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Tags: Enterprise Applications
It was the year in which Bryan Adams sang “Everything I Do, I Do it For You.” The first George Bush was President and the Giants beat the Bills in the Super Bowl. Yes, 1991 was chocked full of history.
No, this isn’t a trip down memory lane, but a reminder that if you stick around in Federal IT long enough, acquisition trends have a way at coming back to haunt you. So it is with IT commoditization and other “new” trends that sound familiar to those of us with long memories.
1991 marked one of the last years that the Federal government purchased IT mostly as a product. The iconic Desktop IV contract, and its contemporaries, was primarily a product-based deal designed to drive prices as low as possible with limited competition. Contractors fought tooth and nail for these contracts. Implementation was delayed by successive rounds of protests as the stake was high.
This may sound familiar to companies involved in recent discussions surrounding reverse auctions, or even plans by GSA to expand its Strategic Sourcing program to include “commodity IT” products. Also, recent reports show that more and more agencies are using modular contracting to obtain IT solutions come to mind. Low price is again king in the Federal market and there is more than a passing glance at de-coupling IT product purchases from network services.
Before everyone gets carried away, though, let’s remember that there are good reasons why there was no Desktop V contract.
First, the government realized that approaches like the Desktop program were a great way to get yesterday’s technology at a premium price. By the time protests were resolved, the technology had changed. Buyers either had to use outmoded technology or pay a comparatively higher price for current market products. Ironically, lower prices and greater levels of competition were often available on GSA Schedule contracts within 24 hours after an initial Desktop award was made.
Second, the government realized that they had some serious compatibility problems. While the modular, product-based approach may have served the needs of Wednesday’s buyer, there was no guarantee that it would work with what someone next door bought on Thursday.
Lastly, the government realized that it wanted the services of an IT system, more than it wanted to own and manage the system itself. Providing a functional system became the job of contractors, while agencies were allowed to focus more on fulfilling their core missions.
While IT solution purchases have not been without their own issues, the government now benefits from having much better compatibility across IT platforms and has ready-made contract vehicles that assure agencies get today’s technology today. Continuous improvement is certainly called for, but does anyone really think that government IT systems would function at all if it had stayed with a modular, product-based acquisition model? We’d have a cloud all right, but it would be a cloud of confusion.
All of this is worth remembering before IT executives in industry and government “Join the Joyride” toward acquisition practices that were used over 20 years ago and found lacking. Commoditization brings a strong lure of low prices, but there is no free lunch – only higher prices to pay for incompatibility and non-transparency. These are relics that need to be remembered as well, but as a reminder that we don’t want to relive this part of our past.
The recent announcement in The Washington Post that Revolution Growth, the equity firm owned by Steve Case and Ted Leonsis, made a significant investment in online reverse auction tool FedBid should be met with a wary eye by government contractors. The move signals that FedBid will get a nice infusion of cash, and some well-connected investors who have publicly stated that they want the company to become an online marketplace for billions of dollars in government procurement. The timing of the acquisition coincides with a drive already underway in many Federal agencies to use low price, technically acceptable procurement standards as the sole standard for conducting all of their procurements.
Many contractors have long been uneasy with FedBid as the company aggressively marketed its reverse auction tool to Federal agencies for all sorts of procurement actions. It is not so much a concern with the company’s sole emphasis on low price, as it is that the firm encourages the use of reverse auctions in situations that aren’t suitable for its use. Additionally, FedBid fees have in the past been less than transparent, making it difficult for a winning contractor to know what its own net price was.
While reverse auctions can be well-suited to commodity purchases and other simplified acquisitions, the format does not lend itself well to the acquisition of professional services or to projects such as enterprise-wide IT solutions. When reverse auctions were first used in government in the early 1990’s, both buyers and sellers sometimes realized after the fact that they had either awarded or won a procurement that was not executable because the reverse auction format had not allowed for consideration of multiple variables. The result was either a re-procurement or a significant and costly adjustment to the original award price.
FedBid is already big business. Last year the company assisted with 20,000 procurement actions valued at more than $1.4 billion. Agencies using FedBid can conduct open market procurements, or use existing IDIQ contracts like GSA Schedules or Alliant. As such, an agency decision to use existing contracts does not preclude them from using FedBid as well.
