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On the Precipice: Big Data Will Change Everything

As we wrap up our soon-to-be published report on Big Data, I can’t help but think about how profoundly technology will change our world in the years ahead.  Big Data will drive great changes, but what kind will depend on what we do with it. No agency can afford to do Big Data just for the sake of organizing their data. The cost of capturing, managing, processing, storing, and analyzing data is just too high to not have a sufficient payoff in terms of the value that the data produces.

It has to yield real, actionable results that create substantial value to be worth doing. For example:
· Finding a cure for cancer
· Discovering how best to manage diabetes to dramatically improve health and lower costs
· Finding energy sources in our galaxy
· Finding ways to avoiding loss of life from a natural disaster
· Identifying and capturing terrorist before they strikes, and
· Helping make American industries more competitive in world markets and creating jobs.
The value of big data is in the knowledge, wisdom, quality of decisions it enables, and the impact of actions that can be taken as a result of harnessing the power of data. Information is power in that it produces wisdom for good governance.
But the power that Big Data will create must be contemplated within an important cultural and ethical context. There is no doubt that Big Data analytics will and has already opened up a Pandora’s box of ethical questions about the role of government. The recent public concerns about domestic use of drones and potential for infringement on the privacy, liberties, and constitutional rights of individual citizens, is an example. Michael Stonebraker, an MIT electrical engineering and computer science professor specializing in database research, also sees the dark side. "Privacy is going to be a huge issue [with big data] and it's largely going to be a political issue,” he said in an InformationWeek article entitled “Why Big Is Bad When It Comes To Data” (July 19, 2012).
President Eisenhower foresaw this day and, in his farewell address to the nation on January 17, 1961, he expressed concern that our national resources of human innovation and science and technology, if left to market forces concerned only with maximizing profit with no regard for ethical, just, and righteous uses and the impact on generations to come, would cause the deterioration of the very things that have made this nation great. It serves us well to remember what he said:
“In…the technological revolution during recent decades,….research has become central, it also becomes more formalized, complex, and costly. A steadily increasing share is conducted for, by, or at the direction of, the Federal government.
Today, the solitary inventor, tinkering in his shop, has been overshadowed by task forces of scientists in laboratories and testing fields. In the same fashion, the free university, historically the fountainhead of free ideas and scientific discovery, has experienced a revolution in the conduct of research. Partly because of the huge costs involved, a government contract becomes virtually a substitute for intellectual curiosity. For every old blackboard there are now hundreds of new electronic computers.
The prospect of domination of the nation's scholars by Federal employment, project allocations, and the power of money is ever present – and is gravely to be regarded.
Yet, in holding scientific research and discovery in respect, as we should, we must also be alert to the equal and opposite danger that public policy could itself become the captive of a scientific-technological elite. It is the task of statesmanship to mold, to balance, and to integrate these and other forces, new and old, within the principles of our democratic system – ever aiming toward the supreme goals of our free society.”
Recommendation: As vendors pursue federal big data business they stand on the precipice of a whole new world. No one can afford for them to get lost in the data and not be mindful of their responsibilities in shaping the future for upcoming generations. Vendors would be well-served, and will serve the federal government’s interests and that of the people it represents, by reading Eisenhower’s speech in full and keeping always in mind the things they were challenged and charged with in their college Business Ethics class.




