Acquisition

'The end of hype for cloud'

Cloud Acquisition

Federal IT managers are moving into the heavy-lifting phase of buying and supporting cloud computing, where they will confront an often-confusing array of challenges in matching agency needs to the technology's capabilities.

"It's the end of the hype cycle for cloud services," said Mark Day, deputy assistant commissioner, integrated technology services at the General Service Administration's Federal Acquisition Service. "The real work is ahead" in establishing tried-and-true acquisition strategies for federal agencies looking to get cloud capabilities, he said.

Programs such as FedRAMP, aimed at providing uniform security capabilities for cloud services and providers, and the National Institute of Standards and Technology's efforts to provide underlying cloud standards have proven effective, Day said. But there is still a considerable amount of practical acquisition experience to be gained.

In March 26 remarks at an FCW-sponsored panel on buying into the cloud, Day said some federal CIOs still confuse managed services with cloud services. Managed services, he said, provide services for enterprise operations on a more-or-less fixed scale, while cloud services depend on a huge user base to support service prices. "Cloud shares risk across many customers. It's a matter of scale," Day said. "Shared services carve up the scale, shrinking savings and scalability."

"With managed services, the buyer pays for the cost of capacity not used," he said. With true cloud services, he explained, a user may use only 50 percent of what they expected, but the costs are absorbed by the vast user base of the provider.

Frank McNally, a former federal contracting officer who is now content developer for ASI Government's virtual acquisition office, likened cloud services to a utility company, with many users drawing from a large source, paying only for the amount they actually use.

A sometimes-hazy understanding of the cloud business case is not the only challenge, Day said. Established federal contracting vehicles can also be tricky to apply to cloud capabilities, which often cross traditional contracting lines.

"There are proponents for IDIQ [indefinite delivery, indefinite quantity] and fixed-price contracting for cloud services, said Michael McFarland, director of the office of acquisitions at GSA FAS. "A requirements contract could fit" if strong service-level agreements and performance metrics are included. "GWACs [government-wide acquisition contracts] have been used too."

The intricacies of contracting and the fluidity of vendor terminology, they said, also complicate McNally's utility analogy. "[Cloud] is like a utility model," said McFarland, "but we see cloud providers all have different models" with different pricing.

Cloud brokers -- third-party entities that act as intermediaries between cloud providers and buyers -- present an even more complicated acquisition proposition.

Ultimately, Day and McFarland said, federal contracting officials are still working on how to handle cloud acquisition.

To come to a more practical acquisition strategy, they said, federal IT managers must more effectively communicate cloud's business model and what it can accomplish. At the same time, federal contracting officials should more clearly communicate their complicated work to IT. Defining what cloud services are and what is expected from them will also help.

McNally offered some practical advice, using commercial business cloud services as a guide. He said contracting officers shouldn't prescribe details like the number of servers and their configuration, site inspections and audit requirements.

"Stay within commercially acceptable lanes. Lengthy service level agreements can also hamper some of the cost efficiencies for cloud services," said McNally. "Focus on outcomes. Stay out of the weeds."

Despite the complicated environment cloud services inhabit, Day expressed confidence that federal contractors and IT managers will get the hang of it. "We will figure out the answers and this will take off," he said.

About the Author

Mark Rockwell is a staff writer covering acquisition, procurement and homeland security. Contact him at mrockwell@fcw.com or follow him on Twitter at @MRockwell4.

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Reader comments

Thu, Mar 27, 2014

Mr. McNally is not saying anything new. Contract Management Magazine published an article "Utilitization of Cloud" 2 years ago. The problem with the analogy is looking at it as a utility for the purposes of understanding cloud, and treating it as a utility for contractual purposes, are two completely different things. Does it matter who provides your kilowatts to your home? No. A kilowatt is a kilowatt. Does it matter who provides your water to your home? No. A gallon is a gallon. Company aside the end product is no different. The same cannot be said of cloud. Differences in the pricing, structure, delivery, and terms exist. A CO needs to be more aware of this, and analogies can over simplify and confuse.

Thu, Mar 27, 2014

Agreed, cloud should no longer be a mystery and nor should the already available (and proven) acquisition strategies to make it happen. Ordering Agencies should simply state their objectives or identify specific SOW tasks, issue the requirement on GSA Schedule 70, and allow any of the hundreds of primes to compete for the business that have Cloud Service Provider (e.g. AWS, Microsoft, Terremark, etc.) SKUs on their contracts already or form CTAs with Schedule 70 primes who do. End the hype, the unecessary "specialty BPAs" and tax dollar wasting limited competition GWACs and Agency IDIQs and let's get to work.

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