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Breakup of NASA Contracts allows Breakout of I3P

NASA officially unveiled the I3P Program during late June 2008, and at the time all we knew was there were some large scale IT infrastructure consolidation initiatives underway at NASA. The recently held Industry Day on July 23, 2008, offered some much needed clarity and insight into this program. However, it is still unclear what parts of ODIN and UNITeS might be combined to support I3P. Whether it's a small part, large part or the entire scope of both contracts, NASA is bringing attention to IT-related services. The Industry Day totaled over 600 registrants and I3P has been one of GovWin's most popular opportunity reports of late.

I3P will cover 5 core initiatives that will be served by separate procurements:

  • End User Services: Program management, provisioning, and support of desktops, laptops, cell phones, personal digital assistants (PDAs), and office automation software. These requirements are currently provided by the Outsourcing Desktop Initiative for NASA (ODIN) contract.
  • Communications Services: Wide Area Network (WAN) services, Local Area Network (LAN) services, Telecommunications Services, Video Services, and Data Services. These requirements are currently provided by:
    • Unified NASA Information Technology Services (UNITeS) contract (#NNM04AA02C)
    • Outsourcing Desktop Initiative for NASA (ODIN) contract
    • NASA Center IT/Communications contracts
  • Data Center Services: Data Center Operations, Facility Management, Application housing and hosting services, Storage services, and license management. These requirements are currently provided by the Unified NASA Information Technology Services (UNITeS) contract and NASA Center IT/Communications contracts.
  • Infrastructure Applications (Web) Services: Public web-site hosting, web content management and integration, and messaging and calendaring services. These services are currently provided by the NASA Web Portal Services contract and the Outsourcing Desktop Initiative for NASA (ODIN) contract.
  • Business or Enterprise Applications Services: Applications services associated with the Enterprise Applications Competency Center. These requirements are currently provided by the Unified NASA Information Technology Services (UNITeS) contract

According to the acquisition schedule discussed by NASA at the Industry Day, they intend to stick to a tight procurement schedule conducting the entire procurement during FY2009 with the I3P requirements being awarded by the end of September 2009. The acquisition strategy and the final acquisition schedule should be finalized at a NASA Procurement Strategy Meeting that will be held during Fall 2008.

GovWin at Army IT Day

Army IT Day 2008, hosted by AFCEA, proved to be a useful glimpse into the minds of Army leadership, and how they plan on transforming the use of technology. There were two main takeaways from the event: the focus on standardization of Army communications, and the focus on facilitation of the Army's responsiveness in the face of external threat.


The Army is in the process of making the LandWarNet (Army LandWarNet NetOps Architecture) program more standardized to better meet the needs of the warfighter. A critical aim of the program as described by Lieutenant General Jeffrey Sorenson (CIO/G-6) is the development of the Network Service Center (NSC) construct, which is an overarching, holistic approach to client connectivity, data communications, and Network Operations. For the connectivity piece, the NSC would help enable the same universal network access, email addresses, file storage, telephone numbers, and standard collaboration tool sets for the warfighter, regardless of location, either in garrison or deployment. This circumvents the cost and inefficiencies inherent in a constantly changing communication fingerprint, which is current reality for the force. The data communications at the enterprise-level will be supported by Area Processing Centers (APC's), and installations of these are rapidly expanding. Finally, NETCOM will oversee the network operations piece, analyzing and defending the Army's communication channels.


In addition to the standardization efforts which were emphasized during Army IT Day, there was also a very strong emphasis on facilitation of Army resources by making the organization even more mission-ready by enhancing its expeditionary (e.g., quickly adaptive) capabilities. Brigadier General Susan Lawrence discussed the issues facing the Army in theatre today, such as a non-linear battlefield, a pervasive informational environment, and asymmetric threats, which make the Army's ability to turn on a dime extremely important. Brigadier General Brian Donahue elaborated on this issue, and discussed "expeditionary tenets" which will inform the LandWarNet effort, such as operations that are austere, based in CONUS, and functional on short notice. For vendors, this will likely mean much more of a focus on consolidation technologies that reign in both spending and forward-situated stationing of resources, such as: virtualization, Service-Oriented-Architecture, and cloud computing.

Looking Forward

Although the main thrust of the spending message yesterday was focused on tightening the Army's acquisition belt, there are many takeaways for industry which can aid vendors in future procurement strategy.

