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State of the Union – Potential Opportunities and Impacts for Federal Contractors

In Tuesday night’s State of the Union address, President Obama highlighted issues and initiatives he hopes to tackle in his last two years in office such as improving “middle-class economics,” building U.S. infrastructure, and increasing cybersecurity.  

Reading between the lines we can attempt to predict the impact some of these initiatives may have on the federal contracting community.

The potential upside for federal contractors:  

  • Obama’s plan to improve infrastructure in the form of trains, bridges, ports, and internet speed and access could provide opportunities for heavy construction and IT contractors. 
  • Strengthening cybersecurity efforts may provide companies with additional opportunities to sell cybersecurity services and solutions to the federal government, as well as the commercial market.  
  • Easier, more affordable access to higher education and increased training will provide employers with a larger, better trained labor pool. 
  • The president’s Precision Medicine Initiative may provide contracting opportunities in the area of health IT, health informatics, medical research, medical technology, and medical devices. 
  • Revisions to the tax code may adversely or positively impact contractors and other companies depending on specifics of proposed tax code changes.  
  • The president’s commitment to continue to fight terrorism may provide opportunities for defense contractors. 
  • Obama’s statements about surveillance and privacy allude to continued funding for intelligence agency surveillance programs, but with emphasis on simultaneously safeguarding citizen privacy.  

The potential downside for federal contractors:  

  • Obama’s call for higher wages in the form of equal pay for women and increasing the minimum wage, may negatively impact companies’ profitability.  
  • The appeal for guaranteed paid sick leave for all employees may place a financial burden on small businesses.  
  • Potential new cybersecurity legislation could impose additional security requirements for federal vendors and service providers.  
  • Revisions to the tax code may adversely or positively impact contractors and other companies depending on specifics of proposed tax code changes. 

The President’s FY 2016 Budget Request, due for release in less than two weeks, will bring to light many of the proposals and initiatives mentioned in the State of the Union address, and is rumored to contain a substantial increase over current year budget levels.

For detailed budget information and federal contractor impacts, watch for Deltek’s future analysis of the President’s FY 2016 Budget Request in the coming weeks.

 

DHS Would Get a $400 Million Boost for the Rest of FY 2015 Under House Bill

While most federal departments received their final fiscal year (FY) 2015 appropriations in mid-December, the Department of Homeland Security (DHS) was put in a funding holding pattern by the last Congress. Now, the new 114th Congress is in session and the U.S. House of Representatives has moved forward on a funding bill for the department.

In December, Congress passed an FY 2015 omnibus that funded all federal departments through the rest of the fiscal year, ending on September 30, except for DHS, which was funded with a continuing resolution (CR) until February 27, 2015. 

Now, with the DHS CR set to expire in a few weeks, the House has approved a FY 2015 Homeland Security Appropriations bill which would fund DHS through September, provided the Senate can move forward on a comparable version and the two chambers can reconcile a final bill to send to the president by the deadline.

The House bill, H.R. 240, provides a total of $39.7 billion in discretionary funding, which is an increase of $400 million (+1%) over the FY 2014 enacted level of $39.3 billion, which itself was a billion dollars more than White House requested in the FY 2015 budget. If enacted, the $37.7 billion would constitute more than a 3.5% increase over what the president requested for this fiscal year.

The bill and the accompanying Explanatory Statement provide details into agency funding and some specific IT investments areas.

