Do we need new contracts for cloud?

At a recent AFCEA Bethesda breakfast, Scott Renda from the Office of Management and Budget told the assembled ears that OMB, the General Services Administration, the Homeland Security department and the Defense Department are working to create one, or possibly more, new contracts to make it easier for federal agencies to purchase cloud computing solutions.

Now, cloud computing is an essential tool for both government and the private sector, but do we really need a new set of contracts just for that?

Every time a new IT solution comes along, it seems that there is an almost irresistible urge to create a new contract program. People who’ve been in the federal IT community remember when reverse auctions were going to revolutionize federal IT buying. Before that, it was seat management. Federal agencies spent countless hours and funds to put together contracting projects for each effort. Contractors, too, incurred substantial costs – some eclipsing the $1 million per opportunity level – simply to prepare a bid for such contracts.

Where did that get us?  Not very far, as it turned out. First, it took years to just put the contracts in place, and then a bit longer for protests to be resolved and orders finally flow. That was just for seat management. Whatever money spent on reverse auction preparation bore even less fruit. By the time the contracts were ready, something new was already on the horizon. Much of the time and money expended was wasted as the evolution of IT moved faster than the contracting community.

Even the best of programs can take years to put together. Remember Alliant?  I once wrote a tongue-in-cheek article titled “Across Five Aprils” because, like the Civil War, that’s how long it took for GSA to get Alliant up and running. It was more than that before the first order was ever placed. Even though Alliant is successful today, the time and expense were huge.

Speaking of existing programs like Alliant, what is lacking in current contracts that make cloud solution acquisition so difficult that an entirely new contract program is required?  Agencies are buying cloud solutions every day via Alliant, the IT 70 Schedule, DHS Eagle, and other existing IT contracts. It is doubtful that federal agencies would be trumpeting their ability to move with agility to the cloud if current contracts were too cumbersome to use.

This is, indeed, a current issue in OMB itself. While one part of OMB is talking about new contract development, another understands that there are already too many IT-related MAC’s. Outgoing Office of Federal Procurement Policy Administrator Dan Gordon rightfully issued a recent regulation requiring agencies to go through a business case process before they develop new MAC IT contracts. Gordon understands that most government needs can already be well met by the thousands of existing contract vehicles and that even the current number represents substantial redundancy. He also understands that creating and managing so many vehicles doesn’t come for free.

Government is not alone in the presumption that new solutions require new contracts. Everyone at the AFCEA breakfast more or less genuflected at the altar of new contract creation when  Renda spoke. There is an automatic assumption that “Yes, of course we need a new vehicle if OMB says we do.”  If I were the CEO of a government contracting company, I would have been pretty upset at my contract managers for at least not asking the question why my company needs to spend millions of scarce bid and proposal dollars for a new contract that does what some of our existing ones do already. I don’t know too many contractors that are looking for new ways to spend money in the midst of a very tight federal market.

Properly executed, government IT contracting is a game of chess. You win not by just looking at the very next move. You have to look ahead. So it is with cloud computing. It’s a good solution, but existing contracts meet the need well and the government has shown over and over again that by the time it gets a new contract program in place, the industry will be on to the next big thing. Who wants to buy cloud solutions when everyone else is in the ionosphere?

About the Author

Larry Allen is president of Allen Federal Business Partners.

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Reader comments

Tue, Jan 3, 2012 Gutenburg

This article makes little sense. A contract is an agreement between two parties. If the services being offered are new, different or changed, how can you use an old contract. This makes about as much sense as saying I will use one old receipt for the rest of my life, regardless of what I buy today. I will keep pulling out a receipt from 2009 everytime I go to the store. Maybe they "genuflected" at the altar of common sense.

Thu, Dec 1, 2011 John Weiler United States

Scott is a sharp cookie, and is clearly speaking from a position of experience. For agencies to get the business value from Cloud computing, they will need to make the following changes; 1) Establish a Services Oriented, Capability Based, Agile Acquisition Framework. 2) Benchmark the business value and cost of its legacy systems at two levels; Application and IT Infrastructure. 3) Define succinctly the 14 or so core infrastructure services, the APIs, and SLAs needed to support the enterprise 4) Establish an IT Governance Structure around SOA, the enforces use of these core service, no exceptions. 5) Do not use the contractors vesting in current rice bowls and legacy systems drive your Cloud efforts. THEY HAVE NOT INCENTIVE. 6) Break agency bonds with "IT Cartel" members, recognizing you cannot solve today's problems with the same thinking that got you there. Small/innovative companies are much more agile and responsive than larger SIs, and cannot afford to fail. Agencies will have a hard choice very soon; cut the IT fat or be cut by the budget. Those looking for help can find some useful guides at www.IT-AAC.org free to download.

Tue, Nov 29, 2011 Mike M Reston

Excellent points! I am hoping that budget cuts beginning in 2013 will wake up agencires that insist upon generating their own MACs when they could make use of Alliant, the GSA Schedule, or one or two other large and widely available contracts. SEWP and CIO-SP2/3 come to mind. The waste surrounding the proliferating MACs that serve one agency has been disgraceful.

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