Progress Update: Foundation Cloud Hosting Services at Department of Interior

The Department of the Interior (DOI) began its Information Technology Transformation (ITT) in 2011, laying out a four year plan to shift focus from physical hardware and software to delivery of customer-oriented services. Midway through the plan, the department awarded its Foundation Cloud Services contract to 10 vendors, each standing to receive up to $1 billion as the pushed into cloud computing. The effort aimed to streamline access to commercial cloud services and garnered a great amount of media attention, due in part to the high ceiling value associated with the awards. At the time, we pointed to the budget environment and the burden of sustaining legacy systems, cautioning that the $10 billion figure was unlikely to be approached.

Awarded in 2013, the Foundation Cloud Hosting Services contract have a 3 year base and 4 single year options (GovWin Opportunity ID: 84257). Having recently cleared the base period of performance, let’s take a look at how the effort has fared and where DOI stands with cloud. To date, just under $29 million in spending on the contract has been reported through the Federal Procurement Data System (FPDS). A far cry from that lofty ceiling. Most of the spending occurred during FY 2015, as shown below. So far, a single vendor (Unisys Corporation) has received the lion’s share of the funds.

Putting this effort in context with other DOI cloud and IT investments, it’s worth noting that department has historically assess these investments in terms of the total contract value and potential duration. In May 2015, DOI’s Inspector General (OIG) released findings from an evaluation of the department’s cloud performance. The audit identified over 40 cloud services implemented across DOI’s bureaus and reviewed contracts for 4 of these efforts. Findings from the report included deficient treatment of IT security risks and failure to follow best contracting practices. DOI reported the duration for the Foundation Cloud Hosting Services at 10 years. In combination, the high potential ceiling and the longer reported period of performance for the effort inflated the average for the four contracts the OIG reviewed.

Based on total contract value, DOI’s four contracts averaged 4.75 and $251 million. DOI’s IT budget reports figures for provisioned services (formerly the agency cloud spending summary) that highlight how skewed those total values are. From FY 2015 to 2017, DOI’s provisioned IT services spending averages around $37 million. Of the provisioned IT services captured in DOI’s FY 2017 budget, $13 million is slated for specific cloud investments, marking a slight decrease from FY 2016.

Going back to 2011, comparison of DOI’s requested, estimated, and actual figures for its IT budget indicate that the organization has tended to receive funds that are slightly above requested levels. Considering that, over the same period, DOI’s technology investment have averaged nearly 80 percent contractor addressable. Despite disconnect around contract values, this level of reliance on technology products and services makes the department a strong market for vendors.   

As DOI continues to pursue its Information Resource Management Strategic Plan, data center consolidation efforts and cloud computing remain central to the department’s technology strategy. At the end of 2015, DOI completed migration of financial management capabilities to cloud. The milestone achievement will allow higher levels of agility and collaboration around budget management, spending analysis, and tracking grants. Going forward, DOI expects the transition to cloud will produce significant savings. In particular, DOI reportedly expects the Foundation Cloud Hosting contract to yield benefits of $100 million each year from 2016 to 2020.