Ted Leonsis will become FedBid’s new Chairman. Among those serving on the board will be retired Army Chief of Staff George Casey. It seems clear that FedBid will have easy access to the top echelons of government and be able sing the siren song of lower costs into the ears of those who may not understand that no customer, even the Federal government, should always purchase based on cost alone.
Any advocate for common sense acquisition – contractor or government buyer – needs to be prepared to show that reverse auctions have their place, but are only one option that the government should examine. The commercial sector uses this mechanism for certain purchases, but not all. The reasons why this is so should be made clear. Similarly, not every procurement action should be solely evaluated on price alone.
The message from common sense acquisition advocates needs to be clear, concise, and frequently heard. You can be sure that the message from Revolution will be.
Cloud computing allows for incredible innovation and flexible solutions. It has become the major driving force in Federal IT for many reasons, among them a current Office of Management and Budget mandate for each Federal agency to identify at least three IT functions for movement to a cloud format this year.
Unfortunately, Federal regulations don’t always keep pace with innovation. This fact is usually cited in cases where a Federal rule prohibits use of some new method of doing business. It can be frustrating for Feds and contractors alike to have government-unique stumbling blocks that lead to extra costs and delays. Outdated rules can also work the other way when agencies try to rely upon them to ensure common sense.
The General Services Administration (GSA) recently tried to limit the geographic locations of where cloud servers could be located. To many, it seemed like the agency set sensible limits to ensure that cloud servers weren’t going to be located in war zones, countries known to have strong terrorist organizations, or other unstable places. We know by now that GSA’s attempt to limit cloud server locations, however, ran afoul of a protest. The Government Accountability Office ruled that the agency could not limit cloud server locations, pointing out that the Trade Agreements Act (TAA) states that, when buying services, it is the location of the company offering the service that matters, not where the service itself may be performed.
As a result of this ruling, agencies that want to restrict cloud server locations to more stable places will have to rely on other laws or rationalizations. This will require creativity and, of course, delay in the implementation of what most agree would be a money-saving, state-of-the-market solution. It’s time to see if we have the rules we need to enable us to make common sense decisions and, if not, we need to start on that process today.
One law that definitely needs updating is the TAA itself. Remember Jimmy Carter, double digit inflation, and The Knacks, “My Sharona”? The year was 1979 and, among many laws adopted that year was the TAA. GM was the largest company in the U.S. in what was still a product-based economy.
No one had a clue that the “Information Age” would soon dawn or that the world would shift to a service-based economy in less than 20 years. The TAA gave short shrift to services, and keenly focused on the location of product manufacturing.
The U.S. economy and world trade itself have changed fundamentally since 1979, but the TAA has not. This has forced Federal contractors, and the government itself, to come up with serpentine reasoning to accommodate the Feds’ acquisition of commercial IT. The problems are well-documented and we need not review them here. Now, agencies and contractors may find that they have to create an entirely new set of serpentine interpretations just to make common sense service acquisitions.
Wouldn’t it be simpler to just update the rules and regulations? Maybe we could do it faster if they were in the cloud?
The Small Business Administration (SBA) routinely points out the shortcomings of Federal agencies when they fail to follow statutes or regulations governing the use of small businesses in procurement. They also aren’t shy about holding the feet of large businesses to the small business use fire. All of that is fair, and a part of their mission. But, before the agency gets too far ahead of itself, a little introspection on how it’s supporting small business Federal contractors might reveal problems closer to home that need attention.
The SBA has a very difficult mission. It is a relatively small agency tasked with fulfilling many different roles. Most people outside of contracting look at the SBA mainly as a place to obtain loans or other financing. The SBA is often mentioned, right after agencies like FEMA, as being critical to the restoration of local economies when disaster strikes. Their missions are often politically charged and at times, it may feel to the agency that they have 535 administrators.
Sticking to the basics, though not politically glamorous, is nevertheless essential if real small firms are to be helped. It’s great to get small businesses 8(a) certified, but it is equally important to support such firms when they run into problems with other Federal agencies. Support for small business success doesn’t end with the award of a certification or contract. The SBA needs to be a true “lifecycle partner” with agencies when post-award problems develop. If an 8(a) contractor has a valid claim against another Federal agency, the SBA must use its statutory authority, along with its considerable powers of persuasion, to assist that firm.
