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DOD CENTRALIZING CLOUD SERVICES? ARMY STANDS UP ITS OWN NEW OFFICE

While the DOD CIO has consistently stated a preference for managing cloud investments centrally, a preference backed up by large cloud projects like JEDI and DISA DEOS, the Army is nevertheless forging ahead with creating its own cloud program office.  The new operation is intended to be the focus point through which the Army accesses DOD cloud solutions, but will also accelerate its own network system modernization with a series of new cloud and enterprise-IT-as-a-service pilots coming this year.  Army CIO Lt. General Bruce Crawford states that this approach is in-line with DOD’s overall cloud strategy.  Crawford, speaking at an industry gathering last week, said that the idea is to start with small efforts to ensure sustained success in a cloud migration.  To that end, the Army is planning at least five cloud efforts this year focused on tactical intelligence data, financial management applications, global force integration systems, logistics and maintenance and tactical service and infrastructure.  These present good opportunities for companies with both proven cloud solutions and key Army relationships.  It is quite possible that these smaller initiatives may actually lead to more immediate business than the larger, enterprise wide DOD cloud projectsThe Armyalso has plans on a larger scale.  It is moving toward an Enterprise-IT-as-a-service model for its assets. 

METHINKS THOU ACTUALLY PROTESTS TOO LITTLE

Even though protests are part of government contracting life, many companies that Allen Federal runs into are actually more reluctant to file a protest than they should be.  Companies will lose business they could otherwise win out of concern that they will harm their customer relationship.  While it is perfectly appropriate to be considerate of customer relationships, it’s important to remember, too, the business interests of those who are financially backing your company.  Relationships that don’t produce business don’t do much for company valuation.  Indeed, almost all federal acquisition officials expect a protest on any good size or mission-critical project.  Time is built into the acquisition lifecycle to address protests.  Still not convinced?  Well over half of the protests filed at GAO over the past several years have resulted in acquisitions being withdrawn so that some remedial action could be taken. In other words, you have a better than 50-50 chance of getting something you want out of a protest.  At a minimum, that’s a chance to bid again on the same project, but with better intelligence.   While it’s true that neither customers nor federal agencies like “serial protestors”, there is every reason to file a protest when a valid business interest is at stake.  Lastly, get known as a “no protest” company and run the risk of never having some offers even be reviewed.  Why bother with the government market at all at that point?

SPENDING MAY CONTINUE TO INCREASE IN FY’2020

Despite earlier predictions that fiscal year 2019 would be a high-water mark in terms of government spending, both Senate Republicans and House Democrats are saying that spending may continue to rise next year.  Republican Senate Budget Committee Chair Mike Enzi (R-WY) said last week that he expects the increase.  The reason is that spending increases will likely be tied to a deal to raise budget caps, as well as a potential increase in the federal debt ceiling.Without a deal to lift the caps, defense spending would drop 11% and non-defense discretionary spending would drop 9%.  This differs from a White House plan to cut defense spending by 14% in 2020 from FY’19 levels, but then add much of that money back via the budgeting gimmick of adding funding to Overseas Contingency Operations money.  Those dollars are specifically excluded from counting against federal budget caps. House Budget Chairman John Yarmuth (D-Ky.) also said that he expects a deal to increase defense and non-defense discretionary spending by roughly equal amounts from fiscal 2019 to 2020.  This is generally good news for contractors as it means that opportunities for new business should continue to develop.  Everything from professional services to cyber to IT enhancements may be realize increased funding.  Emerging areas such as AI would also likely see increased dollars.  No one is asking where the money will actually come from, but that hasn’t stopped Congress from increasing spending before.  While both Enzi and Yarmuth support a two year budget deal, most feds and contractors would just settle for passing spending bills on time.

REPORT SHOWS WHAT WE ALREADY KNEW: OTA USE IS GROWING, BUT RELATED DETAILS ARE SLIM

Surprise!  Congress authorizes expanded use of an innovative, non-regulatory centered method of acquisition.  The use of this tool explodes exponentially so DOD can meet critical missions.  With fewer rules, though, there are fewer data sets to review.  This is essentially the finding of a recent Congressional Research Service report issued on the use of Other Transaction Authority inside DOD.  Oversight agencies are actually surprised that there is minimal paperwork to review when examining how OTA’s are used.  That, ahem, was the basic idea.  The existing DOD acquisition system was deemed too burdensome by both Pentagon leaders and Congress.  OTA’s, which until recently existed at the edge of the federal acquisition universe, moved closer to the center.  CRS estimates that OTA use at DOD has grown 650% from 2013.  That’s a lot of innovative R&D to help the agency maintain its technology edge.  More OTA use is on the way, with the Navy recently announcing plans on where and how this acquisition tool will be used.  We’re not suggesting that everything is perfect on the OTA front, but no one can really criticize a streamlined, fast acquisition method for acting like a streamlined, fast acquisition method.  Make sure OTA use is a discussion you have with your customers, even in civilian agencies.

HAVING THE RIGHT CONTRACT VEHICLE MATTERS MORE THAN EVER

Forty-Two Percent of the dollars spent on service acquisition in FY’18 went through Tier 1, Tier 2, or Best in Class (BIC) contracts last year as federal agencies increasingly followed Category Management guidelines set forth by the Office of Management and Budget.  At the same time, open market service procurements dropped by 10%.  Plus, small businesses received 33% of all orders, beating small use goals by 10%.  While these numbers are specific to services, the trend toward consolidating buys among identified BIC contracts is expected to be similar for IT and other major solutions brought via Indefinite Delivery Indefinite Quantity contracts.  The bottom line for contractors is:  Get on one of these BIC vehicles, or partner with someone who is, if you want to maximize your federal business potential.  Similarly, the contracts you have today that aren’t BIC may become worth less and less as agencies drive spending to BIC vehicles where spend under management can more easily be identified.  Federal agencies appear to be serious about driving business to contracts with competitive pricing where spend analysis tools exist to assist them in their budgeting and acquisition functions.  Still more guidance is expected soon from OMB on Category Management and, with it, the trend line toward increased use of preferred contracts is expected to grow further.