  • One issue that was addressed by Sorenson was the rising operational costs associated with high costs in energy; agile businesses with proprietary energy-saving technologies or with teaming partners that have such technologies will be attractive business options in the very near future. (See Intelligent Power Management and Distribution Systems.)
  • Sorenson touched on the realization of Network Service Centers; a large portion of these NSC's success is predicated upon the ability of our force to maintain an accurate portrayal of threats and vulnerabilities, as well as data throughput and processing issues, so companies boasting robust, scalable network analysis capabilities should be tracking this opportunity. (See Tactical Electronic Warfare System.)
  • Lastly, Sorenson addressed "Generating Force Process Transformation," in which he addressed the creative destruction that would be necessary to bring to bear in leveraging current investments. This transformation encompasses both cost-benefit analyses and operational change, firms with experience in military business process transformation, particularly those with experience in military financials, would be likely starting points in the Army's search for partnering opportunities. (See Field and Installation Readiness Support Team Unrestricted Phase 2.)

For more information on Army IT Day 2008, please see the recently completed GovWin Analyst Recap: AFCEA's 8th Annual Army IT Day: Spotlight on Army CIO and LandWarNet.

Northrop/Boeing Protest PR Strategies

Listening to WTOP during my moderately easy commute to and from Reston this week, I kept hearing a Northrop Grumman ad talking about its KC-45 tanker. I've heard radio ads from federal contractors before that provide a quick hit overview of their services for all of those federal workers suffering through their not-so-easy commutes. But as I heard the Northrop ad a few times, I realized that it was part of a "protest media campaign" to position itself against Boeing for "Take 2" of the Air Force tanker contract.

In case tankers aren't your thing and you haven't been paying attention, GAO recently sustained a Boeing protest against the Air Force for awarding Northrop Grumman and EADS the contract to replace its air refueling tanker fleet (read GovWin's blog on this topic). As a result of the protest sustainment, the Pentagon stepped in and decided to cancel the original contract and issue a new request for proposals from the two companies. What's interesting is that both Boeing and Northrop Grumman have embarked on a public media blitz aimed at...I'm not exactly sure.

There are Op-Ed pieces, blogs, print and radio ads, and websites (all telling the "real story") galore. Northrop has at least 2 radio ads that I've heard, one of which ends by emphasizing the fact that its tanker exists now, while the competitors' is just on paper. Boeing took out full page print ads, and there are billboards and other signage, particularly within the DC metro area and Mobile, AL which stands to gain 1,500 aerospace jobs if the Northrop/EADS team wins the contract and builds two plants there as planned. (Foosackly's Chicken Finger restaurant chain in Mobile invested in a billboard of its own that reads, "We Would Like to Offer Boeing a Finger," and there are T-shirts and bumber stickers for disgruntled aerospace workers on the go).

While the government is not supposed to be influenced by the media, the PR has helped gain momentum among lawmakers from states that will be missing out on jobs if Boeing loses again. It highlights what some may call hypocrisy in government – we've seen lawmakers calling for unbiased and fair competition in contracting...that is until it affects their states. I imagine that the "call your elected official" movement can be expected. It's not clear, however, if those who are even aware of what's going on would want to get involved.

Check out some of their efforts:


Real Tanker ad

KC-X Competition website

The Tanker Decision: Why it Doesn't Add Up ad


Northrop radio ad

KC-45 website

America's New Tanker website

What is very interesting is that in a March 11 motion, Northrop asked GAO to dismiss large sections of what it called Boeing's "PR-plated" protest. Now it seems that PR isn't such a bad thing.

Gearing up for a $700 Million Replacement MMIS and Fiscal Intermediary Contract in the Golden State

The California Medicaid Management Information System (MMIS) replacement project and Fiscal Intermediary (FI) contract is a crucial contracting opportunity. This project provides a prime opportunity for interested companies to partner with established MMIS vendors and get a piece of the market. Also note the state is interested in technologies which can provide a platform to support statewide health information exchange (HIE) activities which may encourage additional teaming.

In preparation for a replacement MMIS and FI contract, California contracted with Fox Systems to provide MMIS Scope of Work development and performed an internal Medicaid Information Technology Architecture (MITA) assessment. The California Department of Health Care Services confirmed that the estimated contract value for the entire MMIS/FI contract is $700 million to $1 billion for 10 years of service. An estimated value for only the MMIS portion could not be provided at this time.

Project details:

Overview- The incumbent MMIS contract which includes FI services is held by Electronic Data Systems (EDS) which was awarded in 2003 and with all extensions exercised expires June 2010. The Department of Health Care Services, Office of Medi-Cal is currently engaged in developing the final Request for Proposals (RFP) draft which is anticipated as early as October 2008. The initial draft RFP was released April 11, 2008 and multiple administrative bulletins have been released since.