The goal, after all, of the 8(a) program is to create successful businesses. While this doesn’t mean that all 8(a)s are entitled to become successful Federal contractors, it does mean that the SBA achieves better outcomes by ensuring that 8(a) companies thrive in whatever market they do business. Helping existing businesses is a bit like working with current customers: it is generally easier to keep existing relationships successful than to constantly start new ones from scratch.
The House Small Business Committee recently held a number of hearings on the state of small businesses in government contracting. These hearings included the status of mentor-protégé contracts, the challenges facing the Office of Small and Disadvantaged Business Utilization (OSDBU) installations, and similar topics. More hearings are on the calendar. The topics covered and the level of interest shown, should be indications to SBA officials that Congress is expecting the agency to ensure “care after the contract” for small firms.
Congress and the SBA may want to consider re-naming the existing OSDBU to the Office of Small and Disadvantaged Business Success. While this may seem to be a small change, it underscores the real mission the SBA should be focused on. What better place to start than inside its own doors?
GSA Administrator Martha Johnson announced July 20th that her agency’s IT Multiple Award Schedule will offer only products that comply with either ENERGY STAR or the government’s own Electronic Product Environmental Assessment Tool (EPEAT). It will be interesting to watch whether the greater impact of this move falls upon GSA or its contractors.
Johnson’s announcement came as no surprise to anyone who has heard her speak over the past two years. Dozens of companies, in fact, have already moved toward offering ENERGY STAR-only IT products or similar “green” solutions. While GSA will have to use some common sense in circumstances where there is no identifiable “green” benchmark, I am not sure that Johnson’s announcement will cause a tidal wave of anxiety from contractors.
The impact on GSA, however, may be more substantial. The IT Schedule is not currently operating at peak efficiency. It is lethargic and its total sales have stagnated for the past several years. While annual sales are on track to reach almost $17 billion this fiscal year, the IT Schedule has been losing market share to contracts like NASA SEWP, specific agency MACs, and even GSA’s own Alliant contract. The IT Schedule team does not move at the speed of customer need these days. Adding a new stumbling block to a contract method already hobbled may not be the best prescription for IT Schedule health.
Why does this matter to GSA? The Industrial Funding Fee generated by IT Schedule sales pays not just for that program, but subsidizes a substantial part of the agency’s staff offices, such as the chief acquisition officer, chief information officer, general counsel, and others. Adding a new requirement to your IT program in a market filled with options that are already more nimble may impact operations throughout your agency.
The Federal IT market is full of contracting options. There are hundreds, if not thousands, of IT acquisition vehicles. These are vehicles that offer solutions to customers across the full spectrum of potential needs. If some government buyer has a legitimate need for IT equipment that isn’t ENERGY STAR compliant, they will still get what they want, but it won’t be from the GSA Schedule.
I have never been a big fan of limiting customer choice via contracting. Presuming that you know what is best for your customer and will offer only those solutions, is an approach that has a long track record of failure in the government market. Customers vote with their purchase cards and buy as they see fit, not from an agency that makes them eat their vegetables.
None of this even begins to touch on Johnson’s similar announcement that contractors will be required to step up their “take back” capabilities as well. That is an added cost to contractors that will make the IT Schedule even less attractive.
So, contractors and Federal buyers will continue to do business in the Federal IT market. Will GSA, however, become simply so over-burdened with unique requirements and costs that it offers the best sustainable program that no one will buy? Stay tuned
There is surprise and uncertainty going through the Federal contracting community currently on the Government Accountability Office’s (GAO) decision to continue hearing task and delivery order protests on transactions over $10 million. Many hoped that Congress’ inability to pass legislation extending the authority originally granted in the Defense Authorization Act of 2008 would result in a year-end buying season with reduced protest risk. The statutory authority to hear such protests provided in the Act expired May 27th.
Not so fast, said GAO on June 14th. The agency apparently found for itself a continued ability to hear such protests, most likely based on precedent, statutory, and regulatory bases. Defense Information Systems Agency challenged the authority of GAO to hear a protest brought by the Technatomy Corporation, claiming that the ability to do so had sun-setted. While GAO said, “We conclude that we have jurisdiction to hear the protest, and deny the request for dismissal,” they also said they would withhold their specific reasoning until a separate decision, apparently on this protest, is rendered.
