Reporter’s Notebook

jason-miller-original“Reporter’s Notebook” is a weekly dispatch of news tidbits, strongly-sourced buzz, and other items of interest happening in the federal IT and acquisition communities.

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The reason why the Air Force pulled the plug on a huge cyber contract may surprise you

The Air Force was 18 months into the Enterprise Cyber Capabilities acquisition and on the brink of making awards. The excitement over this potentially $5 billion multiple award indefinite delivery, indefinite quality contract among industry was a high as any opportunity on the street over the last few years.

With a few strokes on the keyboard on Sept. 19, the Air Combat Command terminated EC2.

The Air Force took the unusual step of pulling the plug on the entire acquisition for reasons that may make sense on the surface, but was baffling to long-time acquisition experts and especially to the vendors, who spent more than year and hundreds of thousands of dollars or more on proposals.

“While it is good that the requirement generated significant industry interest with over 250 proposals received, the established acquisition strategy and evaluation methodology were not suitable to result in a manageable number of prime contract awards. It is in neither the U.S. Air Force’s nor industry’s best interest to award far more prime contracts than the program and its supporting workforce can properly administer, and for which sufficient competitive opportunities are projected to provide fair opportunity to a significant number of prime contractors,” the Air Combat Command, which was running EC2, wrote in a notice on

Agencies have cancelled procurements for a lack of competition. They have cancelled contracts because industry feedback made it clear the government wouldn’t be successful. And agencies have terminated acquisition efforts for an assortment of other reasons.

But long-time acquisition experts say they can’t remember a time when an agency cancelled an acquisition because there was too much interest.

“Clearly, there was insufficient market research conducted to understand how many contractors would propose, and how fully qualified they would be based on the selected source selection strategy,” said Mike Smith, former director of strategic sourcing at the Homeland Security Department and now executive vice president at GovConRx. “From my humble perspective, the Air Force should have foreseen a robust response to this requirement given the huge emphasis on cybersecurity across government and industry today. Additionally, true market research, and not just going through a process, would have told them to expect a large number of proposals, and as such a down-select process and more true discriminators would have been in order.”

A market research failure

Agencies are spending more time and resources on market research these days. The General Services Administration even offers a free tool, market research-as-a-service. Laura Stanton, GSA’s assistant commissioner for the Office of IT category in the Federal Acquisition Service, wrote in a July 31 blog post on MRAS that in three years, the service has conducted over 3,000 requests for information for customers, including more than 25% specifically for IT category special item numbers (SIN) on the GSA multiple award schedule. The top user of MRAS is the Air Force.

But this is more than a market research failure. While experts applauded the Air Force’s tough decision to pull the plug right before the award, the fact the ACC let EC2 go on through almost all the phases of an acquisition before realizing it wasn’t going to work is major breakdown.

A former Air Force official, who requested anonymity because they still do business with the Defense Department, said the entire acquisition strategy was problematic from the start.

ACC went with a self-scoring approach and let companies partner with each other multiple times so figuring out which team was better than another was too difficult.

“The big question is did they really red team how industry would respond to the solicitation?” the former official said. “If they had one-on-one meetings with some of the bidders or more directed discussions, they would’ve gotten feedback on their strategy. The acquisition offices that speak least with industry have the most challenges with procurements. They did hold an industry day, but those are one way discussions. If they did one-on-ones, they would’ve gotten better feedback about the solicitation and how industry would react.”

Greg Giddens, a former chief acquisition executive at the Department of Veterans Affairs and now a partner with Potomac Ridge Consulting, said cancelling a contract like this has negative impacts on both the agency and industry.

“It will make industry less inclined to invest in responding to future proposals and some in the government underestimate the expense that industry incurs to respond. For something like the acquisition, it could easily be in the millions for each company,” he said. “The biggest impact in cancelling an acquisition like this one where the requirements still exist is that the mission needs will not be met.”

Air Force had no other choice

Smith added it’s clear the Air Force will not reimburse industry for their costs and expenses.

“In cancelling this solicitation, the AF unilaterally decided to spread the B&P cost for this effort across all federal agencies,” he said.

The Air Combat Command spokesperson said the agency didn’t have a lot of options but to cancel the acquisition entirely once it realized the challenges ahead.

An ACC spokesperson said the evaluation and award methodology for the acquisition provided that an award would be made to each and all “qualifying offerors. The solicitation did not include a specific number of awards, and the source selection team did not have a set expectation.

“Alternative evaluation methodologies and the re-definition of ‘qualifying offerors’ were considered, and ACC Acquisition Management and Integration Center concluded that either would result in substantial changes to the EC2 solicitation.  In accordance with FAR 15.206(e), if an amendment is proposed for issuance after offers have been received and that amendment ‘is so substantial as to exceed what prospective offerors reasonably could have anticipated, so that additional sources likely would have submitted offers had the substance of the amendment been known to them, the contracting officer shall cancel the original solicitation and issue a new one, regardless of the stage of the acquisition,’” the spokesperson said as the reason for a cancellation instead of modification.

Now that the Air Force ended EC2 after more than 18 months of planning, the need for cyber services doesn’t go away. The spokesperson said ACC is analyzing its next steps to meet enterprise cybersecurity needs.

“In the meantime, ACC AMIC will continue to solicit and award those requirements on an individual basis, either by issuing separate solicitations that will be posted on or by competing and/or placing orders under existing GSA, Defense Department and/or Air Force IDIQ contract vehicles,” the spokesperson said.

And this brings us all the back to the age-old discussion about why agencies believe they need their own multiple award contracts still. The Air Force’s short plan on is really a long-term solution for every agency who believes they need to go down their own path.

And the governmentwide solution to limiting or stopping the proliferation of multiple award IDIQ type contracts for common IT or professional services hasn’t been found. And without political leadership from the Office of Federal Procurement Policy (OFPP) to require agencies to justify an acquisition like EC2, this is what happens — a colossal waste of time and money all around.

House tech leadership biggest surprise of summer changes

The summer isn’t officially over, and with a heat wave stretching from the Plains through the Midwest and into the East Coast this week, it may continue to feel like the dog days of summer for quite a while. But we can pretend fall is just around the corner what with the college football season kicking off last weekend, the NFL starting this week. And now that we are past Labor Day, it’s time to look back at some of the major people changes in the federal IT community over the summer.

One of the most surprising changes came not in the executive branch, but on Capitol Hill.

Multiple sources confirmed, and reacted with both surprise and bewilderment, the House of Representatives decided to part ways with both their chief information officer AND chief technology officer in late May or early June, depending on who you talk to.

Alan Thompson, the CIO, and Justin Black, the CTO, were relieved of their duties because the chief administrative officer, or maybe House leadership, “wanted to go in a new direction,” multiple sources say.

Alan Thompson left earlier this summer after almost three years as the chief information officer for the House of Representatives.

A spokeswoman for the House CAO declined comment on the personnel changes.

Attempts to reach Thompson and Black via LinkedIn were unsuccessful.

Sources also have confirmed that Jamie Crotts is the acting CIO of the House of Representatives. He previously served as the chief information security officer of the House for about eight months and has been director of cybersecurity awareness and policy for six years previously.

Crotts came to the House after spending about 13 years in the private sector with Booz Allen Hamilton and Deloitte.

It’s unclear if Thompson and Black were fired or just asked to leave or left on their own will. No matter the specific circumstances, sources said the decision is surprising nonetheless given both of their impacts on the House to bring the technology members use into the modern era.

Thompson came to the CAO’s office in May 2020 from the Carlyle Group, first as deputy CIO, and then rose to acting and finally permanent CIO a year later.

Black had been CTO since 2018, coming to the CAO after spending 10 years with the Department of Veterans Affairs inspector general’s office where he led the data analytics effort and was the CIO for eight years.

Thompson said back in June 2022 in an interview that one of his top priorities was to make it easier for lawmakers’ office to adopt digital services. He said by filling the gaps in knowledge and skillsets, the CAO’s new office of digital services could accelerate the modernization of Congress.

As part of this digital services effort, Thompson and Black worked on improving the technology infrastructure for the House over the last few years. This includes bringing better Wi-Fi access in the office buildings, a pilot in the district offices to improve their wireless connectivity with the goal of making it easier to connect offices and people.

In the CAO’s semiannual report to Congress released in June, the digital services team continued to make progress in launching new tools, including “the team’s very first home-grown product: Deconflict. Intended primarily for use in committee offices, this modern calendar interface provides staff visibility into each House committee’s upcoming hearings and markups before they are publicly noticed.”

Executives retire from GSA

Thompson and Black weren’t the only notable names leaving federal services over the last few months.

Carol Ochoa, the inspector general of the General Services Administration, retired after 37 years in government. She had been GSA’s IG since 2015 and joined the government in 1989 as an assistant U.S. attorney in Washington, D.C.

Robert Erickson is the current acting IG until President Joe Biden names a permanent one.

Ochoa’s tenure at GSA continued the tenuous relationship between the IG’s office and the administrator’s office.

Carol Fortine Ochoa and Larry Lee Greg (right) retired from GSA’s Office of the Inspector General earlier this summer after 37 and 50 years, respectively, of federal service. (Photo courtesy of GSA OIG)

Some said Ochoa and her staff were overly critical or aggressive around certain and specific areas, particularly during the Trump administration.

One ongoing area of disagreement that neither the IG’s office and the Federal Acquisition Service can find common ground on is the continued use of the Transactional Data Reporting (TDR) framework for tracking prices on the schedules program.

One of Ochoa’s final investigations showed major problems with the program.

“During her roughly eight years of service as GSA IG, she led audit and inspection efforts which produced nearly 600 reports to GSA, and ultimately to Congress. The reports provided recommendations for corrective actions to address serious deficiencies found in GSA programs,” said Rep. Gerry Connolly (D-Va.), in a statement on the House floor recognizing Ochoa’s service. “These reports also included extremely valuable contract audits which, over her term, identified more than $4 billion in potential savings in the form of questioned costs or funds that could be put to better use.”