Background- The California MMIS is the largest and most complex Medicaid system of its kind in the nation, according to the state. The 30 year-old, legacy mainframe system has been modified dozens of times to try to adhere to changes in requirements and increasing complexity of the program. Due to the costly and cumbersome nature of the current system, the state is looking to implement new MMIS technologies which are anticipated to service the state for the next 15+ years.

Requirements- Requirements for the takeover contractor include integrating business and information technology environments, providing a scalable architecture, supporting HIE activities, supporting fraud and prevention strategies, aligning with MITA and Service Oriented Architecture (SOA) standards, meeting federal regulations, Health Information Portability and Accountability (HIPAA) compliance, claims processing components and allowance for quick implementation on policy and system changes.

For additional information on this project, please visit GovWin Opportunity # 45181.

Navy Releases Solicitations for NMCI and NGEN Program Management Support Services via SeaPort-e

On Wednesday, July 23rd, the Department of the Navy moved forward with two high profile RFPs for Program Management Support Services for the Navy-Marine Corps Intranet (NMCI) and the Next Generation Enterprise Network (NGEN) via the SeaPort-e MAC. One of these contracts GovWin Opportunity Report #49336 (Solicitation #N00024-08-R-3337) is being competed on an "unrestricted" basis, with proposals due by August 26, 2008. The other contract, GovWin Opportunity Report #49343, (Solicitation #N00024-08-R-3339) is being competed as a Small Business Set-Aside with proposals due by August 22, 2008.

The Navy's strategy for competing and awarding the contract for NGEN has been evolving over the last year. DON CIO, Robert Carey, made clear in 2007 that the contract for NGEN will be put into place before the NMCI contract expires in September 2010 in order to provide for as seamless a transition as possible. However, to this Analyst's knowledge, Carey has never mentioned that separate procurements for program management services would be carried out as part of the strategy for putting NGEN in place. The competition of separate contracts for NMCI-NGEN Program Management also was not mentioned in the Naval Networking Enviroment~2016 Strategy Paper that the DON CIO released in May 2008. NMCI and NGEN are pillars of the CIO's NNE strategy.

The appearance of these RFPs is of great value to SeaPort-e vendors who want to compete for NGEN when the Solicitation appears in early FY 2009. My reading of the requirements documents reveals there is no Organizational Conflict of Interest clause in either of the program management solicitations as far as later competing for NGEN is concerned. This makes me wonder if the companies that win these contracts will have an advantage when competing for NGEN. The real concern is that if any advantage exists it would be derived from winning a task order contract that was not publicly competed by the Navy. The entire process strikes me as ethically gray from the standpoint of fairness in Government contracting and contrary to the oft-expressed Congressional demand for greater competition in contracting.

Then again, hiding acquisitions behind the battleship gray of a Multiple Award Contract (MAC) is nothing new for the Navy or the Department of Defense. The contracting environment created by SeaPort-e is effectively an alternate universe. Solicitations in this universe walk a foggy street that hides them from public scrutiny. In this universe, there no protests (until recently for the larger tasks) and industry has no advance warning of the appearance of Solicitations. Sometimes even incumbent contract holders and Contracting Offices utilizing SeaPort-e don't know when their requirements will be solicited. Follow-on contracts tend to disappear behind the SeaPort-e veil and disappear entirely or they re-emerge as new task orders with the name of the requirement altered beyond easy recognition.

Meaning, even SeaPort-e contract holders have difficulty gaining visibility into the limited competition environment of SeaPort-e requirements, but at least they have the opportunity to compete for task orders. Those without a SeaPort-e contract, however, are unable to compete for the increasing number of contracts coming out behind the veil of fog that shrouds the SeaPort-e MAC.

States' FOIA responses performance is a smack in the face of transparency

A recent report by the Better Government Association (BGA) and the National Freedom of Information Coalition (NFOIC) smacks transparency in the face by giving 38 states a failing grade on their FOIA response performance.

This study compared states against a "gold standard" in response times, appeals, reviews, fees and sanctions on a ten point grading scale, 60% and below being an "F". There were no "A" grades issued and only Nebraska and New Jersey recieved "B" standing. This is a bit of a surprise, even for someone who has run into many brick walls from sea to shining sea on the open records road. Perhaps my reason for surprise is the fact that government transparency has never been a more prevalent topic in political discourse. On top of that, feds and states alike are developing portals for increased citizen view into government workings.

I think Pennsylvania is on the right track with its recently unveiled Pennsylvania Contracts e-Library. The Commonwealth has opened the curtains to its contracts and has resultingly eliminated considerable volume from a human-intensive FOIA process. It is public information, right? It is not possible to get much more public than the Internet.

Whether by embracing an "open door" Internet view to state documents or creating an automated FOIA processes, states need to give their open records efforts the same attention and enthusiasm that other transparency tools are getting.