Many contractors have long fought against giving GAO the right to hear task and delivery order protests. The original recommendation to do so came from the Services Reform Act (SARA) Panel that, despite a litany of objections from industry, included the recommendation in its final report. Later, when legislation was being considered in Congress, a number of industry groups and individuals pushed hard against it. The basic arguments were that protests are expensive, time consuming, and that the costs are ultimately passed along to the government.
Neither the SARA Panel, nor Congress, was swayed by the arguments. In fact, I have had more than one former SARA panelist tell me that the basic message from industry was heard as “protests take contracts away from my company and given them to someone else.” All of the opposing arguments came across as why the creation of the new protest authority was bad for industry, and not why it would harm the government. Such perceptions do not form a good foundation for a case against protests.
This is especially true when the provision being discussed covered only non-General Services Administration (GSA) Schedule task and delivery orders. Those orders were, and are, subject to protests under separate rulings made by GAO in various cases. It is doubly difficult to argue that one type of indefinite delivery/indefinite quantity (IDIQ) contract should not have protest capabilities when another one does.
Nevertheless, contractors still plan to push Congress to specifically rescind task and delivery order protest authority. That’s fine, and it’s what our democratic process is all about. To be successful, however, they will need better ammunition than what’s been used so far. Here are a few recommendations to consider:
· Frame all arguments in terms of what’s best for the government. Few in Congress are out to do favors for contractors these days
· Show how the government will be protected by not having an oversight tool it has today
· Discuss how eliminating protest rights will promote transparency
· Explain why having protest rights for Schedule purchases is ok, but not for other IDIQs
These are just some of the arguments that those seeking to end task and delivery order protest authority will have to face and for which they will have to have good answers. Congressional officials may have their own ideas, and there are other issues before Congress that contractors may want to consider as higher priorities.
Whatever the outcome, it is clear that protesting protests is not an easy task.
Joe is a regular at the Federal IT Bar and Grill. He comes in after work each day for a glass of milk and good discussion. Like most regulars, Joe understands he occasionally has to wait for his order if it’s a busy night. He’s loyal to the Federal IT Bar and Grill and, after all, it’s right across the street from his office. So long as there’s a basic understanding that Joe will get his milk and discussion when he needs it, he’s okay with sometimes not being the first person served.
And so it is with loyal customers in our regular Federal IT world. They’re loyal to their contracting program, even if it doesn’t “wow” them every minute of the day. In this case, let’s say the program is the GSA IT Schedule. A venerable, popular contract that consistently generates more IT business than all government Governmentwide Acquisition Contracts (GWACs) combined. That certainly shows some level of loyalty and popularity.
What happens, though, when the Federal IT Bar and Grill loses its experienced servers? It now has a lot of people in the back, watching over every server's move. Only a few people know Joe, let alone that he’s been coming to the place for years. Suddenly, not only is Joe not getting his milk on time, it may be last week’s milk! On top of that, the good conversation that made him feel at home has been cut down and replaced by Neil Sedaka records (apologies to Neil Sedaka fans). Now, Joe does not feel he recognizes the place, and he certainly does not feel appreciated. Next week, Joe plans on trying out the new GWAC Cyber Café down on McClure Street.
This is, in essence, what’s happening with the GSA IT Schedule. After a few years of musical chairs in top positions and persistent problems keeping contracts updated with the latest offerings, IT Schedule managers have gotten caught up in a series of internal hurdles and processes; all of which have made the IT Schedule more difficult to manage and taken them away from a focus on customer service. Federal IT customers are voting with their pocketbooks and taking their business to other contract methods. Schedule sales have stayed relatively flat for several years, while sales through individual agency Multi-Agency Contracts (MACs) have increased.
Like the management of the Federal IT Bar and Grill, GSA’s IT Schedule team needs to focus on what’s important. Job number one: Make sure your contracts have the very latest solutions at fair prices. Too often today, the IT Schedule is among the last vehicle to have new offerings. If your competitors have it first, your customers will go there. Job number two: Tell your story. GSA has a good one to tell. Fairly negotiated prices, offerings that meet all Federal rules, and do-it-yourself help when you need it, all for only .75% (yes, it’s still important that customers know it’s not 15%).