In addition to Ochoa, Larry Lee Gregg, the assistant IG at GSA, also retired after 50 years of federal service.

Also leaving GSA is Zach Baldwin, the automation lead for the Federal Risk Authorization Management Program (FedRAMP), after 20 years of federal service.

“It’s really hard to walk away after such a long time — the hardest thing is leaving projects I felt passionately about undone and walking away from some long term relationships I’ve developed,” Baldwin wrote on LinkedIn. “I am very proud of some of the projects that I have been involved in over the years. I was part of bringing cloud to the federal government by creating the first cloud blanket purchase agreement (BPA). I supported and helped lead the Federal Data Center Consolidation which helped the entire government migrate from legacy physical data centers to the cloud. I was there at the creation of FedRAMP, but only significantly contributed when I returned to the program and lead the automation initiatives. I’m excited to see the future of automation as the foundations I helped set are actualized into what I am sure is the future of FedRAMP and cybersecurity. It’s been a great career. I hope I served the taxpayers well.  The federal government is a big ship that doesn’t turn quickly. I hope that in my career I’ve done a significant amount of nudging in the right direction.”

Baldwin didn’t say what his plans are for the future.

Over at the Army, Hannah Hunt, the chief product and innovation officer at the Army Software Factory in the Army Futures Command, decided to move to industry after three years in the role.

She came to the Army Software Factory in October 2020 from the Air Force’s Kessel Run. Hunt started her federal career as a legislative affairs intern at the Treasury Department in 2015.

During her time at the Army Software Factory, among the areas Hunt focused on was the upskilling and training soldiers and civilians to expand the number of software developers. The six-month training program sends about 30 soldiers and civilians through the cohort.

“Years from now you will look back in awe at what you have done for the Army. Change takes time but the Army is well on its way to transform at a pace never before in history,” wrote Raj Iyer, the former Army CIO, who now is with ServiceNow, on LinkedIn.

Hunt said she would be joining MetroStar, a digital services and management consulting company specializing in emerging technologies within the public sector, as a distinguished technical fellow and senior director.

NASA, Interior, SBA add to staff

The news isn’t all about people leaving government service. There were several executives either coming back to government or finding new roles in agencies.

Krista Kinnard, the Labor Department’s director of innovation and engineering in the CIO’s office, is heading to NASA to be its digital transformation team as the change management and culture lead. She starts at the space agency this month.

Krista Kinnard, the Labor Department’s director of innovation and engineering in the CIO’s office, is heading to NASA to be its digital transformation team as the change management and culture lead.

Kinnard has been in that role since April 2021 and previously worked as the director of the AI Center of Excellence at GSA.

Kinnard, who was a winner of a Service to America Medal in 2022 in the emerging technology category, focused on automating repetitive and low-value processes through robotics process automation and other technologies. It helped Labor reduce errors, save time and money and improved services in the areas like human resources and acquisition.

“Through the use of acquisition-related bots, Kinnard transformed work that once took 40 hours to complete, requiring searches through multiple webpages and databases to populate reports, and reduced the time to less than three minutes,” the Partnership for Public Service wrote in its 2022 medals program.

Over at the Interior Department, Darren Ash, the CIO, continues to fill out his staff. He lured Stan Lowe, the former CIO at the Federal Trade Commission and chief information security officer at the Veterans Affairs Department, back to be Interior’s CISO.

Lowe, who left VA in 2015, comes back to government after eight years in the private sector. Among the companies he worked for were Booz Allen, Zscaler and most recently Synchronoss Technologies.

Lowe replaces Jack Donnelly, who left in June 2022 to be the CISO at the Office of the Comptroller of the Currency in the Treasury Department.

Finally, the Small Business Administration’s acting CIO Steve Kucharski named Doug Robertson as the agency’s new chief technology officer. Robertson has been with SBA since July 2020 joining as a product owner and IT specialist.

He previously worked in the private sector at an artificial intelligence company called Interactions and for as a product owner and scrum master.

SBA’s previous full-time CTO was Sanjay Gupta, who left in March 2022 to be the CIO of the Justice Department’s Executive Office of Immigration Review. Gupta recently joined the Illinois state government as the acting director of innovation and technology.

For 21st Century IDEA Act, EIS, it’s just a matter of time

Time is a funny concept when it comes to federal technology initiatives.

There’s never enough time to fix everything. The initiative needs more time to bake. The law, policy or regulation will take time to implement and show results. When it comes to cybersecurity, time isn’t on our side.

I can only imagine that for every agency chief information officer, singer, songwriter Joe Jackson may have summed it up best in his song Got the Time: “Time – got the time tick-tick-tickin’ in my head.”

The recent updates from the General Services Administration on the Enterprise Infrastructure Solutions (EIS) program and the Office of Management and Budget around the 21st Century IDEA Act underscore the trials and tribulations of time in the federal IT community.

GSA is giving eight agencies a new deadline to move to EIS.

OMB is expected to issue new IDEA Act guidance in early September and is encouraging agencies to apply for funding from the Technology Modernization Fund soonest to meet some of the new goals.

As the Rolling Stones famously said, time — years for some agencies with EIS and weeks for the IDEA Act — is on your side, that is, until it’s not.

Let’s start with the immediate countdown clock.

Federal Chief Information Officer Clare Martorana has said several times earlier this spring and summer that OMB finally, after four-plus years, will issue guidance to implement the IDEA Act. Sources say that guidance could come as soon as early September.

Martorana said on Aug. 2 at the IT Vendor Management Summit that while some agencies have moved out on initiatives that the IDEA Act is focused on, others have been “waiting for more deliberate guidance in order to start turning those gears of government forward so the American people can get the IT services that they deserve.”

Clare Martorana is the federal chief information officer.

“It basically will be a 10-year roadmap for digital transformation. Much of this is, as I like to say, motherhood and apple pie. It’s all those good things that we all know have to happen. But it’s really deliberate, thoughtful and achievable for our government to execute on the 21st century IDEA Act,” she said. “It’s very foundational things like not duplicating content, publishing content that’s easy to find and easy to understand, modernizing front-end design and improving the experience of websites and digital services, ensuring we have consistent look or feel branding across agency channels and that everyone is using the US Web Design System. We’re going to improve the design, development and accessibility, which is really critical for all of our digital products and services to ensure sufficient capacity to support Section 508 of the Rehabilitation Act of 1973.”

President Donald Trump signed the IDEA Act in December 2018, which aims to make federal “.gov” websites more mobile-friendly and more secure.

OMB’s delays in getting the guidance out the door can be attributed to several reasons, fair or not. First, OMB had little support within the Trump administration to expedite the improvements, partly because it was a Democrat priority, and partly because it came toward the end of the administration and people and focus went elsewhere, especially as the pandemic went into full swing. The Trump administration did release updated web design standards in January 2020 as part of its IDEA Act efforts.

IDEA Act delays for a host of reasons

When the Biden administration took over OMB, the pandemic remained the focus and then there was a series of cyber incidents that took a lot of time away from the IDEA Act. Biden’s executive order on customer experience, signed in December 2021, does build on the IDEA Act themes, specifically by repeatedly tasking agencies with digitizing forms, as well as improving their websites and expanding the services they offer online.

On top of all of this, Congress interest was tepid at best. Rep. Gerry Connolly (D-Va.) had talked about adding the IDEA Act to the Federal IT Acquisition Reform Act (FITARA) scorecard.

But the December 2022 version didn’t add it, and there hasn’t been a 16th FITARA scorecard yet this year with the Republicans taking control over the Oversight and Reform Committee.

In the meantime, lawmakers led by Connolly and Reps. Carolyn Maloney and Khanna, wrote one letter in May 2021, but didn’t hold a single hearing to hold agencies accountable in four-plus years.

But now it’s time to get the IDEA Act moving. To do that, Martorana and the Technology Modernization Fund Board are trying something new by encouraging agencies to submit funding proposals and use a new template.

“In collaboration with the TMF program management Office at the General Services Administration, we have developed a new streamlined process that includes pre-filled project plans to make it easier for agencies to submit initial project proposals. We are piloting the new process with two templates related to the 21st Century IDEA focused on the following: Improving web accessibility, and digitizing public-facing forms,” Martorana said in an email to the CIO Council, obtained by Federal News Network.

Martorana added in the email that the CIOs should share the TMF funding opportunity with agency digital services and customer experience teams.

On its website, the TMF board said the initial funding opportunity is open through Sept. 22, but it will continue to accept proposals based on funding availability.

So the time is now for agencies to put together their proposals to obtain some of the $400 million or so that’s left in the TMF.

OMB didn’t mention how much money the TMF board was specifically allocating for IDEA Act projects unlike they did for customer experience proposals last summer.

GSA’s timetable shifts

Meanwhile over at GSA, the time for EIS transition went from May 2023 to May 2024 to now, for eight agencies, May 2026.

After approving two extra years for the transition to the new telecommunications contract for the departments of Justice and Homeland Security in December, GSA approved extensions for six more agencies.

A GSA spokesperson confirmed it granted more time to the departments of Transportation, Commerce and Agriculture, as well as the Federal Energy Regulatory Commission, the Government Accountability Office (Oh, the irony) and the U.S. Courts.

“These agencies have entered into memoranda of understanding with GSA that they will be authorized to use the expiring telecommunications contracts up to May 31, 2026, once those contracts are extended to that date. GSA is currently working with the contractors to extend each contract,” the GSA spokesperson said in an email to Federal News Network.

In October, GSA approved a year extension for 82 other agencies finalize their move off of Networx.

Laura Stanton, GSA’s assistant commissioner for the IT category in the Federal Acquisition Service, wrote in an Aug. 10 blog post that this extension is limited to just the eight agencies. She said GSA will update the terms and conditions of the Networks Authorized User List (NAUL), and will remove those agencies which are no longer authorized to use the contracts and will order contractors to disconnect services to such agencies.

“Unless an agency is working with GSA to use the extended CoS to May 31, 2026, the NAUL will be updated to remove the agency and its services will be disconnected on or before May 31, 2024. Agencies should continue to work aggressively with their contractors to transition prior to May 31, 2024. If an agency requires days, weeks or months beyond May 2024, it should contact their solutions broker on the GSA team to explore options,” she wrote.

