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KRT Impact Blog

Federal IT Budget Snapshot

The President’s FY2014 budget was released on April 10th. Though there are still many steps left before the budget passes through congress – it is nice to get some ideas around what are the Administration’s major priorities are. I am still running through the overall President’s budget and may share additional findings in a later blog. For this blog I am focusing on a smaller piece of the overall Federal budget – the IT budget. I spent the last week running through some of the data and had a great opportunity to receive further insights on budget priorities when I attended the Federal IT Budget Preview hosted by AFCEA Bethesda last Friday.

The keynote speaker was Steven Van Roekel the CIO for the United States and also included a great panel of senior executives the Office of Management and Budget (OMB), the Department of Homeland Security (DHS), the Department of Health and Human Services (HHS) and the Department of Agriculture (USDA).

If we dive into the keynote delivered by Steven Van Roekel the main Federal Technology Objectives are:

The full presentation is available here.

Some of the interesting things I noticed is that throughout the 2000s IT spending in the United States expanded at a high rate – the CAGR (Compound Annual Growth Rate) of the IT Budget stood at 7.09% in FY2009. If that rate had remained steady the IT budget for the Fiscal year of FY2014 would have been approximately $111B instead – instead of that the CAGR has remained relatively flat at 0.78%. The result is the expected FY2014 budget is only approximately $81B.

The theme for the IT budget that was echoed repeatedly is doing more with less. There are many initiatives throughout the Federal Agencies to focus on cost-savings and cost avoidance measures – and then channeling that money as investment dollars to improve the effectiveness and efficiency of IT programs.

O&M vs. DME

One of the concerns highlighted at the breakfast was the growth of the operations and maintenance costs in IT programs vs. the investment portion also known as Development, Modernization, and Enhancement (DME). The Government executives present stated that the balance of O&M to DME was unsustainable and they needed solutions in the future that would enable them to invest in Information technology while keeping the O&M portion under control.

 

Overall IT Investments

If we take a closer look at how agencies are investing their IT dollars – there are 3 broad categories with the dominant one being Agency Investments. The categories are outlined below:

Spending in Cloud Computing?

One of the buzzwords in Federal IT for the last few years has been cloud computing. This type of investment has been one of the most talked about and the hardest to analyze from a dollar perspective. This is because the traditional spending categorization systems of NAICS and the Federal Supply Groups don’t show any visibility into cloud computing.  Fortunately the Federal Government is exposing this spending through the FY2014 budget – the table below illustrates cloud spending as the Federal Government defines it.

 

Conclusions

Overall the Federal Government has a lot of budget challenges for FY2014 and they will strive to do more with less. The positive here is that there should be plenty of opportunities for companies that can provide innovative solutions and can help the Federal Government find those lucrative investment dollars through cost savings and cost avoidance!

If you have any questions or comments regarding our data or findings – we would love to hear from you! Please reach out to us at contact@krt-associates.com

Agency Highlight: USAID

 The Administrator for the United States Agency for International Development (USAID) Rajiv Shah, released his Annual Letter on March 19th. This report details some really great examples of USAID projects that are bringing meaningful changes in people’s lives throughout the world and I would recommend taking a look at the full report.   

Logo for USAID

Given the recent release of the letter, and the upcoming release of the President’s Budget – I thought now would be a great time to take a quick dive into one of the Agencies that I have always followed closely, and perhaps convince some organizations to take a look at doing some work with the Agency.

As a starting point the Agency for International Development is really one of the three pillars of US foreign policy (the other two being Defense and State). However, with the current economic and budget environment in the United States – I am concerned that we may turn more inward and diminish both our funding and our efforts on the international development stage. As someone who has always had a great interest in international development, and believed strongly in the good works that the United States does throughout the world – I’m hopeful that USAID gets the funding they need to continue their work.

Looking at the past US Federal budget we can see that USAID’s Budget Authority is relatively small (approx. $5-$6B a year), especially compared to many of the other US Federal Agencies. (If interested in more detailed budget information or how we arrived at our numbers please feel free to contact us). However the impact of that funding is quite extraordinary, especially in some of the most impoverished regions of the world.

