Pentagon Unveils Reduced Spending Plan

Today, Secretary of Defense Leon Panetta unveiled a budget plan that cuts half a trillion dollars in spending increases over the next 10 years, ultimately illustrating how the Obama administration feels America’s military needs to change.  Cuts would begin in October 2013.

Panetta said he will request a total budget that is $33 billion less than the current budget.  To achieve this, Panetta said a new “flexible and agile” strategy was developed for the military of the future.  From examples provided, savings will come from reduced headcount, closing of European bases, and retiring of antiquated hardware.

Programs like the Special Operations Forces (e.g. Navy SEALs) and unmanned aerial vehicles will actually see increases in spending.

New DoD Procurement Proposal Seeks to go Beyond Federal Acquisition Regulation (FAR)

Image by DonkeyHotey via Flickr

According to an article in Washington Technology, new procurement proposal aims to tighten the Defense Federal Acquisition Regulation Supplement’s rules on how DOD gets a fair or reasonable price from a company.  Currently, the Federal Acquisition Regulation leaves decisions on price competition up to the contracting officer. The standard of competition is met if the officer  “can reasonably conclude that the offer was submitted with the expectation of competition.”

Under the new DOD proposal, contracting officers would no longer use that standard.  Contracting officers would instead have to re-compete the solicitation for at least another 30 days if they waited less than a month to receive bids and got only one.

If a competition was open for at least 30 days, officers would have to determine reasonableness of prices through price or cost analysis, or they can enter negotiations with the company that made the bid.

“The purpose and effect of this rule is to promote real competition by ensuring that adequate time is allowed for receipt of offers, and ensuring that prices are fair and reasonable when adequate time has been allowed but nevertheless only one offer is received in response to a competitive solicitation,” DOD officials wrote in a recent memo.

DOD is under pressure to cut costs and competition for contracts is one of the key reform points laid out in the past year.

Defense officials are taking comments on the proposal through Sept. 23.

OPPORTUNITY WATCH: Army Looks to Industry for Mobile Application Development Advice

Image via CrunchBase

According to an article in NextGov, the U.S. Army wants to formalize  its process for developing mobile apps and is turning to industry and researchers as key resources.

The Army Program Executive Office Enterprise Information Systems (PEO EIS) has issued an RFI to “help the Army better understand current and future market solutions, availability of services, industry best practices, …tools, and products capable of enhancing … the Army’s efforts to develop a software development contract for mobile device applications.”

The PEO EIS goes on to say it envisions itself as a one-stop-shop within the Army for secure and scalable mobile apps.  However, this doesn’t mean the work will all be handled by government employees.  In fact, the RFI language states they will be acquiring the services below from a number of large and small business partners capable of developing applications:

• Application Product Design Market Strategy/Analysis
• Requirements Development/Validation
• Architecture and Standards Development
• Testing
• Integration with DoD Systems and Commercial Capabilities
• Integration with Carriers
• Security and Information Assurance

The office has not picked any preferred mobile operating systems at this point as it indicates an openness to developing across all mobile platforms including  iPhone, Android, Windows Mobile, and Blackberry.

The use of mobile applications within the DoD is an interesting, perhaps overdue, development.  As these devices become smarter and more secure, expect to see further opportunities emerge in rapid, narrow function application development.  Clearly, interesting possibilities exist for vendors willing to create early relationships and build strong value propositions.

Government Contractors in Iraq not Withdrawing as Quickly as Military Personnel

Though the military is “aggressively accomplishing its drawdown” in Iraq, the government contractors supporting the military aren’t going quite so easily according to an article on Federal News Radio and a report from the Commission on Wartime Contracting.  It appears as if contractor staff members exceed the required level of support in many cases. 

“In fact,” there are come very noticeable examples that were brought out (in a hearing yesterday) where there are a lot of people sitting around waiting to work,” according to Commission co-chair Michael Thibault.

Both military officials and contractors are pointing fingers at each other.  Military officials say it is the contractor’s responsibility to identify where they see significant numbers of staff sitting around idle.  Contractors say they aren’t getting any guidance from the DoD contracting officers, and they have an obligation to maintain staff levels until instructed otherwise.

“The solution will require exceptional communication on both parties,” said Thibault.    However, we suspect deeper communication on this issue won’t really happen.  Companies are not incentivized to communicate about staff cuts that reduce their revenue numbers.  Military officials see their staff being drawn down, and most likely like the idea of having some extra bodies in place “just in case.”

-LBB 

Pentagon Loosens Policy on Use of Social Media

The Pentagon is supporting the use of social media through the easing of its policy for using social networking and other Web 2.0 sites according to an article in Government Technology.  The Department of Defense (DOD) recently released a new policy statement “for responsible and effective use of Internet-based capabilities.” It basically lifts existing bans on access to social networking sites like Facebook, MySpace and YouTube. Prior to this policy change, most social media sites were essentially banned due to potential national security concerns.

The policy doesn’t completely open up the Internet, however.  Pornography, gambling and other assorted “vice” sites will remain inaccessible.  The policy also allows for the temporary suspension of access in order to “safeguard missions” by “temporarily limiting access to the Internet to preserve operations security or to address bandwidth restraints”.

One interesting reason for allowing access:  lack of media coverage.  The policy will help the DOD press office distribute stories typically overlooked by the mainstream media.  Examples cited include the building of schools and hospitals in Iraq.

While the news may not have a direct effect on many government contractors, it is nevertheless interesting to see the government–particularly the DoD–struggle with issues of open access, privacy, connectedness and potential conflicts with national security.  It’s also interesting to see how government is embracing these technologies to communicate its own messages, a testament to their power.  Products and services that help solve this problem will get attention and funding.  Look for more examples of loosening reigns on technology (and possibly more examples of problems this creates).