Source: GSA EIS transition report from Aug. 2, 2023.

Between now and 2024, Jake Marcellus, who became the executive director for Enterprise Technology Solutions (ETS) in FAS in February, will continue to improve the customer agency EIS transition experience and outcomes.

“His team developed a system to use disconnect data to identify the most significant transition risks and make the appropriate executive engagements with agencies,” Stanton wrote. “They’re engaging agencies, assisting with problem identification, consulting on technical solutions and facilitating requests for 2026 extensions. In addition to meeting with agency CIOs staff, Jake is also meeting with executives of our EIS contractors.”

EIS and the 21st Century IDEA Act, two important initiatives whose time has come and, in some ways gone, and now are caught in the time warp of federal IT where deadlines are fungible and progress is measured in years.

To keep with the theme of the day, I’ll end with the chorus from hard-rock group Anthrax’s Time to sum up when it comes to federal IT initiatives:

My mind keeps thinking
Clockwise as the seconds tick away
I make my move today
Time and life, life and time
To have and hold
And sometimes find
It isn’t mine, it isn’t yours
Man to man, I’ll fight you for
Time and life, life and time
One day I’ll get what’s mine
Through the persistence of time

Blame the lawyers if your agency is paying 10%-to-25% more for certain cloud services

A 200 year-old law created to protect the government from paying for goods and services they may never receive is the latest obstacle agencies in how they buy cloud computing services.

GSA lawyers are interpreting the Advance Payment Statute, which originated in 1823, in a way that is causing agencies to pay 10% to 20% premium for software-as-a-service subscriptions.

Value-added resellers and other industry experts say this interpretation of the law is causing major headaches for agencies and providers alike.

“The government is arbitrarily categorizing subscription licenses delivered through cloud as a service when in practicality it is not a service. It’s a known quantity and it rarely deviates from that known quantity,” said Tony Colangelo, founder and CEO of Minburn Technology Group, a value added reseller. “Microsoft O365 is perfect example. It’s a subscription that is sold on a per user, per year basis. So if you have 500 users, some will use the product more than others, but all 500 will need to use the product throughout the annual subscription term to accomplish agency business. This is a non-partisan conversation and simplicity should prevail in saving taxpayers’ money. We are not trying to charge the government more, but to align commercial practices to the way the government is buying cloud services. This also is impacting small businesses as they have to finance money to pay for the contracts.”

The primary purpose of the Advance Payment Statute is to protect the government against the risk of contractor nonperformance, namely “to preclude the possibility of loss to the government in the event a contractor — after receipt of payment — should fail to perform his contract or refuse or fail to refund moneys advanced,” according to a position paper on this topic produced by Minburn Technology.

Experts say because software-as-a-service is labeled a “service,” GSA lawyers determined agencies buying from the GSA schedule, and possibly other GSA run acquisition vehicles, providers are to be paid in the arrears — like the electricity or water bill at your house when you are paying for something that you’ve already received.

Industry experts say paying in arrears is fine for consumption based cloud services like platform or infrastructure-as-a-service, but in the case for SaaS, it’s more like a magazine subscription where you know you will get 52 issues and you pay for all 52 issues up front.

Two reasons for SaaS concerns

Companies and other acquisition experts say GSA’s lawyers are conflating the term services and what cloud services or software-as-a-service really entails versus the delivery of say food or even paper and pens.

The issue, and GSA’s interpretation, isn’t necessarily a new problem. But it’s come to ahead because of two recent issues. First, the struggles of the high-profile Defense Department’s Defense Enterprise Office Solutions (DEOS) vehicle came to light only recently. The fact that military services and defense agencies are using the Navy’s enterprise software initiative contract instead of DEOS due to as much as a 20% markup of the price for the same Microsoft Office 365 license was surprising to many in the federal community.

The second issue that brought the Advance Payment Statue and SaaS problem to the forefront is inflation.

Colangelo said the cost to borrow money has gone up requiring companies like his to borrow money to pay for the annual license and wait to get paid back monthly by the government.

“It’s a large amount of money that you have to finance, and the harder it is to get the financing, the harder it is to support these orders,” he said. “Whether I have to support a $100,000 or a $50 million task order that we received through say, DEOS, I have to finance that and I know that I signed up for that. But as a taxpayer, I’m frustrated the government is paying 10%-to-12% more than they need to and when talking about a $50 million task order, that adds up. That is $5 million or more.”

Minburn had two orders where it offered the agency customer seven-figure discounts to get the payment up front, but the department couldn’t accept the discount because of this interpretation of the law.

“The government is paying for a payment structure that it doesn’t want or need,” Colangelo said.

GSA’s tail is wagging the dog?

Other value-added reseller companies are in similar situations as Minburn, having to front the funding because commercial companies do not sell SaaS this way where the customer is paying in the arrears anywhere else in the world.

One industry executive have requested anonymity because they didn’t ask permission to talk to the press, said it’s a case of the tail wagging the dog.

“Government policy and law needs to be able to keep up with how industry is changing. We are on the front end of that as the true cloud consumption model is just starting to take off. That is why the government is struggling. It takes a long time to turn a big ship around,” said the industry executive. “But by the same token, the catalyst of how much money you could save if you just change government policy and change the laws is fairly strong.”

GSA officials knew this interpretation of the Advance Payment Statute contradicted industry best practices. But former officials say attempt to make change went nowhere over the years.

To GSA’s credit, current officials recognize something needs to change as agency buying of cloud services, particularly off the schedule, closes in on $1 billion. In 2022, GSA says agencies spent about $993 million through the schedules cloud special item number. GSA says 662 contractors current sell cloud services through the schedules, and SaaS is overwhelmingly the most popular cloud service under the Federal Risk Authorization Management Program (FedRAMP) with 380 out of 422 approvals.

GSA issued a request for information on July 31 asking for industry feedback on SaaS pricing best practices and what are its options better align the schedules with industry practices for pricing and invoicing term-based software.

A GSA spokesperson said, “the RFI is designed to gather information to understand differences between federal and commercial practices, including what discounts vendors may offer if payment in advance were permitted.”

Once GSA analyzes the feedback to the RFI, which is due Aug. 23, it will determine its next steps, the spokesperson said.

Previous attempts to improve cloud buying

Colangelo said GSA implemented a re-write of the cloud SIN payment terms in July 2022, under solicitation refresh No. 13, which let cloud computing service pricing set increments beyond one month, so as to better align with commercial billing practices.

“We thought this revision to the cloud SIN billing terms was supposed to fix the advance payment issue, but it hasn’t been interpreted that way,” he said. “It’s hard to understand what the purpose was for this change to the billing term for cloud services, if not to fix the advance payment issue.”

GSA also issued a new cloud buying policy in December 2021 to promote the ability to buy cloud services on a consumption basis. But this approach helped more with infrastructure — and platform-as-a-service, than SaaS.

A former senior acquisition official in government with industry experience, who requested anonymity because they still do business with GSA, said changing the policy would be beneficial to GSA as much as industry. The former official said GSA and the Defense Department, for example, are not aligned with their interpretation and that is causing problems across the government.

“We are always trying to show ways where the government can show consistency in procurement and this is prime example of where government can and should do that,” the former official said. “GSA easily could make paying up front for cloud services an option within a blanket purchase agreement. So if an agency customer has the authority pay up front, they could have one price, but if they have to pay in the arrears, here’s your other price. GSA could do that if they didn’t want to address this policy head on.”

Larry Allen, president of Allen Federal Business Partners, worked with Senate lawmakers to try to add a technical clarification to the defense authorization bill to help solve this issue to allow for SaaS subscriptions to be paid up front.

Allen said while there was some support on Capitol Hill, it’s unlikely the provision will make it across the finish line.

This leaves industry and agencies waiting until GSA goes through the RFI process, which can take months. Meanwhile, the cost to buy SaaS, an ever growing segment of the federal IT sector, is hung up around inconsistent interpretation of a 200-year-old law. The result is costing some agencies millions of dollars more than they need to spend.

GSA acquisition leadership, its lawyers, the smart folks at the Office of Federal Procurement Policy and the Defense Department should get together to find a pragmatic approach to applying the Advanced Payment Statute to cloud services, a law which was never intended to be applied to cloud or any modern technologies.

GSA’s commercial platforms gaining steam, but data, other concerns persist

Three years into the Commercial Platforms Initiative, the vision Congress had for the initiative isn’t necessarily coming to fruition. But new data and analysis shows that doesn’t mean it’s a failure by any means.

The number of agencies using the platform more than quadrupled between 2020 and 2022 to 27 and the spending, while far below initial estimates of $6 billion have increased to $40 million last fiscal year.

And beyond the raw numbers, agencies told the Government Accountability Office in a new report that it is saving them time, money and giving them better data about their purchase card spending — all of which were major reasons why Congress created the program in the fiscal 2018 Defense Authorization Act.

“What we are seeing is a rapid increase in the platforms’ use and it’s an interesting experiment,” said Chris Yukins, a professor at the George Washington Law School and a federal acquisition expert. “In the 1990s, the use of the schedule contracts exploded largely because General Services Administration senior executives were pushing hard for line purchasing officials to understand and appreciate the schedules program. It was a successful marketing effort. It was completely appropriate and fine, but it took time for government purchasers to get comfortable. I think the same thing is happening with commercial platforms and we are seeing them get more comfortable with them.”

Where the vision of the CPI is falling well short is lawmakers wanted GSA to develop the platform to make it easier for Defense Department purchasers to find commercial items.

The top agencies using the commercial platforms are the departments of Veterans Affairs and Agriculture.

Yukins said the fact DoD users haven’t found or are not attracted to the platform is surprising.