Budget for USAID from FY2009 to FY 203

USAID’s focus areas include:

  • Agriculture and Food Security
  • Democracy, Human Rights, and Governance
  • Economic Growth and Trade
  • Education
  • Environment and Global Climate Change
  • Gender Equality and Women’s Empowerment
  • Global Health
  • Science Technology and Innovation
  • Water and Sanitation
  • Working in Crises and Conflict

One of the overlooked cases (in my mind) of an amazing USAID success story is the United States President’s Emergency Plan for AIDS Relief (PEPFAR) – which I am sure most Americans are unaware of. This program has been running since 2003 and has delivered amazing results in bringing down the infection rate and death rate from AIDS – especially in Sub-Saharan Africa.  

Between 2004 and 2007, the difference in the annual change in the number of HIV-related deaths was 10.5% lower in the focus countries than in the control countries (P = 0.001). The difference in trends between the groups before 2003 was not significant.” Annals of Internal Medicine – May, 2009

Where does the Funding Go?

The follow list highlights the biggest recipients of assistance from USAID in Fiscal Year 2012 – and while the funding does lean heavily toward Afghanistan and Pakistan; there is also significant funding that targets countries in Africa and other regions of Asia.

Top 20 Country’s Receiving USAID Assistance for FY2012

Top country recipients from USAID 2012

Doing Business with USAID

If you are looking for a US Federal Agency to work with – and one where you are supporting or executing some incredible programs and projects that can really impact and change lives. I would recommend taking a look at USAID – they have a great history of working with many contractors including small businesses (make sure you reach out to their Office of Small and Disadvantaged Business Utilization).

Keep an eye out for USAID’s Vendor outreach sessions, which are held throughout the year. However, be aware that due to sequestration a lot of Agencies have been cancelling or postponing their industry outreach sessions – so it pays to be proactive!

Are there are any Agencies that you have a great experience working with? And are there any pros or cons that come from working with Large vs. Smaller Federal Agencies? Feel free to reach out to us with any comments or questions at contact@krt-associates.com !

Differentiation and Standing out in a Crowd

Regardless of what industry you are in – one of the truths of business is that you are going to face competition. Today the barrier for entry in many sectors is quite low, and it is almost a certainty the amount and level of competition is going to steadily increase over time. In many sectors this factor has led to a lot of firms offering similar services and products that all target the same customer base. 

In this type of environment where an industry or sector has little natural differentiation in products or services – how can an organization stand out from the crowd and the competition? This environment I have described is also applicable to the Federal Information Technology sector where I have worked closely with many small to large contractors over the years.

I am going to share some tactics/thoughts that you can incorporate into your business strategies (Federal or not) that will help your firm stand out effectively from the crowd – and I am going to avoid the obvious utilization of price as a differentiator.

1. Don’t be a Me-Too!

There are literally hundreds of IT contractors trying to displace an incumbent vendor or convince a potential teaming partner to work with them. Offering the same services as your competition may not be enough to win in this situation – so what can you do?

Take time to figure out what are your unique strengths!

Your company may have some unique strength that you have never realized – maybe you have a software development team that has done some great and unique enterprise implementations, or perhaps experience in a next generation technology that the general marketplace hasn’t adopted yet. Take a step back and look at what you have done and what you can talk about proudly to set you apart!

If you take a look at your firm and you really can’t find something that differentiates you from a core business perspective (technology or otherwise) – think about investing in people with unique skills or unique technologies that fits within the strategic direction of your firm

2. Invest time to get to know people in your market

Another way to build differentiation is to make yourself a known quantity in your market. Tactics you can utilize to build your brand and brand recognition in your market include:

The idea behind this tactic is a very basic premise: if people are looking for services in your industry or market and there are many vendors that provide the same services. Typically people like working with a known quantity in these scenarios versus an organization they have no contact with or no concept of. If you have taken the time to meet the right people and decision makers, and get your brand awareness in your market – you will be that known quantity!

3. Get to know your Customer

An important factor in differentiation is actually taking the time to understand your customer. This can take both a strategic and a tactical approach.

Take time to define the market sector that you are going to cater to and then what factors are really important to that group. On a strategic level, rather than trying to compete for all of the business out there – take time to really go after a specific group of clients and build an understanding of what is important to them. By doing this you will be able to create a great market niche for your firm. As an example you could decide to cater to Non-Governmental Organizations and take time to build business with them and also build out solutions that take into consideration what factors are important to those types of organizations.