Thankfully, the IT Schedule has a new business manager. She should hammer home this story as often as it takes. She should also have the support of senior leaders who understand that they run the IT business, and run one in a very competitive market. The IT Schedule can win back Joe, but it will have to focus on him and meet his needs. Having too many hurdles and internal traps may result in the cleanest bar and grill in town, but does not guarantee you any business.
It is difficult, and scary, these days to look up from what is right in front of us at the larger environment. Recent headlines have screamed, “Government Shutdown Looms,” “Contractors Expect Slow Quarter,” and “Administration Lauds Reduced Contract Spending.” It takes courage to keep your head up in this environment. Many companies do not. Heads are down and focused only on the immediate.
And yet, we know that to be consistently successful, your company has to keep its head up. You have to have someone, preferably a team of them, looking constantly at what’s happening from side to side and over the horizon. Without that function your company can get caught flat-footed and become the corporate punch line of the old joke, “I was wondering why the ball was coming toward me so fast, and then it hit me.” Simply put, there is no benefit to receiving a corporate black eye because everyone in your business is looking only at the straight ahead near-term.
Now, such people certainly do have a place in your business. There is no way your firm can successfully close opportunities or keep its cash flow positive without professionals who have a laser focus on capturing near-term opportunities. I have run two small businesses. I get the need to ramp up business quickly and get money in the door.
This is not, however, the problem I see with most companies today. It’s the ability to look out beyond the current quarter or fiscal year to strategically plan. Fewer and fewer companies will make investments that do not promise immediate results. While these companies may turn a profit today, their long-term prospects are far less certain.
What happens to these companies down the road? I would argue that the pipeline dries up pretty quickly and new business becomes increasingly difficult to get. For example, the Federal market trend in commercial IT and services is toward indefinite delivery/indefinite quantity contracts. If your firm was not looking at important opportunities at the time these contracts were formed, you may find yourselves shut out of business you thought would be yours.
Also, the services or products you offer may no longer be relevant to what’s happening to your future government customer. Only someone with their head up and looking around can see new developments in services and changes to government organizations that give your firm the time and ability to keep pace. You do not want to sell WordStar in a world where word-processing is now brought in the cloud.
Long-term market intelligence and a broader participation in Federal market events and/or organizations costs money. It’s also current money that cannot always show a pay-off by the end of the quarter. I get it. No one has infinite resources to spread around. Not dedicating any resources to the future, however, many put the future of your company in doubt. Smart, wise investments in the future are expenses that no serious government contractor should go without.
Don’t be the company that gets smacked in the head with a ball from the outfield and is knocked out.
Tags: Collaboration, e-Procurement, Green IT, Networking, Portfolio Management, Project Management, Services, Workforce
I think sustainability is a wonderful thing. Being responsible stewards of the resources we've been given is very important. In fact, it is my experience that industry and government have so far been working pretty closely together to "green" all parts of the acquisition process, something that I had earlier thought would be a bone of major contention. So far, so good. We now have everyone cheering "go green." No one should think that I am in favor of oil spills, Three Mile Island, or Love Canal disasters.
I am, however, in favor of the "S" in "GSA" still standing for "services" and not "sustainability." GSA has a mission to fulfill. It is to serve the acquisition needs of its government customers. GSA is, at its very core, a service business. If it's not providing the solutions its customers need, it's not fulfilling its mission or generating the income it needs to continue operations.
Right now it seems that GSA is only about sustainability. Other important operations are taking a back seat — if they can even make it into the hybrid car.
Staying on this course, dare I say it, is "unsustainable." Here's why:
GSA is losing its edge in being a leading provider of IT and service solutions: Focusing only on sustainability means that GSA’s biggest contract vehicles are losing their competitiveness. The growth in the Federal IDIQ sector is almost entirely in other government agencies. The proliferation of single agency Multiple Award Contracts (MACs) is taking away business and opportunity from GSA's contract vehicles. Exhibit one is the IT schedule where sales have been flat for several years. One-time GSA customers are voting with their wallets and using their own MACs. While GSA's Alliant contract is getting decent business, how much better could it be, though, if it had top-level attention and promotion? One item for GSA leadership to examine: how to test cost-type contracting on vehicles like GSA schedule contracts. If your biggest program doesn't offer it, and your biggest client, DOD, wants it you'd better find out a way to get it to them if you want to keep their business.