  • Office of the Chief Information Officer (OCIO) – $288.1 million, of which $189.1 million is multi-year money available through FY 2016. The $288.1 million is $31 million over the FY 2014 enacted level. An additional $1 million is provided for the DHS Data Framework initiative and an additional $500 thousand is provided for cyber remediation tools.
  • Cybersecurity – The bill includes a total of $753.2 million for cybersecurity operations in the National Programs and Protection Directorate (NPPD). An additional $164.5 million is provided for NPPD Communications and $271 million for infrastructure protection programs, for an aggregate total of $1.19 billion. Cybersecurity workforce funding of $25.9 million is provided for Global Cybersecurity Management, of which at least $15.8 million is for cybersecurity education.
  • Science and Technology – $1.1 billion, $116.3 million below the FY 2014 enacted level, but $32.1 million above the president’s request. This includes $973.9 million for Research, Development, Acquisition, and Operations.
  • Customs and Border Protection (CBP) – $10.7 billion, an increase of $118.7 million above the FY 2014 enacted level. Of this, a total of $808.2 million is provided for Automation Modernization efforts for TECS, Automated Commercial Environment (ACE), International Trade Data System (ITDS) and others. The bill slates $382.5 million for Border Security Fencing, Infrastructure, and Technology (BSFIT).
  • Immigration and Customs Enforcement (ICE) – $5.96 billion, an increase of $689.4 million over the FY 2014 enacted level. IT funding includes $3.5 million to support enhancements to the PATRIOT system for visa vetting
  • Transportation Security Administration (TSA) – $4.8 billion, a decrease of $94.3 million below the FY 2014 enacted level. Technology provisions include $334 million for Explosives Detection Systems (EDS) Procurement and Installation, of which $83.9 million is discretionary funds. The bill also includes $449 million for Transportation Security Support IT and $295 million for Screening Technology Maintenance.
  • Coast Guard – $10 billion, $159 million below the FY 2014 level but $439.5 million above the president’s request, including $2.5 million to restore cuts to USCG information technology programs.
  • Citizenship and Immigration Services (CIS) – $124.4 million in discretionary appropriations is provided for the E- Verify program.
  • Federal Emergency Management Agency (FEMA) – $934.4 million for Salaries and Expenses, down $12.6 million from the FY 2014 enacted level. The bill allows for $7 billion for disaster relief and $2.5 billion in first responder grants, including $1.5 billion for state and local grants; $680 million for Assistance to Firefighter Grants, and $350 million for Emergency Management Performance Grants.
  • Secret Service – $1.7 billion, an increase of $80.5 million above the fiscal year 2014 enacted level. This includes $21.5 million to begin preparation and training for presidential candidate nominee protection for the 2016 presidential election, including for protective vehicles and communications technology. It also includes $45,6 million for investments in Information Integration and Technology Transformation programs.

As anticipated, the House bill restricts the use of funds for controversial White House immigration measures. The House Appropriations Committee Report that accompanies the bill includes an amendment stipulating that no funds, resources, or fees provided to DHS may be used to implement the immigration policy changes that the president initiated last fall.

The ball is now in the hands of the Senate Appropriations Committee (SAC), which has just solidified and announced committee chairs after the leadership change resulting from last November’s election. The Homeland Security subcommittee will need to quickly move their bill forward from the last committee action last summer if they hope to make the February 17 deadline, so the clock is ticking.

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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 2015 Funding – Defense Highlights

The U.S. Congress passed an omnibus funding bill for the remainder of fiscal year (FY) 2015 that includes $1.1 trillion in total in discretionary federal funds, roughly half of which goes to the Department of Defense (DoD).

Federal News Radio reported that the Senate voted 56-40 late Saturday for the bill that will fund most agencies through September, the end of FY 2015. The House of Representatives had voted two days earlier on the spending measure, passing it 219-206.

The final bill removes concerns over the possibility of government shutdowns for the rest of the fiscal year and address funding for each of the agencies covered under the twelve individual appropriations bills that traditionally make their way through Congress. The only exception in full-year funding is the Department of Homeland Security, which is funded by at continuing resolution (CR) levels through Feb. 27, 2015, due to congressional concerns over White House immigration plans. Future funding will be taken up by the next Congress.

Department of Defense

This omnibus provides total FY 2015 funding for DoD set at $553.9B – about 50% of the $1.1 trillion bill – including $490.2B in base budget and $63.7B for Overseas Contingency Operations (OCO). The $490.2B base budget is $3.3B more than the enacted FY 2014 base level of $486.9, but $5.4B less than the president’s FY 2015 budget request of $495.6B.

The following is a high-level breakout of the funding levels provided for DoD in the Consolidated and Further Continuing Appropriations Act, 2015.