“We interact with DoD personnel including contracting officers and about one-third to one-half are mid-career contracting officers from DoD. We talk about the commercial platforms initiative in our classes, and what has emerged is DoD is insisting users must be trained and followed rules like Section 508 and Accessibility. That is creating a steep learning curve for those who want to buy from commercial platforms at DoD,” he said. “For those individuals who are required to undertake training, it can be 5 or 6 tutorials before they are allowed to use it. That is a steep mountain to climb for many.”

Another piece of the NDAA vision that isn’t coming together is the goal to create several platforms that agencies could take advantage of. Initially, vendors and others were calling Section 846 the “Amazon amendment” as experts believed the CPI would benefit the online retail giant the most.

That has become the reality as Amazon has accounted for an increasingly larger amount of sales each year with 92% in 2020, 94% in 2021 and 96% in 2022.

The other two platform providers, Fisher Scientific and Overstock Government have struggled to gain a bigger foothold.

Part of the reason seems to be what agencies are buying.

“The average order size was approximately $270 per order for fiscal years 2021 and 2022 combined. Agencies spent more on the IT broadcasting and telecommunications category —including computer displays, phone headsets, and computer docking stations — than any other product category in the program,” GAO reported. “Agencies’ purchases in this category were almost three times larger than the next highest category. Agencies also purchased office supplies, furniture and domestic appliances through the program.”

Yukins said it’s not surprising to see that Amazon is the most popular of the platforms given there is little to no learning curve to use it. He said the only real barriers are training and the acceptance of this approach to buying in the first place.

Another long running concern about the commercial platforms was GSA’s ability to collect, understand and share data with agencies.

GAO found mixed results.

On data visibility, GAO says, “Officials from seven agencies said that the program provides increased data and enhanced visibility into purchases made by agency cardholders. For example, officials from two selected agencies stated that the program has provided visibility that they did not have before into what individual cardholders were purchasing.”

But data on sales to small businesses and the use of the AbilityOne program was inconsistent.

The challenges around AbilityOne continue to be a matter of contention. The National Industries for the Blind filed a lawsuit against GSA in February after the agency’s solicitation to expand CPI missed the mark for addressing mandatory requirements for certain products.

Concerns about meeting AbilityOne remain

Kevin Lynch, the CEO of NIB, told Federal News Network in an email that his organization dropped the lawsuit in May after GSA reconsidered its approach to AbilityOne program compliance.

“Ultimately, GSA acknowledged it could do more to ensure that CPI purchases meet AbilityOne requirements and amended the solicitation to strengthen language on compliance. Nonetheless, the report GAO issued concludes GSA could still improve its efforts to help federal agencies increase their use of AbilityOne on the commercial platforms,” he said. “We can’t help but feel vindicated by GAO’s conclusion. Acknowledging that GSA’s actions are ‘steps in the right direction,’ GAO said that, as the implementing agency for the CPI, GSA has the opportunity to provide guidance to federal agencies to increase awareness of, and improve future spend on AbilityOne products.”

GSA re-released its solicitation in May to expand the number of platforms after Congress mandated it in the 2022 NDAA.

As part of the new RFP, GSA is trying to address NIB’s concerns by requiring companies who are submitting offers to have a demonstrated “block and sub” system to ensure that mandatory source AbilityOne items are bought when they should be.

An industry source said GSA likely will ask the vendors bidding to demonstrate the block and sub systems during the live test demonstration of the evaluation process.

“Each company will be scored on how well their system meets the requirements. This will be one evaluation factor for a new award,” the source, who requested anonymity, said. “I do not believe that GSA has yet scheduled the live test demonstrations, but I suspect that this is the next step in the acquisition process.”

GSA says it extended the current three CPI contracts an extra six months through December 2023. They were set to expire in June.

GAO makes two recommendations

GAO stated in its first solicitation for the platform provider contracts, GSA sought platforms that could either mark AbilityOne products as preferred or hide “essentially the same” products, a subset of products that the AbilityOne Commission has identified as essentially the same as AbilityOne products.

GAO says Fisher Scientific and Overstock hide essentially the same products while Amazon marks AbilityOne products as preferred.

“Even with these features, officials from two selected agencies stated that the program’s ability to help them meet AbilityOne mandatory sourcing requirements is a work in progress. For example, an official from one selected agency noted that the search filters on the Amazon platform were not working as expected. The officials from this agency told us that the hierarchy of search filters failed to prioritize products that are mandatory sources (e.g., AbilityOne) above other priorities or preferences, such as products sold by small businesses. Rather, the search filters are all prioritized at the same level,” GAO stated. “During the time of our interviews, Amazon representatives and GSA officials told us they were aware of this concern and are working to resolve the issue. In addition, Amazon representatives told us that they established an AbilityOne online storefront in an effort to increase the availability and visibility of AbilityOne products and increase the number of AbilityOne products sold.”

GSA officials told GAO they have taken steps to educate agency buyers and promote AbilityOne items, such as creating a desk guide that reminds buyers of how to identify AbilityOne items on the platforms and demonstrating how to use search filters in monthly trainings.

“[W]e found that there are opportunities for GSA to help participating agencies improve the process to buy AbilityOne products. Similarly, the program has the potential to help agencies purchase from small businesses; however, it currently does not facilitate participating agencies’ ability to report purchases from small businesses,” GAO stated.

One of GAO’s two recommendations focused on GSA developing a plan to formalize its manufacturer part number efforts intended to help ensure AbilityOne products are procured in lieu of their essentially the same counterparts.

NIB’s Lynch said he hopes GSA takes more aggressive steps to enforce AbilityOne compliance.

“That plan could provide details on how GSA will compare manufacturer part numbers to the list of essentially the same (ETS) products and outline actions that will be taken when GSA identifies that an ETS product has been purchased — including how GSA plans to share this information with agencies,” he said. “We continue to believe that the best way to ensure compliance is to prevent the sale of commercial items that are essentially the same as AbilityOne items to federal customers.”

GAO’s second recommendation focused on small business data. GAO says GSA and the Small Business Administration should develop a better process for agency customers to get credit for small business purchases.

“GSA officials acknowledged that given the potentially large number of agency purchases from individual small businesses with relatively small dollar value, the process is resource intensive, which likely discourages agencies from taking the additional steps required to collect small business contracting credit on applicable purchases,” GAO stated. “In addition, as GSA officials explained previously, businesses would have no reason to register with SAM and certify as small businesses if they do not intend to contract with the federal government.”

Yukins added the fact small business sales can’t be tracked more accurately, suggests platform providers are not delivering line item sales data to the government.

“All of the commercial platform providers are slow to change their models to accommodate government requirements for things like socio economic category tracking,” he said. “What we see here is the intersection of private business practices and government socio economic requirements. Over time as private contractors leverage their negotiations, they could resist accommodating all of the government’s requirements and we may be seeing that play out.”

DoJ’s two big False Claims Act settlements a sign of things to come?

A huge fine for a big name government contractor.

A flood of interest for the next great governmentwide acquisition contract.

And despite all the challenges with the federal procurement market, there is a lot of optimism about where agencies and contractors are heading.

Welcome to another edition of As the [Procurement] World Turns.

The Biden administration use of the False Claims Act to prosecute contractors was tepid to say the least. The Justice Department brought in $2.2 billion in fiscal 2022 around settlements and judgements. That is down from $5.6 billion in 2021, $2.2 billion in 2020 and more than $3 billion in 2019.

The majority of those 2022 cases were in the healthcare sector, accounting for $1.7 billion in all. Federal acquisition judgements and settlements barely registered in DoJ’s annual release about their successes.

That all seems to be changing in 2023, however.

In the last few weeks, two cases may just be a sign of things to come.

Booz Allen Hamilton settled acquisition fraud allegations to the tune of paying $377.4 million. This is one of the largest settlements related to federal procurement in the last 20 years. It’s among the largest ever win for a Qui Tam or whistleblower case as well. The former Booz Allen Hamilton employee is expected to receive more than $69 million for bringing the case to light.

You can read the entire Justice press release, but the crux of the allegations against Booz Allen stem from the company allegedly improperly charging costs to its government contracts and subcontracts, and getting reimbursed for those charges that instead should have been billed to its commercial and international contracts from 2011 to 2021.

As one person said to me, if Booz Allen agreed to settle for $377.4 million, imagine how much money was actually improperly charged back to the government over that decade? Makes you wonder a bit…

In a press release, Booz Allen stated, it “has always believed it acted lawfully and responsibly. It decided to settle this civil inquiry for pragmatic business reasons to avoid the delay, uncertainty, and expense of protracted litigation. The company did not want to engage in what likely would have been a years-long court fight with its largest client, the U.S. government, on an immensely complex matter. This settlement ends the DOJ’s civil investigation more than six years after it began. DOJ closed its parallel criminal investigation more than two years ago, taking no action.”

The other False Claims Act from earlier this month was much smaller in terms of a settlement, but nonetheless still interesting.

Justice won a $7 million settlement from Foresee Results, Inc. and Verint Americas, Inc. (collectively, Foresee) to resolve allegations that the company violated the False Claims Act by falsely representing that they used the methodology of the American Customer Satisfaction Index (ACSI) to measure customer satisfaction.

This case stems from a 2011 contract from the Federal Consulting Group (FCG), which is part of the Department of the Interior, for website assessment and improvement services, through which Foresee agreed to measure the public’s satisfaction with certain government websites and make recommendations regarding how to improve satisfaction.

“The settlement announced resolves the government’s allegations that Foresee did not use the ACSI methodology, but instead used a different methodology to measure the public’s satisfaction with certain government websites,” Justice stated in its release.

Eric Crusius, a partner with Holland and Knight and a procurement attorney, said what the federal acquisition community maybe seeing now is DoJ ramping up to implement the Biden administration’s priorities with oversight and accountability.

“With this administration, anecdotally, it appears DoJ has been more active recently in the False Claims Act arena; particularly when looking at the Civil Cyber Fraud initiative that was announced in late 2021 and the Procurement Collusion Strike Force. I expect we will continue to see increased activity in these areas, in particular,” he said.

Flood of OASIS+ questions

Speaking of ramping up, industry’s excitement, or better yet attraction, to the General Services Administration’s OASIS+ multiple award program may not have hit the apex yet, but is rushing up the hill.