Hurricane Sandy: FEMA, social media and first responders

As states along the East Coast begin cleanup efforts from one of the most destructive storms in history, we examine how Hurricane Sandy stands out compared to other recent weather catastrophes. During previous national disasters such as Hurricane Katrina, there was no Twitter or Instragram that put breaking news in the hands of civilians. People around the world had to wait patiently by their TVs and computers for the latest images of New Orleans completely underwater, or devastating earthquake damage in Haiti. Despite widespread Internet use and the growing use of smartphones, news still wasn’t quite instant.
Yesterday, in the face of one of the biggest natural disasters to hit the East Coast, people took pictures, shot videos, sent tweets, and posted to Facebook, all in real time. According to Mashable, Instagram users posted 10 Hurricane Sandy photos per second. Photos coming in at 60 a minute and 3,600 per hour provided more than 86,000 images in a 24-hour period. And this is just one of many social media sites.
While it is difficult to quantify how these pictures, tweets, Facebook messages, etc. affected the response times of first responders, or how many lives were saved, it is clear that news stations and first responders benefit from seeing where an emergency is in real time. In Manhattan, the 911 system was completely overloaded due to the receipt of 10,000 calls per hour; the city typically receives 1,000 per day. Using social media tools to send emergency images to news stations or police Twitter accounts was essential and will continue to be a vital component in rescue efforts.
Another piece of the puzzle that must be examined is that of disaster-relief funding. The Federal Emergency Management Agency (FEMA) has provided coordinated disaster relief across the United States since 1978. Though the powers bestowed upon FEMA have changed, it is still a regional agency that not only coordinates relief, but provides funding to state and local governments to support restoration and other emergency efforts. While many people have differing views on what FEMA should provide as a sub-agency of the Department of Homeland Security (DHS), after large-scale disasters like that of Superstorm Sandy, local governments need help. Should funding be provided by states themselves? Should FEMA, with its larger infrastructure, be the one to determine the funding provided after a natural or other disaster? I’ll let you decide.
When looking at funding levels in recent years, you will see a clear downward trend. Over the past two years, there has been a 43 percent reduction in FEMA grants that pay for disaster preparedness. Additionally, should sequestration occur in January 2013 as planned, an additional 8.2 percent of disaster relief would be cut. One point in favor of letting FEMA provide emergency services and funds is that states in the red don’t have any funds for large-scale restoration. On the other hand, should the federal government sink deeper in debt to help? Again, it’s a matter of opinion.
As we look back on Hurricane Sandy months and years from now, the widespread destruction and loss of lives will be on many people’s minds, but we should also not forget the outpouring of social media response that curtailed even greater damage. State and local governments can now inform citizens instantly about closures and other situations that require real-time information. Disaster relief and rescue will never be the same.


Big Data and the End of the Myth that IT Reduces Costs

Big data solutions have compelling value to offer to federal agencies. They can identify waste and fraud. They can stop terrorist attacks. They may even be able to find a cure for terrible diseases. However, big data solutions require still further investment for agencies to use them, laying bare the myth that IT reduces costs.
One of the compelling value propositions of big data is that the insight gained from the advanced analysis of data can lead to all kinds of benefits. Federal agencies can identify waste and fraud. They can ferret out cyber adversaries and stop terrorist attacks. They may even be able to find a cure for terrible diseases. These are benefits that cannot be assigned a price tag and therein lays the difficulty of determining big data ROI. As agency budgets decline, responsible IT officials are compelled to develop business cases justifying the cost of implementing big data solutions. Just how are they supposed to do this when the potential benefit to be gained is something as squishy as “this investment may contribute to a cure for cancer?” Securing funding for projects based on a vague ROI in a fiscally constrained environment that is only growing worse likely has a snowball’s chance in “you know where” of being approved. Juxtaposed to this is the fact that IT is increasingly being targeted by Congress as an expense to be controlled, equivalent to spending on an agency’s auto fleet or staff. This raises an important question about IT that agency decision-makers and Congress are being forced to grapple with, namely, to what extent is IT a cost saving investment versus a cost generating investment?
This question is particularly appropriate to ask when it comes to big data. The TechAmerica Foundation’s recent report on big data did everyone a big service by describing big data as a phenomenon and not a “market.” This description made it clear that big data is a phenomenon generated by the continuous evolution of IT. Put another way, IT infrastructures and environments, long touted as being cost saving investments, are actually the driving force creating the phenomenon of big data. Organizations in the public and private sectors, relentlessly, dare I say blindly, pursue the golden fleece of increased efficiency driven by IT. They implement every new generation of technology that comes around - mobile devices, sensors, UAVs, etc. - beguiled by the promise that these will enable capabilities, solve problems, and … reduce costs. What we see instead is that the result of all those IT investments is the proliferation of data so massive that it cannot be adequately analyzed for insight by the very investments that generated it.
For example, big data prompted the Department of Energy to invest in the Energy Sciences Network so that DOE scientists can push data at 100GB per second. Demand in the scientific community for the use of this network is very high and will only grow. What will this demand drive? Why, the demand for further investment, of course. Here is another example. The Department of Defense recognizes that it has a big data challenge, so now it wants to build a network capable of speeds greater than 100GB per second. How long will it be before even this network is too slow and overloaded, requiring even more money for expansion? Then there are ever greater data storage requirements. The cost of storage is falling, but it is still not zero, and because data is proliferating storage costs will always grow.
From the beginning cloud computing, now all the rage, was touted as a way for agencies to reduce the cost os spending on IT infrastructure.  Implicit in that claim is the veiled understanding that IT costs always rise.  Pushing agencies to the cloud was simply Vivek Kundra's attempt to let open competition put a lid on constantly rising costs.  Migrating to the cloud eventually will reduce costs in the short term, but the big data challenge is already raising a yellow caution flag in that race.  Data is 100% guaranteed to proliferate, making today's big data tomorrow's bigger data.  This is turn will necessitate investments in hardware, software, and services to store, process, and analyze that data.  All of this is a boon for industry just, please, don't tell Congress.