Department of Defense Observations

Procurement

  • Overall – $93.8B up just $900M from FY 2014 enacted level and $4.1M over the FY 2015 budget request
  • Defense-wide Chem-Bio Situational Awareness – $184M in procurement, up $14M over request
  • Navy CANES – $336M, down $22M from request of $358M due to delays and NGEN ES is set at $106M, off $10M from the FY 2015 request due to tech refresh growth, in procurement budget
  • Air Force GPS III Space Segment – $87M, up $30M from budget request to fund advance procurement
  • Air Force AFNET transfers $15.6M to the Information Transport System program; AFNET budget was reduced an additional $15.6M
  • Air Force Mobility Equipment – $13M, a marginal $2.5M increase over budget request
  • Information Systems Security Program -- $33M increase over president’s FY 2015 request – $20M in Procurement budget, $13M more in RDT&E

RDT&E

  • Overall – $63.7B, $700m over the FY 2014 enacted level and $179M more than requested
  • Defense-wide – $225M for the new Defense Rapid Innovation Fund
  • DoD High Performance Computing Modernization Program – $221.6M, $40M more and a 22% increase over the FY 2015 president’s request
  • Navy University Research Initiatives – $134M, a $20M increase over budget request
  • Navy Defense Research Sciences Program – $497M, an increase of $53.5M over budget request
  • Navy New Design SSN – $88M with a $15M increase for small business tech insertion
  • Army Integrated Military Human Resources System, $68.5M, a $70M reduction from the $138M budget request

O&M

  • Overall – $161.7B, up from the FY 2014 enacted level of $160B, but down $4.3B from the $166B request
  • Defense Logistics Agency - $385.4M, an addition of $12M over the budget request of $381.5M for DLA’s Procurement Technical Assistance program
  • $10M for insider threat detection enhancements
  • Marine Corps Facilities Sustainment, Restoration, and Modernization - $631M, an addition of $57.4M over requested budget.
  • Air Force Facilities Sustainment, Restoration, and Modernization - $1.45B (15 Req.), $1.6B (15 Omnibus). $145M increase.
  • Army Facilities, Sustainment, Restoration, and Modernization Budget - $2.4B, $400M over $2B request
  • Army Service-Wide Communications Budget - $1.6M, a $13M reduction from budget request attributable to less funding needed than assumed for the Integrated Personnel and Pay – Army (IPPS-A) program

The FY 2015 National Defense Authorization Act (NDAA) that was passed by both the House and Senate around the same time as the omnibus had authorized $521.3B in base discretionary spending, but Congress ultimately provided $31.1B less in actual funding in the Omnibus appropriations. See a previous entry for more information on the NDAA and its IT management and acquisitions implications.

Check out our Civilian Highlights in the FY 2015 Omnibus.

Fellow GovWin Federal Industry Analysis (FIA) analyst Alex Rossino contributed to this entry.

 

Congress Passes FY 2015 Funding – Civilian Highlights, Part 1

The U.S. Congress passed an omnibus funding bill for the remainder of fiscal year (FY) 2015 that includes $1.1 trillion in total in discretionary federal funds, roughly half of which goes to federal civilian departments and agencies.

Federal News Radio reported that the Senate voted 56-40 late Saturday for the bill that will fund most agencies through September, the end of FY 2015. The House of Representatives had voted two days earlier on the spending measure, passing it 219-206.

The final bill removes concerns over the possibility of government shutdowns for the rest of the fiscal year and address funding for each of the agencies covered under the twelve individual appropriations bills that traditionally make their way through Congress. The only exception in full-year funding is the Department of Homeland Security, which is funded by at continuing resolution (CR) levels through Feb. 27, 2015, due to congressional concerns over White House immigration plans. Future funding will be taken up by the next Congress.


 

Department Highlights

Energy

Department of Energy funding of $27.9B supports programs across the department’s five primary mission areas: science, energy, environment, nuclear non-proliferation, and national security.

