Information technology vendors who sell hardware and software to the federal market are keenly aware of significant flaws in the way government agencies purchase IT. An effort to reform IT procurement has been conducted by the Obama administration for the last two years — with some improvement.
Some members of Congress, however, still aren’t satisfied.
Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee, has proposed additional reforms to make IT procurement more effective and efficient. “Information technology is at the heart of every federal agency or program’s ability to function successfully. We’ve built an IT infrastructure that is bloated, inefficient, and actually makes it more difficult for the government to serve its citizens,” Issa said at a Jan. 22, 2013, hearing.
Issa outlined his legislative reform package in draft form last September, and has since been collecting comments from industry, including testimony at the January hearing.
The Issa legislation would encourage centralized, government-wide IT procurement vs. single-agency supply schedule acquisition; promote a broader transition to cloud solutions; open up federal websites and data for the development of complimentary apps; and support faster data center optimization. The proposal also requires the development of a federal price catalog listing any price provided by IT vendors for the same — or similar — goods or services.
The feedback from the IT sector on Issa’s proposal has been mixed. Within the vendor community there is general support for improving federal IT procurement procedures. There are differences, however, among some high-profile entities about specific improvements.
At the House Oversight and Reform Committee hearing chaired by Issa, Chris Niehaus, director of Microsoft’s U.S. Office of Civic Innovation, said the committee was “right to focus on IT investment strategy and not simply acquisition,” and “there is room for reform” when it comes to federal acquisition of IT.
“We applaud this committee for its tireless efforts to ensure that the government is procuring information technology efficiently and otherwise achieving the best value when it does so,” said Trey Hodgkins, senior vice president for the global public sector at TechAmerica. The trade group also supports the bill’s provisions that would strengthen the role of agency CIOs and develop cross-government expertise in specialized areas of IT procurement.
Buying IT as a Commodity
There is substantial resistance by some in the vendor community on other parts of the Issa proposal, especially when it comes to promoting commodity IT procurement — the treatment of more generic and less customized hardware and software, such as email or payroll accounting systems, as items that could be acquired at substantial savings.
“The issue with the term commodity IT is that it is redundant and is a subset of commercial items. In business, there is no such term as commodity IT, and so instead of introducing a new term we should focus on strengthening the government’s existing category for commercial items in this legislation,” Erica McCann, manager of procurement policy at TechAmerica, told the E-Commerce Times.
“The legislation should not seek to introduce another definition because it could have a profound effect on the application and interpretation of these terms and what is acquired under them,” she said.
“TechAmerica supports the government purchase of commercial items because it allows the government to take advantage of innovation in the marketplace and economies of scale that lend themselves to achieving value for the government customer,” said McCann.
The law requires that those transactions be conducted as closely as possible to commercial transactions and not include an array of unique government requirements, she added.
“Unfortunately, that is not the case, and all too frequently when a commercial company wants to do business with the government, there are unique government requirements — such as disclosure of executive compensation, unique software licensing requirements or sharing of intellectual property — that are not commercial in nature and often can drive up the transactional cost of those items,” McCann explained.
Commercial companies are simply not set up “to respond to unique requirements in the manufacturing and delivery of their globally marketed commercial items,” she said.
At the January hearing, Microsoft’s Niehaus also recommended that the government avoid mandating any new acquisition structures focused on procuring so-called “commodity IT.”
“To the extent that there is an assumption that IT services or devices could be generically interchanged, there turns out to be very little IT that is truly a commodity,” he said. “Something as ubiquitous as email is not a commodity, as demonstrated by the General Services Administration’s recent awards for Email as a Service, where GSA appropriately designated seven different varieties of email service, depending on the privacy, security, cost and other legal and mission needs of specific agencies.”
Policies that require agencies to procure “cookie-cutter technology based on a one-size-fits-all standard would ignore many commercially available and cost effective solutions that can better meet the needs of agencies, and might keep some sophisticated commercial innovators out of the federal market,” Niehaus added.
Issa’s proposal to centralize federal IT purchasing wherever possible prompted a warning. “We would caution that a top-down, lead-agency IT acquisition model should be avoided,” he said. “Centering acquisition authority in one outside agency that does not intimately understand the specific needs of individual agencies could create a needlessly cumbersome process that could make it more difficult for industry and agency customers to work together.”
The group’s members are concerned about “concentrating buying power within a single centralized buying agency,” TechAmerica’s Hodgkins also cautioned.
One vendor who thinks Issa is on the right path is Brocade.
“The concept of commodity IT is not redundant. It actually keeps government on pace with the march of technology innovation and drives out cost and accelerates efficiency,” Anthony Robbins, vice president of federal sales at Brocade, told the E-Commerce Times. “Agencies should move away from costly legacy and proprietary environments to deliver improved services to citizens and war fighters.”
Approach Spurs Innovation
The draft legislation requires a definition for commodity IT, which represents those commonly used and purchased IT products such as end user devices, servers, storage, networking and applications. The goal is to drive more competition and innovation through standardization, Robbins said.
“During the hearing in January, Brocade’s former CEO highlighted overdependency on a single source for government networks as one of the largest challenges to making a secure IT investment and reducing costs,” he said. “Overdependency creates a monopoly-like environment with closed requirements that often lock clients in with one vendor. This is especially true for the network infrastructure of government systems.”
Brocade believes mandating the use of open industry standards in IT solutions, including networks and restricting the use of proprietary network protocols, “will drive down the cost of IT procurement and allow government to tap into the innovation inherent in our industry,” Robbins said. A Gartner study found that introducing a second networking vendor can result in savings of 15 percent to 25 percent over a five-year period, he added.
In remarks at a February 12 conference in Washington sponsored by the Software and Information Industry Association, Issa used the occasion to gather more feedback. He noted that Congress must take action through legislation to achieve IT acquisition improvements. “If Congress doesn’t intervene,” Issa told the E-Commerce Times, “we will continue to muddle along, with about the same level of investment in IT, and with much the same failure rate.”
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