Cyber Security and DARPA's Cyber Test Range

Some of the most interesting pieces of our evolving national cybersecurity strategy are the offensive pieces, when we fight back. We are still left waiting, however, for DARPA to make an award on the Cyber Security Range (GovWin Opportunity #47845), our obstensible national proving ground for cyber warfare.

Interestingly, many in the blogosphere (check here, here, and here) are not so sure the Cyber Security Range is such a good idea. Spending a lot of money trying to build a model of the Internet (one blogger estimated $30 Billion, saying that they could rebuild the Internet for that cost) might not make as much sense as "training" on the real thing. Given the highly fluid nature of the threat and the tactics, they have a point. DARPA seems to be having trouble hiring or obtaining the type of talent they need for the Cyber range, leading netizens to point to the open source model. We're not sure DARPA will go for that. Cultural struggles like these show how truly different this national security effort is from prior challenges.

Continued abuse of state and local employees favors savvy vendors

Staffing and outsourcing contractors who focus on providing a conducive work environment and producing real results will compare favorably to increasingly hostile public-sector workplaces.

Compensation of state and local government employees will comprise as much as 65% of the $1.8 trillion in expected spending at these levels in the current fiscal year. So, it's no surprise that, during a time of financial distress among the states and localities, public employees become pawns in the budget-balancing game, paying for the fiscal sins of their elected bosses. If they aren't laid off, they are bought out or forced to take vacation days without pay. If they are lucky enough to get a pay raise, it's probably well below the rate of inflation. Benefits are reduced for new (and, increasingly, current) employees. (Next up: retirees.) Everyone's workloads increase as a result of hiring freezes.

Most recently, Gov. Arnold Schwarzenegger (R-CA) proposed reducing the pay of his state's employees to the minimum wage! All of these political decisions produce a type of unintended consequences that are also known in politics and economics as "perverse incentives." For example, Gov. Schwarzenegger's bluster was intended to intimidate the legislature into passing a budget that addresses the state's $15 billion budget deficit within the next few weeks. Of course, if his gambit proved successful, it would most likely drive the legislature to make short-term compromises designed to put reality off until after the next election rather than address the state's structural financial issues. That's a perverse incentive from the citizen's point of view.

Of interest to vendors are some of the long-term unintended consequences. When you look at the list of common measures to reduce compensation expenses, one major consequence comes to mind. Each of them serves only to make public service less rewarding and attractive. That's not to say that government employment--even at its worst--isn't better than many of the options available in the private sector. But, just because government has been able to "find the money" to "fill the slots" to this point, doesn't mean this will always be true in the future. Given certain economic and demographic trends, there's no reason to believe that the downward pressure on public employment expenditures will let up any time soon. In fact, it will get worse...much worse.

Vendors who provide on-site staffing and proximity-based outsourcing services should be thinking about how their employment environments compare to public-sector employment. Better? Worse? About the same? Ask those former public-sector workers who have come over to the "dark side." Can such vendors be honest with themselves? (Is it about doing it on the cheap with non-unionized labor or greater efficiency and better results?) If they strive to provide a superior work environment where employees will feel they can make a real difference for the public benefit and get paid for it (novel idea!), these vendors will be well-positioned to take advantage of the economic and demographic trends of the next ten to 20 years.

MacAulay-Brown (MacB) buys Gray Research and KosTech

Last week MacB announced their acquisition of Gray Research of Huntsville, AL, and KosTech. A growing private mid-sized contractor, MacB has reached a revenue threshold where others have opted for an IPO or sale to a larger integrator.

Gray Research: 10 years from birth to acquisition, recent rapid growth

Founded in 1998, Gray Research had just under $29 million in average annual gross receipts in the past three years as of April 2008, according to a self-certifying directory hosted by the federal government.

Assuming Gray now has around $50 million in annual revenue at the time of acquisition, deduction puts Gray with roughly $40 million in revenue combined for trailing years 2 and 3 and thus an annual growth rate in the last three years around 50%.

Where did Gray's growth come from?

From an exchange with Marc Marlin, Vice President with KippsDeSanto which represented Gray Research in the deal: "the Company's ability to win a number of large contracts and BPAs in 2005 and 2006 definitely accelerated the Company's growth, however the foundation for those wins had truly been built over the previous years. The Company's growth has been driven by Company's ability to hire and retain the best and brightest that have carried the Gray Research flag to other customers. Gray Research's NASA business was actually even more strategically focused. In 2002 the Company recognized a favorable funding environment and outlook for future space exploration initiatives (especially those associated with the Constellation Program) and proactively marketed this new customer."