On a tactical level when you are getting ready to go after a specific customer or client – take the time to learn about what is really important to them. One of the constants I have heard over the years from many senior executives is that they don’t fundamentally care about the widget you are selling or how cutting edge it is. What really matters to them is how can your product or service better help them achieve their mission objectives. By focusing on the customer’s mission needs you will make an impression that most of your competition will not be able to match.

In Conclusion

I know much of what I stated above will be obvious to many people, but I wanted to put it down in writing because I have rarely run into firms that effectively utilize all of the tactics I shared above.

In an increasingly competitive market, I really believe it is important to do whatever you can to stand out from the crowd. The tactics/thoughts I shared are relatively low investments for many firms that will lead to great results!

Do you agree or not? We would love to hear your feedback please contact us!

Security vulnerability for GSA’s SAM Reported

The General Services Administration (GSA) released a letter warning about security vulnerability in their system System for Award Management (SAM) last Friday. Users with administrator rights for their organizations on SAM may want to go to GSA’s SAM security FAQ: http://www.gsa.gov/portal/content/167851

Handling security issues is always a delicate issue when balancing security and the perception of a new initiative, and I applaud GSA for being proactive in reaching out to their end users. 

The full content of the letter is available at the bottom of this post.

What is SAM?

 SAM is a portal/initiative where GSA will be consolidating many of the existing Federal acquisition and award management systems and sites into one unified platform. This PDF provides a great overview of exactly what sites will be consolidated into the system and a rough timeline for consolidation as well. Eventually most of the popular acquisition sites covering everything from Federal contracts to grants will be housed in SAM.

Sites/Systems that will be consolidated in the future include:

IBM won the prime contract for this effort under contract for Architecture and Operations Support Contract (GS-00I-10-AA-C-0046)  awarded on February 3, 2010 by GSA for $74,441,281.04. The period of performance on this contract is 8 years (Three-year base period and five one-year option periods). According to FPDS approximately $31M has been executed against this contract to date.

So far SAM has taken over the functionality for several systems so far including the Central Contractor Registration (CCR) – which as the name indicates is where most contractors house their core business information so they can do business with the Government. The above security alert primarily pertains to the CCR type of data.

SAM like any new large system or consolidation effort has had some issues during its implementation, some which are highlighted in the news articles below:

The idea for consolidation in the many disconnected acquisition systems is one that just makes sense, especially if you have spent time over the years trying to navigate many of these systems trying to find some strands of commonality when conducting research into a Program or trying to support business development or capture efforts. I hope GSA and IBM manage to overcome the other obstacles an effort of this scale is going to have, and we all benefit from having one unnecessary system of silos in the acquisition space.

Content of the Letter:

“Dear SAM user

 The General Services Administration (GSA) recently has identified a security vulnerability in the System for Award Management (SAM), which is part of the cross-government Integrated Award Environment (IAE) managed by GSA.  Registered SAM users with entity administrator rights and delegated entity registration rights had the ability to view any entity’s registration information, including both public and non-public data at all sensitivity levels.

Immediately after the vulnerability was identified, GSA implemented a software patch to close this exposure.  As a precaution, GSA is taking proactive steps to protect and inform SAM users.

 The data contained identifying information including names, taxpayer identification numbers (TINs), marketing partner information numbers and bank account information. As a result, information identifiable with your entity registered in SAM was potentially viewable to others.

 Registrants using their social security numbers instead of a TIN for purposes of doing business with the federal government may be at greater risk for potential identity theft. These registrants will receive a separate email communication regarding credit monitoring resources available to them at no charge.

 In the meantime, we wanted you to be aware of certain steps that all SAM users may want to take to protect against identity theft and financial loss. Specific information is available at www.gsa.gov/samsecurity.  If you would like additional background or have questions, you may call 1-800-FED-INFO (1-800-333-4636), from 8 a.m. to 8 p.m. (ET), Monday-Friday starting Monday, March 18. We recommend that you monitor your bank accounts and notify your financial institution immediately if you find any discrepancies.

 We apologize for any inconvenience or concern this situation may cause. We believe it is important for you to be fully informed of any potential risk resulting from this situation. The security of your information is a critical priority to this agency and we are working to ensure the system remains secure. We will keep you apprised of any further developments.

 Sincerely,

 Amanda Fredriksen

Acting Assistant Commissioner

Integrated Award Environment