DOD begins major shift to utility computing

New IT contracts let DOD pay for servers on a per-use basis

The Defense Department is adopting a utility model that lets DOD pay for computing services as it needs them instead of owning all its information technology hardware. The purpose of the new policy is to accelerate the IT acquisitions process and free DOD from expensive and time-consuming investments in managing servers.

The policy represents a major change in the way DOD does business, said John Garing, chief information officer of the Defense Information Systems Agency. DISA has awarded contracts for server processing capability and collaboration tools using a managed-services approach, he said. In the future, he added, DOD could also procure software applications and bandwidth as utilities.

“This gives us the ability to scale up and scale down…and only pay for what we use,” Garing said. DISA modeled the new acquisition policy on similar industry acquisition policies.

DISA announced Oct. 18 five contracts to manage its server environments. The contracts could be worth as much as $700 million in the next eight years. DISA divided the five awards among four companies: Apptis, Sun Microsystems, ViON and Hewlett-Packard, which won two of the awards.

The vendors will provide hardware, maintenance and support for servers at 17 DISA data centers in the United States and one in Germany. The companies will charge DISA for use of and work on the servers on an hourly basis.

“The computing world is going to go the way electricity does, and eventually, you’ll buy computing cycles out of the wall,” said Tom Syster, Sun Federal’s DISA client executive.

The contracts were competitively bid as fixed-price service contracts based on a best-value comparison, Syster said.

Under those contracts, the vendors will be responsible for refreshing technology as it evolves, said Tim Sheahan, vice president and general manager of HP Federal. The arrangement takes capacity planning and capital investment “off DISA’s back and puts it onto the contractor,” he said.

DISA will maintain control over data center operations, but the vendors will provide support mostly from remote locations, said Dave Lewis, HP Federal’s capture manager for strategic programs. “This is one of the first steps toward a lights-out data center — a data center of the future,” he said.

Each company will manage different operating environments, according to notices on the Federal Business Opportunities Web site. Sun will manage the Solaris operating environment, ViON will be in charge of the IBM AIX environment, and Apptis will run IBM’s z/OS and z/VM servers. HP will manage DISA servers running Microsoft Windows, Red Hat Linux, Novell SUSE Linux and HP-UX software, the notices state.

DISA manages about 5,000 servers.

DISA used the fee-per-use approach in July to acquire collaboration tools for its Defense Knowledge Online (DKO) Web portal. The agency awarded a $17 million contract to IBM for its Lotus Sametime suite, but it told the company that it would be paid only as users access the applications.

DISA has announced its intention to award a second contract for collaboration tools. It will offer those alongside the IBM Lotus Sametime collaboration suite on the DKO home page to foster competition, DISA officials said.

But DISA will not stop there. It will soon award a utility-type contract for data storage, said Paul Hallowell, DISA’s deputy director for computing services. The contract will have a ceiling of $700 million over eight years. The utility model could also apply to software acquisitions, DISA officials said.

The Croom effect

The Defense Department’s foray into utility computing is largely because of the personal leadership of Lt. Gen. Charles Croom, director of the Defense Information Systems Agency. Croom offered his ideas about utility computing in an interview at the recent Milcom conference in Washington, D.C.

Strategies such as the one DISA used in its recent server contracts move the burden of capacity planning to vendors. “It’s up to the vendors now to get it to our floor, to set it up and have it ready to go when we need it,” Croom said.

Server outsourcing and other utility-computing efforts fit into Croom’s overall “ABC” policy of adopting, buying and creating solutions — in that order.

“We’re trying to get away from building it ourselves…so we’re seeking more and more managed-type services provided by the commercial providers,” he said.

Croom said he is receiving resistance on some of his policies. “The people who own processes today are struggling with us,” he said. “But it’s not about the process. It’s about delivering the capability.”

“Hopefully they will catch on and be supportive,” he added. “Time will tell.”

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