  • National Nuclear Security Administration (NNSA): Funding for NNSA sees an increase of $200M over FY 2014 levels to maintain the safety, security, and readiness of the nation’s nuclear weapons stockpile. This increase brings NNSA’s funding to $11.4B for FY 2015.
  • Funding includes $8.2B for weapons activities as well as $1.2B for naval reactors. Advanced simulation and computing efforts receive $598.0M, including $50.0M for activities related to the exascale initiative.
  • Energy Programs: Support for programs that encourage U.S. competitiveness drive an increase of $22M over FY 2014 enacted levels, bringing funding for Energy Programs at DOE to $10.2B.
  • Science Research: Funding for energy science research is maintained at FY 2014 levels, providing $5,071M to strengthen innovation and support basic energy research, development of high-performance computing systems, and exploration into next generation clean energy solutions.
  • Advanced Research Projects Agency-Energy (ARPA-E): The advanced research organization ARPA-E receives $280.0M, $45M below the level requested for FY 2015.

Commerce

Department of Commerce funding of $8.5B marks an increase of $286M above the level enacted for FY 2014.

  • Patent and Trademark Office (PTO): $3,458M for the U.S. Patents and Trademark Office, the full estimated amount of offsetting fee collection for FY 2015. The Patents and Trademark Office had nearly $651M in unobligated balances at the end of FY 2014.
  • National Institute of Standards and Technology (NIST): $675.5M for the scientific and technical core programs at the National Institute of Standards and Technology (NIST).
    • This amount includes $15M for the National Cybersecurity Center of Excellence and up to $60.7M for cybersecurity research and development.
    • National Initiative for Cybersecurity Education receives $4M. These funds also provide $16.5M for the National Strategy for Trusted Identities in Cyberspace (NSTIC), which includes up to $6M for the lab-to-market program and up to $2M for urban dome programs.
  • National Oceanic and Atmospheric Administration (NOAA): $5,441M for the National Oceanic and Atmospheric Administration (NOAA). This amount includes $3,333.4M for coastal, fisheries, marine, weather, satellite, and other programs.
  • Census Bureau: $1,088M for the Bureau of the Census, which includes $840M for periodic censuses and programs.
  • International Trade Administration: $472M in total program resources for the International Trade Administration. $10M of those funds are expected to be offset by fee collection, resulting in a direct appropriation of $462M.  Of those funds, up to $9M ins for the Interagency Trade and Enforcement Center, up to $10M is for SelectUSA, and Global Markets are funded at levels at least equal to FY 2014.

Go to Part 2 of Civilian Highlights, or check out our Defense Highlights of the FY 2015 Omnibus here.

Fellow GovWin Federal Industry Analysis (FIA) analysts Kyra Fussell, Angela Petty, and Alex Rossino contributed to this entry.

Congress Passes FY 2015 Funding – Civilian Highlights, Part 3

The U.S. Congress passed an omnibus funding bill for the remainder of fiscal year (FY) 2015 that includes $1.1 trillion in total in discretionary federal funds, roughly half of which goes to federal civilian departments and agencies. In part 3 we’ll look at Transportation, Treasury, and the VA.

Read our Civilian Highlights, Part 2.

Transportation

Department of Transportation receives $17.8B in discretionary funding, the same as the fiscal year 2014 enacted level and $4.8B below the president’s request.

  • $12.4B for the Federal Aviation Administration, $17M below the fiscal year 2014 enacted level. Funding is preserved for FAA’s Next Generation Air Transportation Systems (NextGen) investment.
  • $1.6B for the Federal Railroad Administration, an increase of $23M above the fiscal year 2014 enacted level.
  • $2.3B for the Federal Transit Administration, an increase of $141M over the fiscal year 2014 enacted level.
  • $830M in both mandatory and discretionary funding for the National Highway Traffic Safety Administration, an increase of $11M over the fiscal year 2014 enacted level
  • $584M for the Federal Motor Carrier Safety Administration, a decrease of $1M from the fiscal year 2014 enacted level.
  • $9.1M for the Pipeline and Hazardous Materials Safety Administration.
  • $186M for the Maritime Security Program, the same level in the current authorization.