Contractors submitted more than 4,500 questions about the six solicitations GSA released in June for this professional services governmentwide contract.

GSA says it plans to release its responses in batches in the coming weeks, and will notify industry via and this OASIS+ Interact Community forum.

Bids on OASIS+ are due by Sept. 13, but anyone who has watched these mega-contracts over the last two decades knows, deadlines tend to slip to the right several times, particularly with the amount of interest OASIS+ is garnering.

Now on top of the OASIS+ bid, GSA said today it plans to issue an amendment to Polaris GWAC Small Business Pool offerors in August 2023.

“The amendment will incorporate submission of a price proposal, as well as adjustment to the evaluation requirements specific to protégé firms. Solicitation amendments for the WOSB, HUBZone, and SDVOSB Pools are planned for September 2023.”

Both of these will keep companies, bid and capture experts and GSA contracting officials busy into the new year.

Survey says: Acquisition workers optimistic

Within all of these challenges and opportunities, contracting officers and other acquisition leaders are generally optimistic about where the market is heading.

A recent survey by the Professional Services Council of officials from 13 agencies found, generally speaking, acquisition processes have been functioning well, and there is continued confidence in federal acquisition efforts.

”PSC’s 2023 Acquisition Policy Survey indicates government acquisitions are in a stable condition, though ambiguity at programmatic and policy levels creates an opportunity for federal leadership action at many different decision points,” PSC wrote in the survey summary. “Decision points exist on how best to apply the composing parts of impact areas for mission execution and to determine if some of these composing parts even work at all.”

Survey respondents highlighted several positive outcomes, including the benefits of multi-agency contracts like the GSA schedules or NASA SEWP.

“Sixty-one percent of respondents believed multi-agency contract vehicles — ranked most beneficial to acquisition outcomes and key to the Category Management framework — grow the available vendor base,” the survey stated. “Worth noting: 39% believed that those contracts shrink the base, enough to indicate that while these vehicles are beneficial to acquisition outcomes, those beneficial outcomes may not necessarily result from vendor base growth.”

Source: Professional Services Council biennial acquisition policy survey.

Many respondents say longer-term contracts help improve communication of expectations with contractors and create more stable partnerships. These vehicles also reduce the stress or impact on understaffed procurement shops.

Workforce remains a major challenge with the workforce facing an attrition rate of 25% over two years, the median age of 46 and 23% of staff already retirement eligible.

“Our survey and interviews demonstrated surprising results — that while the government still has difficulty attracting a new generation of workers, employees leave mostly to other agencies and components, instead of to retirement, resignation or private industry,” PSC stated. “Respondents said government hires need to be promoted quickly. Promotion takes training, and acquisition training takes time. Sometimes, ‘we turn to contractors for trained professionalism — especially for knowledge of legacy systems. This is reaching a crisis level.’ Respondents said their employees need more skills to reach the right experience, right fit. Respondents most often stated they are weakest on training in program management.”

Source: Professional Services Council biennial acquisition policy survey.

Optimism in how agencies communicate and collaborate with contractors is another sign of optimism.

PSC says 67% of respondents believe communication with industry has improved over the last 2-3 years and 70% say it will continue to get better over the next few years.

Respondents said issuing requests for information, holding one-on-one meetings and reverse industry days are among the most effective ways to communicate with industry.

Is GSA’s Alliant 3 vehicle tilted too much to small, very large contractors?

Let me riddle you this: When it comes to government contracting, if you are not a small business, what are you?

The answer, of course, is “other than small.”

Not much of a riddle, except if you are a “medium-sized” business in the $34.1 million to $250 million revenue range (feel free to argue for that end range to be closer to $500 million) over the last year, specifically under NAICS Code 541512 — computer systems design services.

Then the riddle clearly is how to compete in a market that favors small and very large firms.

This decades-long challenge is coming to a head with the General Services Administration’s Alliant 3 multiple award contract, currently in the planning phase.

There are growing concerns that based on GSA’s draft request for proposals, these “medium-sized” firms will be locked out of the vehicle, further impacting the industrial base and forcing these firms to sell to the large companies, figure out a way to drop back into the small business size standard, meaning potentially laying off employees, or leaving the federal market altogether. There is no official federal definition for medium-sized businesses. As many of you know, a company is either small or not small. There is nothing in-between.

“There’s a lot of a lot of these indefinite delivery, indefinite quantity (IDIQ) self scoring contracts that are out there that that favor the small business category or the very large businesses. If you are not an Alliant prime in one of the categories, you basically are excluded from a lot of the market, including your existing customers that are moving to best-in-class vehicles,” said Doug Sickler, the chief growth officer for Pyramid Systems, an IT services company with approximately 200 employees, in an interview with Federal News Network. “We did research and wanted to have a fact-based discussion, really regarding some of the key requirements [of Alliant 3] that would exclude companies like ours and others. In our situation, scoring well enough to be one of the 60 companies to receive this contract vehicle will be difficult with things like the past performance, the size of the past performance, which is really incongruent with the average size of the average Alliant task order and having an approved accounting system, which require not only that you have the accounting system but also that you have the contracts that require the audit because you can’t just request an audit out of the blue and have that done from the Defense Contract Audit Agency.”

RFP coming next spring

If you aren’t familiar with Alliant 3, it is the next great battleground for federal contractors. It portends to be one of the most sought-after governmentwide multiple award contracts of 2024.

GSA wrote on its Interact site that it expects to release the final RFP in spring 2024 after issuing a second draft RFP before the end of calendar year 2023.

“We had hoped to issue the RFP in 2023 after a single draft RFP, but as a result of feedback from the first draft, the one-on-one listening sessions, and other factors, changes were made to the solicitation that warrant the release of a full second draft RFP slated for before the end of the calendar year and a subsequent solicitation planned for spring 2024,” said Laura Stanton, the assistant commissioner for the Office of Information Technology Category in GSA’s Federal Acquisition Service, in an email to Federal News Network. “We will be holding a pre-proposal conference and taking other steps to ensure that all companies have equal access to information.”

Pyramid Systems joined with several “medium-sized” businesses to outline the potential challenges with Alliant 3 and develop recommendations for how GSA could improve the final RFP.

Sickler said part of the goal of the medium-sized group white paper is to shine a light on the current state of Alliant 2 and how GSA’s draft requirements do not seem to take them into account. There’s also the need to continue to push back against the “we need the best-of-the-best” type of thinking by agency acquisition leaders and contracting officers.

“That’s our whole argument is that they’re not getting us to the best when they compete these GWACs this way. What they’re getting is the biggest of them. They’re measuring volume, they’re measuring quantity and size. They’re not measuring quality, agility, innovativeness and those things that are more subjective, which are harder to draw concrete lines in the sand,” he said. “The default becomes just pure statistics of dollars, of employees and of size. It’s not necessarily an indication of the best of the best. If you really want the best of the best, then make sure those folks are available to bid on the task orders.”

Source: GSA D2D portal for July 13, 2023.

The group is suggesting several things GSA could do to improve Alliant 3 to address what they see as a playing field tilted to small or very large businesses.

First, the coalition is encouraging GSA to expand the number of awardees from the initial plan of just 60.

“As witnessed during the life span of the Alliant 2 contract, significant (roughly 30%) market consolidation took place due to mergers and acquisitions. Without significant policy changes, the federal government should anticipate the market consolidation trend to continue and address this for Alliant 3. One practical solution would be to create a mandatory, annual on-ramp for new participants, with a goal of adding twenty percent (20%) of new awards over the life of the GWAC,” the white papers stated. “Currently, there is also no plan to allow for an on-ramp to Alliant 3, and there is currently no on-ramp to Alliant 2. Over the 10-year period of performance, this inhibits the government’s flexibility to source additional providers. This could include companies who grew from small to large during that period as well as commercial providers who decided to bring their innovative solutions to the federal sector.”

Kevin Cooley, the CEO of Resource Management Concepts, which also is an IT services company and has about 350 employees, said agencies too often limit the number of awardees because of inaccurate concerns of having too many bids per task orders.

He pointed to how Alliant 2, with initially 61 awardees — now down to 41 because of the aforementioned M&A — averaged only 2.5 bids per task order. GSA’s schedule contracts with tens of thousands of vendors has seen similar numbers over the years.

“GSA probably needs to double the pool size on Alliant 3. They will not end up with 10 bids per task order. That’s not going to happen,” he said. “By doubling the number of awards on this to probably about 120, they get more medium-sized companies in there and it actually wouldn’t corrupt the GSA business model. They really can’t afford to have 2,000 contracts to manage because it drives their cost. But 200 would still be small enough to keep their costs manageable.”

Source: GSA D2D portal for July 13, 2023.

A second suggestion is to change the past performance criteria for other-than-small businesses. The coalition says the current draft requirements do not give medium-sized businesses a chance to compete.

“As currently designed, a successful bidder on Alliant 3 will need a nearly perfect score. There are 10,500 points available if the bidder provides seven past performance examples, each with a $275 million contract value. This requirement effectively limits competition to only very large businesses,” the white paper stated. “[O]f the 517 task orders under Alliant 2, the average contract size is $84.38 million and 80%+ of the task orders are less than $85 million. Another example of the 517 task orders on Alliant 2, only 14% of the task orders are cost-based, yet the requirements for Alliant 3 include an accounting system approved by the Defense Contract Audit Agency (DCAA). Contractors cannot request this audit; it can only be received if the government asks DCAA to audit your system on their behalf.”

Cooley said most of Resource Management Concepts’ work is with the Navy and maybe 1% or 2% of all task orders the Navy puts out are above $200 million, meaning GSA set the past performance bar way too high.

“When you think about winning a spot on Alliant 3, you basically have to max your points, so getting points for all seven of those past performance examples,” he said. “They’re pretty darn rare in the big picture. So the idea that the mid-sized companies are going to go out and clean up six or seven of those, it’s ludicrous. It’s just not going to happen.”

The coalition recommends GSA set the minimum scoring line to 78% of total points and include an on-ramp for companies to earn their way on Alliant 3 in the future.

