single network, OneNet, will look to fulfill the network needs of all state departments and employees and citizens with guaranteed performance levels.
  5. Adaptive Computing Environment (ACE) - Establishes a consistent configuration for computing devices across the State using pre-approved vendors. State employees can order standard systems that are engineered to operate most efficiently in the OneNet environment. Choices are provided based on job classification for mobile/tablet solutions, laptop/desktop, or a strictly virtual environment for certain work. These systems require fewer support resources than non-standard configurations, enhance overall support effectiveness, and reduce total cost of ownership.
  6. Shared Services Center - For the future State vision, the goal will be to have five fully meshed functional shared services centers (SSC) distributed across the islands to provide high availability, redundancy, fault tolerance, data backup and replication, disaster recovery, and always-on services to Hawaii. Connections between shared services centers will be provided with dedicated high-speed fiber optic lines with service providers and State wireless connections acting as redundant and backup links respectively.
  7. Information Assurance & Privacy - Hawaii has a fully integrated Security Operations Center (SOC) and Computer Security Incident Response Centerv (CSIRC) to: provide uninterrupted security services while improving security incident response times; reduce security threats to the State; and enable quicker, well-coordinated notification to all State Departments regarding security threats or issues.
  8. Mobile ComputingHawaii is aiming to establish a standard mobile applications solution pattern and approach with standard methods, skill development, contractor resources, and tools/technologies in conjunction with the adoption of preferred smartphones and tablets. Since mobile application development has a very small footprint in the State at this time, this initiative will need to analyze, pilot, and invest/implement in a standard approach, capabilities, and tools for developing mobile applications.
  9. E-Mail, Collaboration and Geospatial This effort is looking to provide several integrated services in a single environment, including integrated multi-media online communications services; collaboration and conferencing services, and multimedia content and information services.
  10. Open GovernmentSeeks to establish a State of Hawaii data.gov internal and public-facing website to facilitate the sharing of master data sets.
  11. Hawaii Broadband - Hawaii currently has many broadband projects underway as part of the Hawaii Broadband Initiative (HBI) with departmental participation that highlights the importance of the program. An assessment of the current program illuminates the fact that there must be strong unification of these disparate efforts within an established, disciplined program management framework with continual progress reports.
Our Take: Overall, we applaud the actions taken by the new CIO to outline how the State of Hawaii can streamline its operations while improving efficiencies through the use of technology.  With this in mind, Deltek expects opportunities in the areas of IT refresh, systems integration, portal development, broadband, and IT services to arise as a result of these significant IT efforts.
In terms of contracts, Hawaii currently has over 154 active GovWin tracked opportunities. The following is a breakdown of Hawaii’s top 5 opportunities (in terms of value) across all market verticals:
  1. Pharmacy Benefit Management Services and Fiscal Agent Services In Support of Pharmacy Claims Processing; Value: >$30 million; Primary Requirement: IT Professional Services; Award Date: February 2013.
  2. Statewide Telecommunications Equipment; Value: >$30 million; Primary Requirement: LAN/WAN Equipment; Award Date: January 2014.
  3. Hawaii Broadband Initiative; Value: >$30 million; Primary Requirement: Fiber Optic Materials & Components; Award Date: June 2013.
  4. Health Insurance Exchange Services; Value: <$30 million; Primary Requirement: Information Technology; Award Date: November 2012.
  5. Third Party Administrator (TPA); Value: <$30 million; Primary Requirement: Information Technology; Award Date: July 2013.