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 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.


How Sequestration Might Impact the Air Force

It is strategic planning season for many of GovWin’s Federal Industry Analysis subscribers, and so we are getting a lot of questions about where we see the market going in the near term, given so much uncertainty and unresolved issues. Much of this focuses on specific technology segments – IT services, hardware, software, cybersecurity, cloud, etc., but there is even more interest in the potential impacts of budget sequestration if it occurs in January.
Last week, I looked at the potential impact of sequestration on the Navy. This week, it’s the Air Force’s turn.
The Air Force Budget Environment and Sequestration
The Air Force, like DISA at DoD, the Army and the Navy, funds much of its IT programs through its Research, Development, Test, and Evaluation (RDT&E) budget and it’s Air Force Working Capital Fund (AFWCF). Between the two, the RDT&E funds are the primary area of risk with regard to sequestration. 
For FY 2013 Air Force requested $25.4 billion for its RDT&E activities, funding primarily, but not exclusively, C4 systems, weapons platforms, and advanced weapons technology (e.g., space, lasers, etc.) The current sequestration plan cuts $6.7B (26%) from the Air Force RDT&E budget, if that FY 2013 budget were to be passed later this year. But under the current continuing resolution (CR) that runs until mid-March 2013, Air Force RDT&E funding is assumed to be set at the FY 2012 level, which was $26.7B, including Overseas Contingency Operations (OCO). So the FY 2013 RDT&E request represented a decrease in funding of $1.3 billion.
The AFWCF is essentially 100% exempt from sequestration, so programs funded through AFWCF may avoid direct sequestration-related cuts. That will depend somewhat on how much discretion, if any, the Air Force has in implementing reductions and if they are able to shuffle funding on priorities.
One noteworthy point here is that the delta between FY 2012 and FY 2013 RT&E budgets shows that the Air Force was already planning to reduce its RDT&E spending before sequestration was on the near-term horizon. FY 2013 budget plans were being drawn up during the same 2011 timeframe when the Budget Control Act (BCA) that brought us the sequestration plan was passed. The DoD was already wrestling with ways to trim the recent levels of budget growth to reach more sustainable levels in a budget-constricted environment. 
What is Vulnerable to Sequestration at the Air Force
So what Air Force programs are most vulnerable to cuts under sequestration? Below is a table that lists the top ten highest RDT&E-funded programs/offices at the Air Force, based on FY 2012 funding levels. (Under the current CR, any sequestration cuts which occur will be based on the higher funding level of the FY 2012 actual budget.) These ten programs total $859.2 million in spending – the largest amount for top ten RDT&E programs among the four DoD branches.
Ten Highest RDT&E-funded Programs/Offices at the Air Force

*FY 2012 level funding is assumed at this time because of CR.
These programs range from combat support systems to back-office enterprise applications and systems. The challenging question is . . . which of these can the Air Force afford to cut?
If sequestration occurs in its current form then the Air Force will need to weigh cutting RDT&E funded C4 and weapons platform advancements versus network and enterprise system programs. It is yet unclear how much real latitude Air Force officials will have, if any, to move dollars around in order to support critical priorities and needs or if across-the-board percentage cuts will be enforced. Although Air Force’s planned FY 2013 RDT&E funding was decreasing before sequestration that does not mean sequestration would not be highly disruptive to affected programs.  
Air Force RDT&E is 40% larger than DISA’s at DoD, 50% larger than the Navy’s, and 3 times that of the Army. Does this make Air Force RDT&E more vulnerable under sequestration and/or future budget revisions? Since more than a quarter of their RDT&E budget is on the sequestration chopping block – compared to about 10-11% for DISA, Army and Navy – the answer seems clear.