Additionally, the companies suggest creating pools of awardees based on revenue size:

  • Under $50 million;
  • $50 million-to-$150 million;
  • $150 million-to-$250 million; and
  • Over $250 million

Stanton said GSA has been heeding the feedback in the RFI and draft RFPs so far.

While she couldn’t offer too many specifics on the changes to Alliant 3 that are coming, she said they will publish the list of questions, answers and comments received on Alliant 3, and that they expect the changes GSA is making will be welcomed by businesses of various sizes.

“I’ll give you a couple of tangible examples that came out of the listening sessions. One company suggested that we add a technology area to the RFP in climate/environmental technology. We think this is a great suggestion and would distinguish Alliant 3 as the only one that offered something like this. We intend to act on this and to add a technology area to the RFP,” Stanton said. “Many medium-sized companies expressed a concern over the cost of completing a proposal. A number of companies wanted to get a feel for how many points are needed to get on the contract as they consider whether to put forward a proposal to prime, or seek a teaming relationship with a larger prime. To address this, we plan to issue some data in the RFI responses that will help to inform industry of the total available points for Alliant 2, and the lowest number of points earned that resulted in an award. While not an exact reflection of Alliant 3, it should give industry a good idea of the investment needed to get an award.”

It’s clear there are some real concerns about GSA’s current approach to Alliant 3. While everyone recognizes the final acquisition strategy is not set in stone, the signals are clear. It would behoove GSA to increase the number of awardees and relook at the past performance requirements as both seem to predestine Alliant 3 to protest purgatory.

Busy federal fourth quarter to bleed into just as crazy first quarter of 2024

The fourth quarter federal buying season officially kicked off on Saturday.

And it’s expected to be as busy as ever. Bloomberg Government estimates agencies will spend about $217 billion between now and Sept. 30. That’s about 31% of the total acquisition spending for fiscal 2023.

Of that, BGov expects agencies to use existing multiple award type contracts, whether they’re governmentwide acquisition contracts like NASA SEWP or the CIO-SP3 vehicles from the National Institutes of Health IT Acquisition and Assessment Center or through the schedules program from the General Services Administration, for about 60% of all spending.

David Berteau, the president of the Professional Services Council, an industry association, said because agencies received 2023 appropriations earlier than in previous years, the fourth quarter may not be record breaking.

“I do think it will be a busy fourth quarter,” Berteau said in an interview. “Non- DoD agencies did better in obligating money in the second quarter and I expect they will do better in the third quarter, which should take the pressure off in the fourth quarter.”

But, Berteau added, it’s not unusual for agencies to have to spend more than 30% of their annual appropriations in the fourth quarter.

“The pressure of fourth quarter spending is different for each agency because of when their money expires. Some have one-year money and some have two-year money and others have no-year money, so that also plays into the decisions,” he said.

At the same time, agencies need to get their orders in quickly for some of the GWACs.

NITAAC’s assisted acquisition services set a deadline of Aug. 1 for agencies to get orders in, otherwise they will not be fulfilled by Sept. 30.

“It takes time to get an acquisition from inception to contract award so we don’t want to have problems there at the end of the year, and you still have a contract that’s not been awarded,” said Ricky Clark, the deputy director at NITAAC during the recent Centre Law and Consulting Annual Review. “For us, that deadline is mandatory for us to process as needed.”

GSA’s Assisted Acquisition Services has issued a similar deadline in the past as well. It’s unclear what their drop dead order deadline is this year.

Other GWACS, like NASA SEWP, can take orders up to Sept. 30 at midnight.

The point being contractors and agencies alike should expect a busy next three months.

While contractors will watch the laundry list of assorted multiple award contracts they’re on via, assuming it’s working and not down for technical problems like we’ve seen a bit too often recently (and have you heard me complain lately about the lack of transparency of these MACs and GWACs? If not, now you have), the other big acquisition story is NITAAC’s CIO-SP4.

If you missed the news last week, shame on you. The Government Accountability Office upheld 98 protests of the phase 1 evaluation. It’s unclear what that means, except the $50 billion GWAC continues to face major challenges to get to final award.

There probably are dozens of other major contracts industry is closely watching for awards in the fourth quarter as well, including the State Department’s $8 billion EVOLVE multiple award contract, the Homeland Security Department’s FirstSource III small business contract and the Army’s $7.9 billion Common Hardware System-6 (CHS-6) vehicle.

At the same time, agencies are preparing a boat load of solicitations for early 2024. Here are a few of the ones many companies are following, though it is not intended to be a complete list by any means:

OASIS, Alliant, oh my!

If you are a professional services firm and haven’t been living under a rock for the past year, you probably know the General Services Administration released all six solicitations for the OASIS+ multiple award contract. For the rest of you, OASIS+ is the follow-on contract to the highly success OASIS multiple award contract. Since 2015, agencies have obligated almost $64 billion across OASIS, OASIS small business and OASIS 8(a).

What you need to know: Five small business pools and one unrestricted. Due date for proposals is Sept. 13 — it’s a good bet that date will be extended a few times before proposals are actually really, truly due. Questions about the solicitation are due by July 6. This 10-year contract has no ceiling. GSA made 12 significant changes to the request for proposals from the March 2023 draft solicitation.

Background: My interview from April with Tiffany Hixson, the assistant commissioner for the Office of Professional Services and Human Capital Categories in the GSA’s Federal Acquisition Service. She goes into good detail about the OASIS+ acquisition strategy and how they are trying their best to stay out of protest purgatory.

The Alliant 3 solicitation is still a ways away. GSA wrote on its Interact site that it expects to release the final RFP in spring 2024 after issuing a second draft RFP before the end of calendar year 2023.

What you need to know: Alliant 3 is the follow-on to the highly popular Alliant 2 contract. GSA is knee-deep in acquisition strategy and planning mode, having issued a draft RFP in last October. GSA wrote June 28 that “as a result of the feedback we received from the first draft RFP, one-on-one listening sessions and other factors, changes were made to the solicitation that warrant the release of a full second draft RFP…”

Background: Alliant 2 continues to be among the most successful GWACs ever. GSA dropped the other shoe in June extending the order date under the vehicle by five years to 2028. This comes after it increased the ceiling of Alliant 2 to $75 billion last August. Since 2018, agencies have obligated almost $19 billion through Alliant 2.

Small business contractors also will be waiting a bit longer for the final set of RFPs under the Polaris GWAC.

What you need to know: An April Court of Federal Claims decision threw GSA’s plan for Polaris into turmoil. GSA now says it’s still figuring out how to respond to the court’s decision and will eventually issue an amendment to Polaris. It offered no timeline nor insight into what that amendment would include or address beyond what the court recommended.

Background: Polaris was supposed to be the small business vehicle that made up for the missteps with Alliant Small Business GWAC that fell apart in 2020. Now despite Polaris delays and not having Alliant SB in place, GSA’s other small business GWACs have filled the void. 8(a) STARS III has received over $1 billion in obligations since 2021 and agencies have obligated more than $1.2 billion since 2018.

From the “this just in category,” GSA released market research for quantum cryptography on June 26.

What you need to know: This request for information is taking the temperature of the state of the market for products and services. GSA specifically is looking for short answer feedback on eight specific questions, including:

  • Can your organization provide any PQC related services and/or products?
  • Does your organization currently have a contract to provide any federal, state, local or tribal entities with any specific services and/or products, related to tools and services regarding automated PQC analysis and planning?
  • Does your organization have any PQC related services and/or products that should be added to federal, state, local or tribal contracts?
  • Does your organization have any PQC related services and/or products currently under development that are not yet ready to be added to federal, state, local or tribal contracts?

Due date for comments is July 11.

Background: The White House’s May 2021 cyber executive order called on agencies to prepare for the future of cybersecurity. The May 2022 National Security Memorandum identified key steps needed to maintain a competitive advantage in quantum information science, while mitigating the risks of quantum computers to the nation’s cyber, economic and national security. The RFI helps further the procurement discussion about the products and services agencies buy and how they will be prepared for the post-quantum world.

From the “this just in category, part 2,” GSA issued a new request for information to change how vendors through their schedule contract sets prices for cloud services, including infrastructure- and platform-as-a-service GSA called the RFI term-based cloud services pricing and invoicing practices.

What you need to know: This RFI is focused solely on schedule contractors. It’s unclear if GSA released this broadly or just through its e-Buy platform (now about that soap box…), since Google and searches came up with no results. The Coalition for Government Procurement gets the credit for alerting its members to the RFI. GSA wrote in the RFI, “Software delivery methods have changed over the years. Pricing for software has become complex, and depending on how the software is invoiced there can be a significant difference in pricing. The information received in response to this RFI will be used to explore options to align the Multiple Award Schedule (MAS) with industry practices for pricing and invoicing term-based software.”

The RFI asks five basic questions about how companies price and invoice their software or other cloud services on the schedules compared to commercial practices.

It’s unclear when the due date is for responses. The RFI came out on June 23 so figure sometime in mid-July.

Background: To their credit, GSA has been at the forefront of trying to fix how the government buys and pays for cloud services. Unlike most commercial organizations, the government can’t follow the “pay by the drink” approach. The problem, of course, is the Anti-Deficiency Act. In December 2021, GSA released a final cloud buying policy to let agencies buy cloud services using a consumption-based pricing formula. But it seems that this policy hasn’t had the intended effect GSA wanted and now is looking at ways to change the schedules program itself.

Services in your SEWP

SEWP V is almost two full years from expiring, but the folks in the program office have a plan for the sixth generation IT GWAC.

What you need to know: SEWP VI will be like no other iteration of this ever-growing contract. Joanne Woytek, SEWP program manager, said at the recent Centre Law and Consulting annual review event that the current approach is for the vehicle to have three pools: One contains essentially the same offerings as SEWP V; the second is enterprise-wide IT services;  the third is more task-oriented around IT services for information and communications technologies and audio/visual requirements.

She said NASA’s plan is to release a draft SEWP VI RFP this summer, by August at the latest, and then have an industry day in the fall.