Treasury

The Department of the Treasury funding is part of the Financial Services Appropriations.  Treasury’s discretionary funding totals $12.5B for FY 2015.  Treasury highlights of the omnibus bill include the following:

  • $10.9B for the IRS, a reduction of $345.6M below FY 2014 and $1.5B below the president’s request. This amount includes $290M for business systems modernization.
  • $112M for Financial Crimes Enforcement Network.
  • The bill does not provide any additional funds for the IRS to implement the Affordable Care Act.
  • The bill contains several important oversight and policy provisions related to the IRS, to combat waste and increase accountability.

Veterans Affairs

The Department of Veterans Affairs funding is part of the broader Military Construction/Veterans Affairs Appropriations.  VA’s discretionary funding totals $65B for FY 2015.  VA highlights of the omnibus bill include the following:

  • $45.2B for VA medical services to provide care and treatment for approximately 6.7 million veterans. This includes: $7.2B in mental health care services; $133M in suicide prevention activities; $229M for traumatic brain injury treatment; $7.4B in homeless veterans treatment, services, housing, and job training; and $250M in rural health initiatives.
  • $209M to help address new costs related to the Veterans Access, Choice, and Accountability Act of 2014 – such as hiring medical staff and expanding facility capacity and to implement the Caregivers Act, which provides stipends and other assistance to families of seriously wounded veterans.
  • $344M to help ensure DoD-VA EHRs that will seamlessly transfer medical information.
  • Requires the VA to create a truly interoperable, working system to help prevent unnecessary mistakes or delays in veterans’ medical care. If goals are not met, a portion of the funding will not be released.
  • $2.5B for disability claims processing backlog. This is $40M over the president’s budget request.  The increase is to be used to support digital scanning of claims, to hire additional claims processors in regional offices, and for the centralized mail initiative.
  • $99M to fund the Board of Veterans Appeals to address the looming appeals backlog.
  • $562M for major construction to correcting critical seismic deficiencies and repair crumbling infrastructure in some of the VA’s oldest structures.
  • $58.7B in advance FY 2016 appropriations for Veterans Medical Programs to provide for medical services, medical support and compliance, and medical facilities, and ensure that veterans have continued access to their medical care.

Check out our Defense Highlights of the FY 2015 Omnibus here.

Fellow GovWin Federal Industry Analysis (FIA) analysts Kyra Fussell, Angela Petty, and Alex Rossino contributed to this entry.

FY 2015 Appropriations Plan is on the Horizon...Hopefully

On December 9, the House and Senate Appropriations Committees released their Consolidated and Further
Continuing Appropriations Act, 2015 bill, 2 days shy of the expiration of the Continuing Resolution (CR).  While the $1.1trillion dollar discretionary budget appropriations package is good news, there are still a few steps in the process before it becomes law, which means that there is likely to be another short-term CR passed in the next 24 hours to give Congress enough time to push the bill through.

The omnibus currently sits at the committee level in both the House and Senate.  Now, the full House and Senate must pass each version, followed by the House-Senate conference committee hammering out any differences to agree on a final version that goes to President Obama for his signature.

The good news is that there is informal agreement about funding levels for each appropriation bill, including a plan for a CR to only fund the Department of Homeland Security through February 27, 2015.  The omnibus funding levels are compared to the President’s Budget Request below:

The House and Senate versions of the omnibus also show agreement on funding (or lack thereof) and oversight in several high-profile areas, including:

  • No additional funding for Obamacare   
  • Increased funding to address backlog in VA’s disability claims processing (+$69M compared to FY 2014)
  • Increased oversight of VA construction expenditures and audits of hospital scheduling and patient care
  • No DHS funding allocated to addressing “the humanitarian crisis of children and families with children crossing our Southwest border”
  • No DHS funding allocated to addressing lapses in White House security
  • IRS-specific policy provisions:
    --Funding prohibition for inappropriate videos and conferences
    --Funding prohibition on target organizations for regulatory scrutiny based on their ideological beliefs or for exercising their First Amendment rights
    --Funding prohibition for improperly disclosing confidential taxpayer information
    --Funding prohibition for the White House to order the IRS to determine the tax-exempt status of an organization
    --A requirement that the agency report on spending and activities, official time and document retention.