Contractor Survival Tactics: Booz Allen Makes C4ISR Acquisition, Expands Into Commercial Cyber

In today’s challenging federal market, contractors of all sizes are evaluating their current strategies to achieve success over the next several years, while bracing for potential budget cuts that could significantly impact the way they do business moving forward.
At FIA, we are always keeping tabs on what’s going on in the federal market, and I recently noticed that consulting firm Booz Allen Hamilton is making some interesting moves in order to remain competitive and continue its success in today’s evolving government market.
In fiscal 2012, Booz Allen derived 98% of its revenue from services provided to more than 1,200 client organizations across the U.S. government under more than 5,800 contracts and task orders.
FIA Perspective:
Booz continues to look for “opportunistic” acquisitions. Last week, Booz Allen agreed to acquire the Defense Systems Engineering & Support (DSES) division of ARINC for $154 million. This acquisition will bring strong capabilities in advanced aviation and maritime engineering, advanced weapons modernization and sustainment, and advanced systems engineering and integration to complement Booz Allen’s existing services, which span engineering and operations, technology, analytics, and strategy and organization. DSES is well-positioned in the growing C4ISR and engineering services/prototyping segments of the defense market, and Booz sees opportunities for these capabilities in adjacent intelligence, law enforcement, homeland security, and international systems sectors.
Taking a look at its acquisition strategy, Booz said it’s seeing consolidation in the market, and is “open to evaluating potential opportunities” with a focus on companies that are a cultural fit that will bring additional client access or enhanced capabilities. It also said it would “pursue inorganic growth options ideally in the $100 to $200 million range.”
Booz continues to win significant contracts despite tightening market conditions. In terms of contracts, Booz Allen was recently one of 12 vendors who won a $7 billion Army contract for software and engineering services. In August, Booz was also one of five contractors to receive an Army award (with a $489 million ceiling) to manage chemical weapons. In addition, Booz said it won 35 healthcare contracts, totaling more than $112 million, in August and September timeframe to support a wide range of federal healthcare agencies and private organizations.
In its fiscal first quarter, Booz Allen also won a series of major awards totaling over $300 million to support the U.S. Navy Space and Naval Warfare Systems Command in areas such as cyber, intelligence systems, infrastructure protection, and C4I. Booz also added an IDIQ contract with a ceiling of $20 billion from the National Institute of Health for services and solutions with the Chief Information Office, and a $73 million contract from the Department of Energy to provide scientific, engineering, and technical support.
For fiscal 2012, Booz said it achieved an overall win rate of 55% on new contracts and task orders that it pursued, and a win rate of more than 91% on re-competed contracts and task orders for existing or related business.
Booz Allen looking for commercial opportunities in cyber security.  While cybersecurity is one of the federal market’sfew bright spots in terms of spending,Booz Allen is aiming to use its federal cyber expertise as a bridge to commercial opportunities in the field, according to a recent Washington Post article.
Currently, Booz is one of a handful of contractors looking to make the transition to the commercial sector to expand its addressable market in cyber. Other firms seeking to make this jump include KEYW Holdings Corp., ManTech International, SAIC and Computer Sciences Corp., according to the article.
As part of its foray into the commercial market, Booz Allen recently entered into a consulting and services partnership with EMC’s security division, RSA, to provide enhanced offerings and make it easier for commercial and public sector customers to use both companies’ information security expertise and specialized technologies. The partnership’s objectives include: developing joint information security service offerings; simplifying client engagements for security preparedness and incident response; and further assessing the commercialization of advanced security technologies (from Booz Allen) that play a crucial role in detecting and defeating today’s sophisticated computer attacks.
In its annual report, Booz noted that it will continue to pursue new opportunities in the commercial market by building on its cyber-related work and leveraging its core competencies, with a focus on serving industries in which there is a strong intersection between government and commercial interests, such as financial services, healthcare, and energy.  
Currently, Booz Allen’s key service offerings to commercial clients include: dynamic defense (cyber), next-generation virtual infrastructure, decision analytics, design for affordability, and smart compliance. Its commercial clients include major commercial banks and investment banks, healthcare providers, energy companies, and utilities.
Booz posts nice bottom-line growth in latest quarter. In the latest fiscal first quarter, Booz Allen’s profit jumped 21% to $61.9 million, or 43 cents per share. This compares with $51.1 million, or 37 cents per share, in last year’s comparable quarter. At the same time, the company’s revenue slipped 1% to $1.43 billion, compared with $1.45 billion in last year’s first quarter.At June 30, Booz Allen had total backlog of $10.23 billion, of which $2.58 billion was funded.
Looking ahead, Booz said it expects adjusted earnings of between $1.60 and $1.70 per share for the year, down from its earlier estimates of between $1.71 and $1.81 per share. Moving forward, Booz believes that the investments it’s making in areas such as cyber, cloud, health, engineering services, enterprise effectiveness and efficiency, commercial, and international businesses will “position the company well for future growth.”
On its first quarter earnings call, Booz highlighted that it’s “investing resources and deploying leaders to business areas that are growing, while noting that it “will continue to grow in government, commercial, and international markets, such as health, finance, and intelligence surveillance reconnaissance.”
Booz also noted that it continues to win major contract awards across all markets in its government business, despite the generally challenging conditions in that sector. The company has also been “proactive and diligent in managing its cost base which has enabled Booz to continue to deliver on bottom-line commitments.”
Our Take:
Overall, we believe that Booz Allen will continue to be aggressive in making moves to remain competitive in today’s challenging federal market, especially in the wake of expected defense budget cuts and increased competition from top-tier rivals.
We like that Booz is making opportunistic acquisitions to expand into new and adjacent markets (especially commercial cyber), while continuing to win key contracts in markets in which it already competes. Looking ahead, we believe that Booz’s growth strategy will ultimately payoff for the company and allow it to achieve success in today’s evolving markets. 