“Then we go into hiding to develop the final RFP and have that out early to mid-next year,” she said.

The award timeline is for May 2025.

Background: SEWP V includes 142 contract holders, more than 9,300 products and services and awards more than $8 billion a year in total task orders. Woytek estimates SEWP V may reach $10 billion or even $12 billion when 2023 is all said and done.  Check out the upcoming contract guide from Federal News Network on SEWP V.

Acquisitions to watch from FBI, IRS and VA

The FBI’s IT Supplies and Support Services (ITSSS-2) second generation blanket purchase agreement solicitation is out as of last Friday.

What you need to know: Remember that soapbox about transparency I mentioned earlier? Well here is a perfect example of why this is a problem. The FBI, working through GSA, released the request for quotes on June 30 through E-Buy, meaning only vendors on the GSA schedule can bid on it. And no other vendor, or reporter for that case, can easily even look at what the FBI is asking for. The FBI stated in a notice on that it’s giving vendors roughly a month to submit bids, due by July 31, and expects to make an award by December.

Background: The FBI restarted the follow-on to this contract — first awarded in 2010 — in February, pushing the draft phase, three different industry feedback sessions and the final release of the RFQ through the process in about six months. The FBI awarded the current ITSS BPA to 46 companies 13 years ago with a $30 billion ceiling. The agency expected ITSSS to be an eight year contract, but had to extend it by five-plus years now for an assortment of reasons, including having to move the acquisition process to GSA in December 2021 because of contracting workforce staffing issues and then pulling it back from GSA in February to manage the contract itself.

The IRS is taking the first step to buy a commercial contract writing system. The Analytics, Research and Technology (ART) Division is looking to replace a legacy system that combines both commercial and customized systems based on a SAP system.

What you need to know: The RFI comes as part of the IRS’s implementation of the Promoting Rigorous and Innovative Cost Efficiencies for Federal Procurement and Acquisitions (PRICE Act), which calls for system modernization. The PRICE Act established the objective of “modernized data analytics, and advanced technologies that allow decision making to occur in a more friction-free buying environment and improve customer experience.” The IRS’ end goal is to have a single, integrated system that supports the complete acquisition lifecycle workflow through a commercial-off-the-shelf (COTS) product. Comments on the RFI are due by July 24.

Background: This is another example of how the IRS is trying to bring innovation and system modernization to its employees. Agencies have struggled to buy commercial contract writing systems, with the Army and the Navy as recent examples, making the IRS’ effort one to watch for sure in 2024.

The Department of Veterans Affairs is taking another run at modernizing the system that runs its supply chain. It released a RFP on June 29 hopefully heeding the lessons learned of the past almost 20 years.

What you need to know: VA is looking to do a single award, indefinite delivery, indefinite quantity (IDIQ) contract for 10 years. It plans to take “a system-of-systems approach utilizing existing modular technologies to meet the government’s various objectives. This system-of-systems approach reinforced the government’s need for a single system integrator with the capability to not only provide these various technologies, but also manage the extremely complex integration and implementation into VA’s intricate enterprise environment.” Proposals are due July 18.

Background: This is the fifth attempt since 2004 to bring new technology to manage VA’s supply chain. In 2018, VA tried to use the Defense Logistics Agency known as the Defense Medical Logistics Standard Support (DMLSS), only to run into problems and eventually give up last December. This latest effort to attempt to consolidate and integrate approximately 63 disparate systems across 171 sites to manage VA’s supply chain.

GSA joins EPA in putting the brakes on how employees use generative AI

You can’t tune into a webinar, go to a conference or listen to a speech by a federal technology executive these days without them slipping in a mention of generative artificial intelligence, particularly ChatGPT.

Yes, it’s the latest buzzword to join the litany of past excitement over cloud computing, robotics process automation and most recently, zero trust.

But unlike cloud or RPA or even zero trust, generative AI is striking apprehension in the hearts of federal officials.

“I think that anybody who’s fired up ChatGPT, and I would be one of the people who’s used it today, I think over the last three to four months with our interactions, we’ve reached some sort of inflection point that we don’t even understand. I think that to try to develop a strategy that’s going to help you long term while really not understanding what’s going on right now, or the speed at which that goes, I think keeping up with that is the real challenge for us,” said Katie Baynes, the deputy chief science data officer in NASA’s Science Mission Directorate, at the recent GITEC summit. “I think partnering with folks who are keeping up and doing cutting edge work has really been the way we mitigate that challenge.”

The newness and desire to better understand how these capabilities work that Baynes talked about is becoming a common theme among agencies, and thus driving initial policy decisions.

New policy from GSA

The most recent one comes from the General Services Administration. It issued an instructional letter (IL) to provide an interim policy for controlled access to generative AI large language models (LLMs) from the GSA network and government furnished equipment (GFE).

GSA chose not to make the actual three-page instructional letter public. But a GSA spokesperson said in an email to Federal News Network that the “interim policy provides guidance for responsible use of generative AI LLM by employees and contractors with access to GSA systems and provides initial guidelines for what’s appropriate and what’s not (e.g., inputting nonpublic information). Our goal is to continue to ensure that GSA has overall policies in place to help ensure responsible use of software tools by employees and contractors.”

Federal News Network obtained a copy of the IL signed out June 9 by David Shive, GSA’s chief information officer, and it spells out the type of concerns agencies leaders have been saying publicly and privately for much of the past few months.

“Access to publicly available, third-party generative AI LLM endpoints and tools shall be blocked from the GSA network and GFE devices,” the letter stated. “Exceptions will be made for research (relevant to the role, position or organization of the requestor) and non-sensitive uses involving data inputs already in the public domain and generalized queries. Exceptions require completing [a] request form detailing intended usage and acknowledgement of GSA’s IT general rules of behavior to not expose internal federal data.”

Shive said in the IL that non-public data such as work products, email, controlled unclassified information and other similar information cannot be disclosed as inputs for LLM prompts.

“Deployment and use of locally deployed LLMs, such as Alpaca or Open-LLaMA on GFE shall abide by GSA IT standards profile,” the letter stated. “GSA-deployed and managed LLMs shall be assessed and authorized to operate by GSA and require specific authorizations to handle personal identifiable information; have privileged access to GSA systems; or transfer data to systems that are not authorized to operate by the GSA.”

Finally, GSA’s letter also tells users that using LLMs for generating software code should be limited to publicly available code only, and code in GSA’s repository should not be inputted into publicly available LLMs.

“The output from LLMs used to generate code or publishable material shall be manually reviewed by the approved user for accuracy, functional effectiveness and suitability, and intellectual property, including copyrights and trademarks, terms of service or end-user license agreements as LLMs may have been trained on data that AI providers may not have had full legal rights to use,” the letter stated. “GSA performs electronic monitoring of internet communications traffic, including publicly available LLMs.”

EPA, HHS’s ACF join discussion

GSA’s instructional letter is one of several similar policy-like documents issued by agencies over the last few weeks.

The Environmental Protection Agency in early May sent a note to staff saying it was blocking ChatGPT, OpenAI and similar sites.

EPA’s Office of Mission Support, according to the email obtained by Politico, described its policy as an “interim decision,” and that the EPA continues to analyze AI tools and will follow up with a final decision on these tools.

“EPA is currently assessing potential legal, privacy and cybersecurity concerns as releasing information to AI tools could lead to potential data breaches, identity theft, financial fraud or inadvertent release of privileged information,” the EPA memo stated.

A few weeks later, Kevin Duvall, the acting CIO and chief technology officer for the Administration of Children and Families in the Department of Health and Human Services, issued a policy that tries to find the middle ground.

“I think it is important for organizations to take a balanced approach to helping employees navigate appropriate and inappropriate uses in the federal context. We are at the edge of a new frontier that is still just getting started,” Duvall wrote on LinkedIn. “At the Administration for Children and Families (ACF), we are balancing risk, while still exploring this technology and its potential to empower federal employees to serve citizens even better. This interim policy helps us explicitly address some ‘dos’ and ‘don’ts’ while this space matures. I hope this can help others as they navigate this technology.”

HHS ACF’s policy outlines six considerations for employees as they use or considering using chatbots and generative AI tools. These include some common focus areas like don’t share PII or personal health data as well as workforce education about how these tools work and don’t rely on the capabilities for decision making purposes.

These policies — there may be others from more agencies — as well as a new AI task force from the Homeland Security Department come as the White House Office of Science and Technology Policy (OSTP), in a request for information released May 23, is asking the public to provide this input, as part of an upcoming National AI Strategy on how agencies could benefit from generative AI tools to meet their mission. OSTP is accepting comments through July 7.

Leveling the playing field

The real or potential use of generative AI is seeping into other parts of the government. The Interior Department already is starting to see some impact.

“ChatGPT took us by storm. We were off doing our business cases for pilots, and we had our plans, and then all of a sudden there was ChatGPT. Our grant recipients and our contract vendors were like, ‘guess what, we can use this to write our applications and we can use this to get a higher score to finally get funding. Wouldn’t that be nice to level the playing field.’ We were like, ‘Oh my goodness,’” said Andrea Brandon, the deputy assistant secretary for budget, finance, grants and acquisition for the Interior Department. “We don’t have any government policy yet that tells them they can’t use it. We are starting to see an uptick in the applications coming in from organizations that historically been trying and trying to get a grant, and then here is ChatGPT helping them write it, and they don’t need to hire a grant writer. Now they can ask some questions and get it right.”

Brandon said they are discussing the use of ChatGPT because they can hire grant writers so why can’t they use these tools? At the same time, it could mean Interior, or any agency for that matter, could get 1,000 grant applications where once it received only 400. Brandon said having the staff to review the applications would be a huge challenge and likely delay the awarding of the money.

“The organizations that are using ChatGPT currently are finding that it’s actually cheaper to use ChatGPT than to hire a grant writer. Some organizations never had the funds to write a grant right or to hire a grant writer. Whether we’re going to still allow ChatGPT in the future or what have you, we discussed having a policy, which we’re all just discussing it. We’ll take that into consideration,” she said. “We never told applicants that they couldn’t use grant writers. So I don’t know, maybe we won’t tell them they can’t use ChatGPT either so maybe they’ll be able to still use it. I don’t know. But currently, it’s leveling the playing field, they are able to use it.”