All the best,

Lorin

Air Force Wants Contractors to Develop Offensive Network “Weapons”

The Air Force is looking for contractors to help it go on the offensive in attacking enemy computer networks, according to an article on NextGov.  The military branch says it is looking for technologies that can:

• Map an enemy’s computer network
• Provide access to that network,
• Manipulate data in enemy information systems
• Launch denial-of-service attacks.

Apparently, the statements mark a change from the Pentagon’s public comments on cybersecurity which have focused primarily on defending our networks against attack.

-LBB

Small Business Federal Contracts Up, Percentage Down

The Small Business Administration says the federal government spent a record amount of money on small business-primed contracts in Fiscal 2008.  The amount totaled 93.3-billion-dollars.  However, as a percentage of the total amount awarded, small business contracts declined a bit,  from 21.5 percent from 22 percent.  That’s short of the 23-percent goal for small business spending set by law.

The Department of Defense is by far the largest spender with small business.  Total for Fiscal 2008 amounted to over 62.4-billion-dollars.  While that number was up seven-percent from the previous year, DoD failed to meet its goal of 22.24% spending with small business.

The next largest small business spenders were the Veterans Administration, Department of Homeland Security, Department of Health and Human Services, and the Agriculture Department.  All four met their small business spending goals.  (The links take you to the agency small business scorecards; a master list of all federal agencies can be found here.)

Scores were also given for other categories such as:  Small Business Disadvantaged, 8(A), Veteran Owned, Service Disabled Veteran Owned, Women Owned, and Hubzones (underutilized business areas).  Details can be found here.  General Services Administration is the only federal agency to meet its goals in all categories, in fact exceeded them and improved from the previous year.

The federal government is a growing area of opportunity for small businesses.  Federal law will make sure it continues to be  so.  However, federal buyers are not push-overs, even when trying to reach their mandated goals.  As we’ve said many times before, it takes understanding their pain and process and presenting a strong value proposition.

Department of Defense Starts Blog to Seek Input on Future Social Media Policy

In efforts to receive feedback on social media policy, the Department of Defense has set up a blog for service families to provide input.  An article on nextgov.com discusses the conflict between the DoD’s need to maintain security and a family-members’ need to have contact with their deployed loved one (accomplished over social media sites).  

In response, officials have set up the “DoD Web 2.0 Guidance Forum.”  Posts are made and public comments are requested.  Questions are asked such as:

• How valuable and what are the benefits of Web 2.0/social media tools to military families with love ones who are deployed?
• Is this a critical necessity, or merely a useful addition to your options?
• What impact would there be to families, with loves ones who are deployed, if Web 2.0/social media tools were NOT available to military members serving over seas?
• When communicating with your love ones who are deployed, which social medium do you use most frequently?

Defense Secretary Robert Gates will apparently factor in any public comments to future policy, and will accept input through August 20.

IMPLICATIONS

While it is difficult to identify direct implications for contractors, the situation is certainly interesting to watch (and may spark some creative thinking for some of you out there).  This is the first such effort by the DoD to create a blog feedback environment.  It clearly reinforces the growing importance of social media across our society.  Government agencies and businesses alike can not afford to ignore the power of social media, nor can they afford to ignore the potential pitfalls.  The DoD blog illustrates this tension well.

-LBB 

Army’s Centralizing of Procurement Offers Lessons for Vendors

After years of utilizing outside contractors for virtually all of its engineering expertise, the Army is centralizing its acquisition and engineering organization according to a recent Nextgov article by Katherine McIntire Peters. 

According to Ross Guckert, Army Assistant Deputy for Acquisition and Systems Integration, it was determined there was no systems engineering function looking across and integrating all programs.  This was highlighted last summer when the Army realized it had 16 different “battle command systems” (systems used to communicate on the battlefield) that could not work together.  Guckert stated creating a unified communications system is now top priority. 

IMPLICATIONS

First, while this is just one example, it highlights what could be an emerging trend within government and DoD to centralize core functions (particularly at a strategic level).  While this may impact some vendors, overall this should be viewed favorably, as better high-level insight and accountability makes for greater efficiency, improved effectiveness, and a safer nation.  Also, as a practical matter, it is far less likely for a vendor’s project to be delayed or cancelled mid-stream if the ongoing initiative fits well within the comprehensive strategic framework.

Second, vendors should place themselves in a position to help drive the conversation about integration and cross-functional applications.  Interoperability in communications and other systems is a red hot topic across all levels of government.  In the past, vendors sought to create proprietary solutions in hopes they would become the defacto standard.  Today, a new mindset of open technologies and systems is making its way into government procurement.  While in practice, legacy systems and approaches still may be difficult to remove in the short-term, vendors with an “integration mindset” will be favored going forward.

-LBB

DoD Gets Stimulus Money for Construction

The Department of Defense has announced details surrounding $835 million in stimulus money investments.  This is in addition to the $6.1 billion already detailed on March 20.  There are more than 850 improvement projects here, aimed at Army and Army National Guard facilities in 37 states.  More than half of this money will be distributed in five states: 

• Texas ($155 million)
• Kentucky ($83 million)
• North Carolina ($83 million)
• Oklahoma ($66 million)
• Hawaii ($59 million).

Projects appear to be aimed mostly at renovations and repairs of facilities, living quarters and road infrastructure.

Not in the construction business and wondering where your opportunity lies?  First, the “construction” projects will be multi-faceted in nature and will no doubt include a variety of supplier types (IT, services, telephony, etc.).  Second, it’s a safe bet that many of these projects were originally included in an operating budget somewhere.  Stimulus money that now covers these initiatives may free up budget money to be spent elsewhere.  Smart businesses targeting the DoD will look for this underlying potential.