GSA can't add innovative solutions to its contracts fast enough: Another issue that needs top level attention at GSA is the process by which new products and services are added to existing contracts. It used to be that if a new item was introduced in the commercial market one day, it could be added to schedule that same day. Anecdotal evidence now indicates that at least some COs are asking for a full year of commercial sales before they will consider allowing an item onto a schedule contract. By then it's no longer new — and it can most likely be found on a half dozen other government contracts.
GSA is more than the Public Building Service (PBS): Scan the GSA Web site and you will find that the overwhelming majority of discussions have to do with the Public Buildings Service. Indeed, PBS is an important part of what GSA does. Still, PBS is only part of the agency. If it's getting most of the press and the attention, it doesn't take long for the other parts to atrophy. GSA’s senior leaders need to show the Federal Acquisition Service the necessary attention and dedicate resources to it at the top level to make sure there is no atrophy.
All of this adds up to a GSA that is headed toward trouble if the single sustainability track remains in place. If your offerings are no longer relevant to your customer, there is no reason for them to come to you, no matter how sustainable they may be. The agency will no longer be able to support itself through solution-generated revenues. Congressional appropriations are highly unlikely.
It is time to place the sustainability initiative in its proper perspective: an important, but not all-consuming, goal for GSA. Let’s hope that the agency can address its other needs and remain not just sustainable, but essential, for years to come.
It is a simple fact that communication is the key to successful relationships of any kind. This includes the business of government contracting. It is also a fact that people in authority can exercise great power with their communication. With this power, though, must come responsibility and an awareness of how big of an impact their communication can have.
These two facts intersected twice in early February in the field of government contracting. One example could have a tremendously positive impact on the business of government. The other could all but cancel the first one out.
In issuing a memo to all government contracting offices promoting government-industry communication, Office of Federal Procurement Policy Administrator, Dan Gordon, used his position to target head-on a once old problem that has recently reared its head again: a view that government contractors are the enemy and that communication with them should be limited. By promoting better and more frequent discussions, Gordon understands that it is vital to the successful conduct of government business for contracting officers to interact with industry. Only through open, proper discussions can an overburdened workforce properly position their procurements in order to drive the best government outcomes. Mistakes are identified earlier, requirements are more accurately defined, and a true understanding of what the “state of the market” is for a particular need is obtained.
At the same time Gordon was issuing his memo, however, Senator Claire McCaskill (D-MO) chose to use her substantial procurement oversight bully pulpit to undermine confidence in the acquisition workforce and encourage minimal communication between that workforce and the contractors they must work with in order to meet the many missions of government.
Specifically, McCaskill chose a hearing on government audit practices to issue a statement that many government contracting officers have gotten “too close” to contractors to make good judgments. The former state auditor apparently believes that contractors can hold a Svengali-like sway over government buyers if they communicate too much. Perhaps unsurprisingly, the Senator advocated for auditors to have the last real say in what constitutes a good contract price because they are detached from day-to-day contractor interactions.
Wow. In one hearing Senator McCaskill managed to both actively discourage the sort of discussions that Administrator Gordon advocated for in the same week and insult the integrity of what is largely a professional, responsible acquisition workforce. Where Gordon sought to thaw government-industry suspicion, McCaskill took it right back to the freezer.
While the Senator is certainly entitled to her point of view, she perhaps could benefit from a bit of restraint and more carefully chosen words. She is no longer a Senate back-bencher, but the chair of two key Senate subcommittees with some form of government contracting oversight. Her words and positions carry considerably more weight and can have a profoundly chilling impact on what should be routine government-industry communication. With the pulpit that she has obtained comes the responsibility to communicate wisely from it. It is probable that the Senator wanted to send one message, it is equally as likely, however, that the workforce heard another. Without more careful use of her position she could easily find herself holding oversight hearings next year on why the government cannot conduct well-defined or timely procurements.
Communication is a powerful thing. Communicators should use that power wisely and well.