The bad news is that, while there is a general consensus that another government shutdown is off the table, the broad scope of the bill provides ample fodder for Congressional contingents to oppose various pieces of the bill. 

According to this Politico.com article, some lawmakers are opposed to the bill because it does little to block President Obama’s plans on immigration reform, others because it doesn’t cut enough spending, and others because they simply haven’t had time to examine its contents.    

Budget uncertainty is the monkey wrench of the procurement process, so the sooner agency leadership has clarity around their fiscal circumstances for the remainder of the fiscal year, the better.

 

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

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

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

Overview

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

Reform Efforts

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

Information Technology and Cyber Operations

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

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

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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.

 

Will Congress Help DHS Stem its Cyber-Workforce Hemorrhaging?

Recent news media reports reveal endemic leadership and staff turnover and low morale at the Department of Homeland Security (DHS) and these challenges continue to impact both its intelligence and cybersecurity missions and the department’s ability to attract and retain skilled experts. Now, it appears that some legislation in Congress might help address some of the issues. 

According to a recent Washington Post report, over the past four years, federal employees have left DHS at a rate that is nearly twice as fast as the overall federal government, and the trend is accelerating. Morale is dismal, by most reports, and the department’s ability to attract replacements and new talent has been slow and ineffective. Contributing factors include cultural clashes and in-fighting among the sub-agencies, bureaucratic lethargy, unclear missions, a high degree of regulatory oversight, and low pay compared to similar jobs in the private sector. The departures have hit the leadership area especially hard. The department’s ­top-level vacancy rate had reached 40 percent, although the Senate has confirmed 10 top DHS officials in the last six months or so.

The high-level leadership departures have hit hard DHS’s intelligence functions as well as cybersecurity. The Post reports that between June 2011 and March 2012, four senior DHS cybersecurity officials left, right as DHS was arguing its case to Congress to be given more authority in protecting critical private-sector infrastructure and networks, a failed effort. High churn rates have also impacted operational areas like the National Cybersecurity and Communications Integration Center (NCCIC), which just recently lost its director and another key leader. The high turn-over rate is credited with stalling the progress of major programs like EINSTEIN. Compensation is a major issue as cybersecurity experts can make 2-3 times as much, or more, in the private sector than they can at DHS.

While numerous legislative bills aimed at beefing up the federal cybersecurity workforce have come and gone over the last few years, one effort to support DHS has gained legs recently. The Senate recently passed the Border Patrol Agent Pay Reform Act of 2014, which includes the DHS Cybersecurity Workforce Recruitment and Retention Act that is aimed at helping the department recruit and retain cybersecurity experts.

A recent article summarizes the provisions to include:

  • Giving DHS greater hiring authorities, similar to those at DoD, to expedite the on-boarding of cybersecurity staff, as well as greater leeway in compensation,
  • Requiring DHS to report annually on the progress of the hiring effort, and
  • Requiring DHS to develop cyber- occupation classification codes for staff performing cybersecurity activities to aid in identifying and fulfilling its cybersecurity needs.

What gives some hope to the current Senate bill is that it is similar to the Homeland Security Cybersecurity Boots-on-the-Ground Act that passed the House this summer.  I discussed this House bill when it first passed out of committee back in October, 2013. Now, nearly a year later, we will see if this or the Senate bill has enough legs to be passed as-is by the other chamber or can survive a conference committee mark-up and re-vote in both chambers to make it to the president. Given that we are in a Congressional election year with little left in the legislative calendar before the run-up to November, such fate may fall to the lame duck session and that is an uncertain fate for sure.

Even if legislation were enacted immediately, it will take significant time to for DHS to make up lost ground and build up its workforce. Until then, they look to industry to help fill the gaps and protect the department and the rest of the .gov domain from an increasingly hostile cybersecurity landscape.