Not to take lightly for a small business, Gray is also ISO 9000:2000 certified.

M&A themes evidenced by the deal, aka what made the deal attractive?

Per Marlin with KippsDeSanto:

  • Continued strong buyer demand for local presence in highly strategic and well-funded contracting communities, especially BRAC beneficiaries;
  • Resultant critical mass, enhanced portfolio of technical capabilities and complementary customer sets that facilitate cross-selling and exchange of operational best practices remain key M&A drivers for both mid-size buyers and sellers.

    MacAulay-Brown: A model for mid-sized growth

    Outside of organic growth (around 20%), MacB has made several acquisitions. Here is a timeline of their M&A history, with emphasis on employee and revenue changes:

    2001: MacB was acquired in December 2001 by privately-held The Sytex Group, Inc (TSGI). At the time, MacB was generating slightly more than $35 million in annual revenues with 350 employees (source: Minuteman Ventures Newsletter).

    2004: TSGI has $425 million in revenue, up roughly 50% from 2003 (source: Washington Technology).

    2005: Lockheed buys MacB's parent TSGI for $440 million, and conflict of interest leaves MacB out of the deal.

    2006: MacB adds revenue of about $20 million from two acquisitions. Starting with 775 employees MacB adds 75 employees and between $11 million and $12 million in revenue with acquisition of fellow Dayton, OH company GRACAR. With the GRACAR deal, MacB expects combined revenue of $90 million for the year. Then MacB acquired Analytical Solutions Inc. in June adding another $10 million to the year's revenue estimate.

    2007: MacB estimates 2007 revenue of $120M as of June 2006 at the time of the Analytical Solutions deal.

    2008: MacB acquired TeraTech earlier this year, and now Gray Research and KosTech. As of the Gray Research deal, MacB has 1,200 employees and now expects to exceed $200M and reach $250 million in 2009 (source: MacB / Kipps DeSanto press release).

  • Small Businesses: Getting Lost in the Kerfuffle

    It's been a very interesting past few months for the Small Business Administration. After a high-profile article was released by the New York Times on June 12th highlighting the state of the Agency's lending and small-business-support goals in the wake of Steven C. Preston's departure, the SBA has experienced heightened scrutiny of its practices. The most notable talking points, as outlined in the article, are the waning flow of SBA loans, the shortfall in meeting woman-owned business goals, and the much-criticized reality of large businesses receiving contracts that are earmarked for small businesses.

    The SBA maintains that it is an Agency in transformation. Jovita Carranza, the Acting Administrator of the SBA, stated in his subsequent Letter to the Editor that the Times' article was "stunning in its omission of letters and proclamations of support for the agency's turnaround from industry groups and legislators."

    Indeed, it does seem that a turnaround is taking place, and that major changes are not far afield at the SBA. This seachange is reflected in the increased, self-administered scrutiny in reporting that the contracting community is witnessing at the SBA.

    In a preliminary assessment of SBA's 2007 numbers, which will be released in August, Kent Hoover, the Washington Bureau Chief at, says that the Agency will not be meeting its goal of 23% allocation of government procurement dollars to small businesses (SB). However, at the same time, some interesting figures jump out:

    • $436 billion in total prime contracts (more money than 2006)
    • SB prime contract dollars decreased to 22.1% from 22.8% in 2006
    • $1 out of every $3 went to DC metro area firms

    This downtick was likely attributable to the fact that small business acquired by large businesses no longer counted toward Agencies' small business goals. Additionally, for the first time ever this year, Agencies were required to certify the accuracy of their contracting data: in theory, this means fewer size standard and codification errors, and more transparency surrounding small business contracting processes, which will hopefully allow small businesses targeting government business to breathe a sigh of relief and rest assured that their concerns are being addressed.

    Although all the back and forth between critics and the SBA has done much to increase scrutiny of the numbers, the actual reality of small business concerns in the contracting world remains relatively static. Relationships still matter, quite a bit, and although this has never been a surprise in the contracting arena, it is surprising to just what degree such increased access still informs government procurement. With so many new programs of such a high profile at stake:

    It's very important that the SBA and the contracting community work together, reconcile differences and stave off post-award outcry, which only creates further hindrances and expense to the procurement process.

    Perhaps the best way to move forward is to assimilate the GovWin of small businesses themselves, to ensure visibility and support for all policies; it seems as though increased oversight in this direction, however slowly, provides targeted growth and greater opportunities. One thing is for sure - there is always progress to be made.

    GovWin welcomes the feedback of its members. Are you sensing a change on the horizon for small business concerns, and the government's commitment to meeting its goals? Or are we just conducting business as usual?

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