The Potential Impact of Sequestration on RDT&E Spending in the U.S. Army

The U.S. Army potentially faces sequestration related cuts to its FY 2013 RDT&E budget of $954M. In this blog we take a look at home these cuts may affect RDT&E spending on Army C2 programs, weapons platforms, and more traditional IT projects. Last week in this space, I posted a blog on the potential impact of sequestration on IT programs at DISA. This week I’d like to turn to the potential impact on IT programs at the U.S. Army. In the name of consistency, I’ll follow the same format used in the previous blog and present data and information from the same sources, these being the FY 2013 Army Working Capital Fund and FY 2013 DoD Research, Development, Test, and Evaluation (RDT&E) Budget Request. Again, my purpose in clarifying where sequestration cuts may be felt the deepest is to relieve some of the anxiety surrounding sequestration and clarify what the issues are that leaders at the Army may be struggling with when it comes to deciding where the sequestration axe should fall.
Sequestration and the Army’s Working Capital and RDT&E Funding Sources
Those familiar with the Army Working Capital Fund (AWCF) may wonder why I chose to take a look at it, given the fact that it contains very little of the Army’s IT spending. The reasons are straightforward. First, FIA’s September 2012 analysis of the Obama Administration’s detailed budget account report on the impact of sequestration revealed that $178M of the AWCF was potentially vulnerable to sequestration cuts. Second, after having examined the Defense-Wide Working Capital Fund and finding just how important that fund is to DISA, I wanted to see if the AWCF was equally important to IT spending in the Army. The good news is that the AWCF is not as important to Army IT spending as the DWWCF is to DISA. In fact, the only IT program of note to be found in the AWCF is the Logistics Modernization Program (LMP). So, while the potential impact of sequestration on the LMP might be important to L-3 Services, the company currently supporting the program under contract W91QUZ-09-D-0039, the impact on the wider IT contracting community is negligible.
This brings me to the Army’s portion of the RDT&E budget, the sequestration of which has far wider repercussions. Sequestration cuts $954M, or 10.7%, from the total FY 2013 Army RDT&E budget request of $8.9B. The $8.9B is the figure if an FY 2013 budget is passed. The “if an FY 2013 budget is passed” part of the statement above is important here because if an FY 2013 budget is not passed then sequestration cuts would be based on funding at the FY 2012 level, as required by the Continuing Resolution in place until March 2013.
In the Army’s case, FY 2012 RDT&E funding was $8.7B, including OCO funding. Based on the FY 2013 request, the Army expected its RDT&E funding to increase by $200M. This means that it is actually more favorable for the Army if sequestration cuts would be based on the FY 2013 requested RDT&E funding level of $8.9B, rather than on the FY 2012 RDT&E funding level of $8.7B. Given the fact that Congress is highly unlikely to pass an FY 2013 budget before 2 January 2013, the Army has $200M less in RDT&E funding headroom to bear the brunt of sequestration cuts. In short, sequestration cuts to the Army’s RDT&E funding would hurt more based on FY 2012 funding than they would have if an FY 2013 budget was in place.
What is Vulnerable to Sequestration at the Army?
Army RDT&E money funds research and development related primarily, but not exclusively, to command and control systems and weapons platforms. The table below lists the top 10 (by funding) RDT&E funded programs/offices at the Army, based on FY 2012 funding levels. These programs represent a total of $2.7B in Army RDT&E spending in FY 2012. Based on what readers know of strategic priorities at the Army, which of these programs do you think the Army could afford to cut if sequestration became a reality?