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

Shared Services to Ease DATA Act Implementation

Dick Gregg, Fiscal Assistant Secretary of The Treasury and the executive assigned to implementing the DATA Act, expressed concern about the quick three year implementation timeline for the DATA Act at a recent Federal Financial Management Conference.  However, he believes that moving agencies to shared financial management services is a “force multiplier.”

Gregg believes outsourcing financial management functions to one of the four recently approved federal financial management shared service providers could streamline the compliance process.  “The sooner we can move more agencies into shared services, the easier it’s going to be to implement the DATA Act,” he stated.

The Digital Accountability and Transparency Act creates standards for agency reporting of financial data and makes it publically available.  The Act specifies a three year implementation timeline to begin with Treasury’s establishment of a data analytics center modelled after the Recovery Accountability and Transparency Board’s Recovery Operations Center for the Stimulus.  The center will work with OMB to establish agency financial reporting standards.  OMB will also set up a two-year pilot program for use by contractors and grantees.  Gregg wants to move quickly with demonstration programs to see what will work. 

The Act provides no funding for implementation.  This may explain the less than enthusiastic reception from some agency financial managers.  They fear reporting may cast more of a burden on already strained resources.  According to Mary Peterman, president of the Association of Government Accountants, “…generally, they all believe in the essence [of the Act], except that whether the legislating transparency is a value proposition for the citizenry is somewhat the question.”    

Ultimately, the new financial reporting will be available via USASpending.gov which is now managed by Treasury.  After implementation, the federal spending data available via the site will provide a deeper view into federal spending.  Not only will the additional data provide transparency to the public, it should help agency executives gain more insight into their operations, leading to improvements in efficiency and effectiveness. 

 

Balancing Privacy with Efforts to Reduce Fraud and Waste

A key element to being able to identify waste and fraud is data analysis:  the ability to match disparate data sources to spot anomalies or trends.  However, many federal data sets contain data protected by privacy legislation.  Agencies must balance citizen and corporate privacy with efforts to root out waste, fraud and abuse. 

 

According to OMB, improper payment rates continue to decline, dropping from 5.42% in FY2009 to 3.53% in FY2013.  Improper payments occur when funds go to the wrong recipient, payment is made in the wrong amount, documentation is not available to support a payment, or the recipient uses funds in an improper manner. Although OMB hasn’t published the total amount of improper payments to date, using total program spending figures from prior years would position FY2013 improper payments around $100 billion.

 

In January, GAO released a report on the Computer Matching Act which governs privacy when agencies share data sets to ID waste and fraud.  GAO concluded that agencies have taken a number of steps to implement the elements of the act, but implementation across the seven agencies studied has not been consistent and a number of agencies stated that the act’s rigorous requirements and short time frames discouraged them from pursuing computer matching agreements (CMAs) with other agencies.  GAO recommended that OMB revise its guidance and that selected agencies develop and implement policies and procedures for cost-benefit analyses and establish annual reviews and reporting.

 

OMB is responsible for developing guidelines for execution of the Computer Matching Act, while agencies are responsible for implementation to include: 

  • Developing CMAs and notifying OMB, Congress and the public
  • Conducting cost benefit analysis for proposed matching programs
  • Establishing data integrity boards to oversee matching programs

 

All the agencies that GAO reviewed had established at least one CMA, but differed in their understanding of whether CMAs were required for data queries.   SSA had established the most CMAs with a total of 34.  Agencies generally conducted cost benefit analyses, but did not use key elements to determine value of computer matching programs.  OMB has not yet release guidance for development of cost benefit analyses.  Finally, although agency data integrity boards have been established, reporting varies widely.

 

OMB needs to offer further guidance to agencies to foster more consistent implementation of the Computer Matching Act.   Judging from the number of CMAs currently in place for the seven agencies GAO reviewed, there is potential for future CMAs among agencies.  Additional implementation of CMAs and the Computer Matching Act could further assist in decreasing the federal government’s $100 billion in annual improper payments.  The market to reduce waste and fraud remains ripe for contractor support in areas such as data authentication, analytics, predictive modeling, forensic accounting, and fraud case management.

 

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