It’s clear the amount of uncertainty about generative AI and how it could impact mission areas across the government is causing agencies to put the brakes on the capabilities.

And probably rightly so as generative AI, like any new technology, comes with a host of unknowns and buzz from industry as every company throws the term in their marketing materials.

The question comes back to how quickly will agency leaders become comfortable with the new capabilities and when will OMB publish some basic guidance to help agencies manage the excitement?  Until then, the inconsistent application of generative AI will cause more challenges than they solve.

High per-license cost pushed many military services, Defense agencies away from DEOS

The build up to the Defense Enterprise Office Solutions contract vehicle, starting in 2015, was full of anticipation and promise.

Before the award of this contract that many estimated to be worth $8 billion-to-$10 billion, Defense Department technology and program executives said the effort will “better align our resources,” it has the “potential to dramatically change the way the Army does business,” and it would “eliminate some barriers to collaboration, and also help to eliminate duplicative spending.”

The Department of Navy was writing its multibillion-dollar Next Generation Enterprise Network (NGEN) contract at the time, and specifically took steps so it could easily move its email and collaboration capabilities to DEOS.

There even was talk of using DEOS as a model for a civilian agency version, called CEOS.

But here we are eight years after the Defense Information Systems Agency first came up with the idea, and two-plus years since the 10-year, $4.4 billion award to General Dynamics Information Technology (GDIT) for implementation services, DEOS is struggling to live up to expectations.

Former DoD executives and industry sources say the program isn’t necessarily a failure and is providing some value. But the shortcomings of DEOS is a case of how time and circumstances may have overtaken the initial rationale of the program, leaving many of the services to have found better and cheaper ways to accomplish the same goals.

“How people are using office and collaboration tools now versus before the pandemic is hugely different. It was hard when we were developing DEOS to foresee how much things would change,” said Alan Thomas, the former commissioner of the Federal Acquisition Service in the General Services Administration, which worked with DISA to run the acquisition. “We all know how the ground shifted under the DEOS program because of the pandemic, maybe in more ways than we saw in a lot of other areas, as we were all driven out of the office.”

Multiple O365 tenants emerged

DoD data about DEOS shows it hasn’t lived up to expectations. Back in 2018, DISA hoped to start migrating the department’s first users — about 1.5 million of them — within 18 months after award.

Navy Cmdr. Jessica McNulty, a DoD spokesperson, said under the DEOS blanket purchase agreement, services and agencies have bought about 98,000 subscription licenses and 323,000 Azure Active Directory Premium 2 (AADP2) licenses for Office 365.

McNulty added in all there are 1.97 million subscription licenses sold since 2020.

The difference, according to an industry source with knowledge of how DEOS works, is the 98,000 number is likely only for the joint tenant — the DISA-managed instance of O365 that serves users in DoD’s “fourth estate,” while the 1.97 million number includes the assorted other tenants the military services wound up creating, which, in many ways, was what DoD was attempting to avoid by creating the DEOS contract in the first place.

“DEOS was intended to be one-stop shop and the ‘be all, end all’ for these collaboration tools. But what happened was the services stood up these other tenants as well as several other contracts outside of DEOS,” said the source, who requested anonymity because their company still does business with DoD. “DEOS ended up being one of many contracts, and like many DISA programs, the ‘build it and they will come’ philosophy didn’t work well.”

McNulty confirmed there are 14 unclassified O365 tenants across DoD.

“We’ve allowed for this many tenants given the desire by the military services and others to manage their own DoD O365 environments, based on their concerns about oversight of their own data and security,” she said. “However, now that we’re nearly two years into our impact level 5 (IL5) DoD O365 journey, we’ve all recognized that 14 tenants is too many; at the same time, one is too few, as it would likely be the largest O365 tenant in the world.  We are working to reach a balance between the two numbers in the future.”

Pricing under DEOS is 20% higher

At the same time, she said DoD also is planning to authorize the O365 instance in the IL6 or the classified environment where it plans a single, joint tenant.

The industry source said DoD’s multiple unclassified tenants had integration and interoperability issues because the services set up different rules and requirements.

It seems that the DoD Chief Information Officer, John Sherman, is trying to avoid the same mistakes with the classified tenant.

At the heart of the shortcomings with DEOS isn’t the multiple tenants or the inconsistent implementation of O365, it’s the price of the licenses DISA and its industry partner Dell are selling through the BPA.

Multiple former government sources and industry experts say the price negotiated through the DEOS contract for O365 licenses is as much as 20% higher than what the services and Defense agencies could get through the Navy enterprise software initiative (ESI) contract.

A former DoD technology executive, who requested anonymity because their current company does business with the government, said the overhead of the DEOS program was “exceptionally absurd and didn’t add value.”

“DEOS was put in place before the Commercial Virtual Remote (CVR) platform, and before they knew how folks would consume the platform. They went massively huge before having any data about how users would consume software-as-a-service,” the former executive said. “Why they didn’t start small and then grow it is a big question. But now they are eating their results.”

Offering monthly licenses drove costs up

Sources say the huge markup is based on how DoD thought it wanted to use the licenses in 2016 or 2017.

“GSA and DoD only wanted to buy licenses on a monthly basis because they wanted a rebate if people leave or move to a new job. But that approach causes Dell to pay up front for a years’ worth of licenses,” the industry source said. “GSA was not flexible with this approach, so Dell is having to pay upfront for all those licenses, which caused the price to be much higher than what Microsoft was charging others.”

The former DoD executive said the price for O365 licenses was “insane,” and the services were required to buy licenses for every employee whether or not they were using the product in the same way.

All of the military services took steps to move away from DEOS or find cheaper Microsoft licenses.

Air Force CIO Lauren Knausenberger said recently one of the ways she found to save money was by redoing several different deals with software vendors.

“We renegotiated a number of enterprise software deals, where we saved very large amounts of money. This year, we renegotiated some of our Office 365 licenses and that actually took care of a lot of our under use going into the year. There are places where we had to get smarter with negotiations, and then there were places where we had to cut. There were places where we just had to find the money,” Knausenberger said.

The Army went in a different direction last October by moving 250,000 active duty enlisted soldiers to Google Workspace.

Sources say that decision helped convince Microsoft to drop its price for O365 licenses by half in some cases on other non-DEOS contracts.

The idea, according to sources, is new recruits know how to use Google Workspace, it’s more intuitive and in some ways, provides better security.

The Navy launched Operation Flank Speed, where it plans to move more than 650,000 sailors, seamen and Marines into the O365 environment.

Microsoft declined to comment for the story. GDIT also declined to comment for the story.

“What the Navy did was they looked at this DEOS problem and perhaps learned from previous contracts, or did more research and decided to buy on yearly basis and not get up-charged,” said another former DoD official with knowledge of DISA and the DEOS contract. “The former Army CIO [Raj Iyer] looked for alternatives and one was Google because there are some junior service members who don’t use O365 on a daily basis as part of their primary mission. It didn’t make sense to pay for the full suite for them. I do think the Army looked at this problem and made innovative decisions. Hopefully other services are looking at that as well, because they have to answer the question: Does every service member require the Cadillac of IT, or can they do with something to get email, to receive notifications?”

Joint tenant expansion doesn’t seem likely

McNulty, the DoD spokesperson, said the price differences between DEOS and the Navy’s ESI did not affect the implementation of DEOS.

“The DEOS BPA and the Navy ESI provide different models to purchase O365 licenses. The Office of the DoD CIO (OCIO) does not provide differentiating guidance on licensing,” she said. “However, OCIO must ensure every DoD component keeps current appropriate licenses to maintain O365 collaboration capabilities. For mission partners that have consistent licensing requirements year-over-year, the Navy contract offers cost savings due to the annual payment-up-front model. The department has various options available to mission partners for purchasing licenses and savings, which will vary based on the contract option they chose that best meets their mission needs.”

McNulty said DoD has no plans to end the DEOS BPA. At the same time, expanding the unclassified joint tenant version of DEOS also doesn’t seem to be a major priority.

“DoD’s main priority for 2023 is to develop, deliver and maintain the classified DOD O365 platform,” she said. “Other priorities include continuing ongoing sustainment of the unclassified joint environment and evolution of disrupted, disconnected, intermittent and low-bandwidth (DDIL) environment. Lastly, DoD is continuing to assist mission partners in optimizing the BPA for services they may need including data migrations, engineering support and zero trust modernization.”

There was no mention of expanding the number of users under DEOS despite specifically being asked that question.

Sources say the expansion most likely will come through the Navy ESI contract because the idea of paying for monthly licenses, especially if the markup is as much as 20%, isn’t tenable for the services.

“It sounds like the DoD CIO is saying ‘the Navy contract is much cheaper, but we are not telling you what to do,’” the industry source said. “It sounds like they don’t want to throw GSA under the bus, but it’s clear no one wants a monthly license and to have to pay that premium.”

Multiple sources agreed that part of the problem with DEOS, and in many ways many of DISA’s offerings, has to do with the time it takes to develop the requirements, award the contract, getting through protests, and then implementation. Due to that elongated timeline, particularly in the case of DEOS, the technology environment changes, leaving customers wanting something different than what DISA is offering.

“There is an element that agencies have more experience with the cloud now that they are several years into it. DISA completed all transitions during COVID to DEOS, but more than that, it looks to me like DISA made poor assumptions up front about what kinds of pricing models they would get from vendors,” the second former DoD executive said. “I think they thought it was a good assumption that if you can get the licenses on a monthly basis, it should be cheaper. But clearly they didn’t do enough research. It seems like the government made poor assumptions on what would be a good pricing model, and that should’ve been one of those things teased out of market research.”

McNulty said DoD recognized how the pandemic changed the adoption of O365 capabilities. But the DEOS BPA has had only one administrative modification to date.

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