For my part, I’d like to draw attention to three programs on this list and offer comments on where these systems fit into the Army’s IT ecosystem.
  • High Performance Computing Modernization – Slated to receive $228M (the FY 2012 number based on the CR) in RDT&E funding, the HPCM program would likely play a critical role in enabling the Army’s use of big data tools. Because traditional computing platforms cannot handle the volume, variety, and velocity of data to be processed, the Army and other DoD services will likely to turn to high performance computing for solutions. If this program is not funded it could hamstring efforts the Army’s efforts to use the big data analysis tools that it requires.
  • Warfighter Information Network-Tactical (WIN-T) – The WIN-T network is central to the Army’s efforts to drive capabilities to the tactical edge. These are capabilities that the warfighter counts on so cutting funding to this program could have life and death consequences.
  • Global Combat Support System (GCSS) – The GCSS is an enterprise level ERP system that provides a comprehensive COTS-based logistics solution to combatant commanders. So long as American lives are at stake in far-flung theaters of operation, the GCSS will be a required system, but this might not be enough to save it from cuts given the bad taste that years of DoD ERP cost overruns have left in the mouth of Congress.
There are of course other more traditionally oriented IT programs in the RDT&E budget that could experience cuts related to sequestration. These programs include Army Tactical C2 Hardware & Software ($94M in funding at FY 2012 levels) and Distributed Common Ground/Surface Systems (DCGS-A) ($32M in funding at FY 2012 levels). However, it is difficult to see much money, in percentage terms, being cut from these program budgets.
Sequestration in Perspective
When it comes to sequestration at the Army, it is my opinion that the potential impact is likely to be focused in the C2 and weapons platform space. In general, the more traditionally oriented IT programs are less visible, at least as far as the size of funded accounts is concerned.  This said the CR unfortunately puts the Army in a weaker position to withstand cuts to its RDT&E funding, if they materialize.




Contractors Indicate that Relationships are Their Top Source for New Opportunities

Sources of opportunity identification and assembly of staff resources around opportunities play a critical role in the federal pipeline process. Federal services contractors must develop a system for generating a continuous stream of contracting opportunities to fill their pipeline in order to be successful. Likewise, they need a well honed process for assembling an internal team to vet and potentially bid on these opportunities.
As we continue to look at federal pipeline management processes as a way for contractors to develop a competitive advantage, one extremely important element of the process is opportunity identification. Deltek’s recent research into the opportunity and pipeline processes of federal contractors sheds light on the major opportunity sources used by contractors to fill their pipeline.  The chart below shows the top sources for new opportunities by Deltek’s 244 survey respondents:
Large and mid-sized contractors rely heavily on the relationships developed by both business development and project staff to identify new opportunities. This is augmented by third party research. However, small contractors rely more heavily on teaming relationships to identify new opportunities, than do large or mid-sized contractors. This could indicate that their relationships with fellow contractors and teaming partners are stronger than their customer relationships due to their small size and limited time in the marketplace. Large and mid-sized contractors, due to their size and longevity in the market, typically have more people interacting with government clients and have deeper client relationships.
Assembling an experienced and well-trained internal team to pursue business is also a critical factor to increasing win rates. 
The chart below shows the average mix of resources used to go after new business in the federal contracting companies that Deltek surveyed: 
For the most part, all contractors showed an equal likeliness to outsource market research and proposal writing, while business development is the area most likely to have dedicated resources. The majority of contractors realize how important the business development function is to gaining new business and a constant stream of revenue, and are consequently more likely to maintain those resources in-house and dedicating them to the function of generating business. 
Opportunity identification and assembly of staff resources are just two pieces of the pipeline management effort, but contribute to an overall solid process. As federal budgets contract and contracting opportunities become smaller in size, business development and pipeline processes need to adapt to provide a constant new stream of business and revenue.
About Deltek’s Survey:
In July 2012, Deltek conducted a web survey of 244 of business unit heads, CEOs, COOs, business development leaders, capture managers and proposal managers from 138 companies that provide information technology or professional services to the federal government, with annual revenues of $25 million or more. 



