A sobering take on government contractors

steve kelman

I recently had a chance to hear a small informal presentation by an executive with decades of high-level industry experience in the government contracting market, and who is very respected in the community. His remarks were sobering, and I took a chance to follow up with him after his presentation to get more meat on the bones of his discussion.

He started his presentation by asserted that no traditional government contractors had established any position to speak of in the market for cloud computing, arguably the biggest tech management shift of the past decade. Instead, Amazon Web Services, with no presence in the federal market, stole the market from under their noses. Very few government contractors had even explored entering this market.

Why, I asked? "Government contractors don't think that way," the executive replied. "They are very focused on government RFPs, responding to things the government puts out. That keeps them busy. But it makes them very unlike Silicon Valley companies and venture capitalists that are constantly scanning the market for new tech trends and developments. When Amazon concluded there was a potential huge market in cloud computing, they poured huge amounts of their own money into developing an infrastructure. Government contractors don't think that way either. They don't want to risk large amounts of their own money."

By contrast, Amazon was "willing to take time and risk" painstakingly to make a business case for cloud to senior federal officials over a number of years before making sales.

The executive in question sees the cloud as just the latest illustration of the failures of government contractors to exploit opportunities opened up by the internet. The internet, he pointed out, was incubated by the government, with much of the work sponsored by DARPA. The first federal funding of what became the internet started in 1962. Over the next 30 years, before it was commercialized, the growing network was well-known within the defense and academic communities. It was everywhere around the world of government contractors, but they did not really see its commercial potential.

Silicon Valley, he noted, initially knew much less about the internet than government contractors did, but once they saw things developing, they jumped. "What always struck me as strange was that 90 percent of the companies that clustered around the internet were Silicon Valley, yet they had not been involved in developing it for all those years," the executive told me. "Government contractors sat here with the internet growing over time, this was their backyard." (He made the same observation about GPS systems, developed by government and government contractors, but exploited by Silicon Valley.)

This executive said he attended National Science Foundation meetings on the internet "for years" as the technology was developing; "there would be some government contractors there listening but I never saw any major contractors do anything about it." Indeed, he "never heard much of any discussion in the government contracting community of this." (The one exception was SAIC's 1995 acquisition of Network Solutions, which held a contractual agreement with the U.S. government to be the exclusive seller of all internet domain names globally.)

He said that senior federal agency leaders with whom he has been speaking feel that, because of these contractor shortcomings, they aren't "getting what they need" from contractors. They desperately want to tap into the commercial tech world – hence the new Defense Department offices in the Silicon Valley, Boston, and Austin, Texas – but there is wide skepticism in the commercial tech world about the government's slowness and the large marketing resources that go into landing government business. So, the executive felt, whether DOD's efforts will be successful is very much an open question.

Finally, he reported that he had never seen senior agency leaders feeling so "besieged" as they do now. There is a "general anxiety about the speed of change," he observed. With tight budgets, there is "intense internal pressure about how to work with less," but that means changing an "agency's longstanding IT environment to something that would be totally different," which is hard. Organizational and technological change are coming so rapidly that "people are having a more difficult time figuring out what to do to be on the advanced end of technology." And agency leaders, he asserted, don't believe they have the talent inside government to select the right technologies.

In sum, a frank and fairly grim picture from a very wise man. I would like to hear reactions from readers!

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.