Crime Prevention Month: Ask an analyst

Since 1984, the National Crime Prevention Council (NCPC) has designated October as Crime Prevention Month. State and local agencies, schools and other organizations spend the month increasing awareness and highlighting crime prevention and reduction efforts nationwide.
Last year, Deltek celebrated the month by issuing a series of blogs, each focusing on a different area of crime prevention. The technologies our analysts reported on last year included surveillance cameras and closed-circuit television (CCTV), red-light cameras, and predictive policing, all of which remain vital technologies to crime prevention at the state and local level.
This year, Deltek will again report on the abovementioned technologies, in addition to state and local public safety personnel and grants that may be able to assist agencies in implementing new systems. Grants are essential to state and local governments, and with dwindling grant funds compared to previous years, agencies and vendors will have to work harder to do more with even less.
In conjunction with the blogs, our analysts will also be filming a video panel series that delves into a variety of issues surrounding crime prevention at a high level, as well as detailing specific technologies. In order to engage the community, as is the goal of Crime Prevention Month, we will be accepting questions via email and on our Twitter account (@GovWinPubSafety). We will provide a follow-up blog answering questions shortly after. Stay tuned.

GAO Praises CMS Improvements to the HIPPA Eligibility Transaction System

A few weeks ago, GAO released a report endorsing CMS’ efforts to improve the HIPPA Eligibility Transaction System (HETS) and provide reliable service to users. A series of hardware and software upgrades in early 2011 dramatically increased system performance.
HETS supplies providers with Medicare beneficiary eligibility information. Timely and accurate data access is vital to the Medicare program which covered 48.4 million individuals to the tune of $565 billion in 2011.
In 2005 CMS began offering automated access to eligibility data via HETS, but suffered from a deluge of provider and beneficiary complaints in 2010. In September 2011, Senators Coburn, Burr, and Hatch requested that GAO review operation of CMS’ HETS. In a letter to GAO, the Senators referenced user complaints such as long wait times for eligibility confirmation and the inability to obtain telephone support. “Since establishing beneficiary eligibility in a timely and efficient manner is a fundamental part of basic program integrity operations, HETS is uniquely important to CMS fraud prevention efforts,” states the letter.
Prior to GAO’s investigation, CMS was attempting to make system improvements. In fact, in July 2010 they began to implement a series of major enhancements to the HETS operating environment and system, including hardware and software upgrades. However, users continued to experience lengthy response and system down times. According to program officials interviewed by GAO, CMS took additional steps to address the slow response and system availability problems in January 2011 by doubling the hardware capacity, replacing the operating system, and upgrading the system’s software. The second round of upgrades were completed in the spring of 2011.
After experiencing performance problems throughout 2010, GAO found that HETS is currently operating on a real-time basis, 24 hours a day, 7 days a week, and with few user concerns. As of June 2012, CMS reported that 244 entities were using the system and during the first 6 months of 2012, the system processed more than 380 million transactions.
Users told GAO that since CMS completed the 2011 hardware and software upgrades, they have been satisfied with HETS’ operational status. Additionally, Helpdesk calls have been reduced by nearly 50% and the percentage of transactions that received responses from HETS in less than 3 seconds increased from 60.8% in 2010 to 99.9% in the first half of 2012.
CMS doesn’t plan to stop there. With anticipated increases in transaction volume of 40% each year, the agency plans to redesign the system and migrate to a scalable database environment. In the short-term, CMS will implement proactive system monitoring tools to enhance production capacity prior to the redesign. In June 2012, the agency awarded a contract for defining and writing requirements for the redesigned system and it plans to procure a contract for maintenance of the current system until the redesign is complete in 2014. However, program officials told GAO that all improvements will be dependent on the agency’s budget.



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