The National Security Agency readies a mega IT outsourcing pact in hopes of retooling its backoffice information systems
First it was the Navy and Marine Corps. Now it's the National Security Agency's
NSA plans to issue a request for proposals next month for a contract
that would outsource the majority of its internal computer systems, including
telephone services; desktop computing hardware, software and support services;
and information technology security. NSA's mission-critical systems — those
that manage classified information — would not be outsourced.
NSA is embarking on the 10-year, $5 billion program — called "Project
Groundbreaker" — as a first step toward bringing the agency's Cold War-era
IT infrastructure into the 21st century.
For decades, NSA held the technological high ground, making significant
intelligence contributions to the U.S. dominance over the Soviet Union during
the Cold War. But today, NSA must collect information from numerous sources
armed with the latest and greatest IT the private sector can provide — a
situation that has threatened the agency's ability to carry out its mission.
The support systems within NSA's offices must also meet similar demands.
"We must immediately begin to invest in our IT infrastructure to secure
NSA's agility and adaptability in the Information Age," said Air Force Lt.
Gen. Michael Hayden, NSA's director. Groundbreaker has been designed to
reverse years of modernization neglect at the agency, according to Hayden.
NSA hopes to follow the lead of the Navy and Marine Corps, which in
October awarded Electronic Data Systems Corp. the $6.9 billion Navy Marine
Corps Intranet contract. EDS will tie together Navy and Marine Corps networks
on bases and ships to enable better communications. Navy officials believe
NMCI will be a key component in the service's network-centric warfare strategy — the ability to wage war more effectively by using computers.
But just as the Navy has learned in its efforts to make NMCI a reality,
NSA may run into obstacles along the way. As many as 5,000 NSA civilian
employees and contractors could be affected by the Groundbreaker contract,
which is raising the ire of federal employee unions. Congressional members
from districts with large blocks of federal employees may worry about the
lost jobs, as well as Groundbreaker's cost.
Outsourcing is the Way
NSA is best known as the signals intelligence arm of the Pentagon's
intelligence apparatus. The agency is responsible for intercepting and analyzing
a vast array of foreign military and national security-related communications
around the world. It recently completed a massive renovation of the Operations
1 Building at its Fort Meade, Md., headquarters. Modernization efforts included
installing communications upgrades for more than 1,000 NSA personnel — and
adding Internet connections for at least 10 percent of the work-stations — and developing an Operations Watch Center that acts as a 24-hour intelligence-gathering
and warning center.
However, the pace of today's technological changes — compounded by new
challenges posed by the spread of encryption, fiber-optic cable and the
sheer volume of communications to be intercepted and analyzed — has threatened
NSA's ability to carry out its mission. In fact, the slow pace of modernization
at the agency has caught the attention of lawmakers on Capitol Hill, who
have called infrastructure modernization the No. 1 challenge for the agency.
Hayden believes the best way to catch up is to hire a private firm to
own and manage the agency's internal systems. He decided to go ahead with
Groundbreaker after Booz-Allen & Hamilton Inc. determined during a 15-month
feasibility study that NSA's IT infrastructure needs could be met through
a massive outsourcing agreement with private industry.
The study identified
four IT areas the agency could outsource: distributed computing, enterprise
security management, networks and telephony.
A spokesman for the agency added that during the feasibility study,
NSA "benchmarked other government outsourcing initiatives to gain a complete
picture of what has worked in government outsourcing and what has not."
The spokesman confirmed that NSA has been in contact with officials
from other government agencies that have conducted major outsourcing proj-ects,
including the Navy.
NSA has prequalified three prime contractors to bid on Groundbreaker,
including some one-time hopefuls for the Navy's NMCI contract. However,
representatives from all of the potential primes — Computer Sciences Corp.,
AT&T and OAO Corp. — declined to comment on the program or on how they
would handle the outsourcing initiative if they won the contract. A spokesman
for NMCI victor EDS confirmed that it is a subcontractor on OAO's bid team.
'Just a Beginning'
Past pilot projects and two recent internal agency reports have also
served as catalysts for Groundbreaker. In 1998, NSA conducted a pilot program
known as "Project Breakthrough," which outsourced maintenance for 20 legacy
software systems. In addition, an in-house study conducted in October 1999
by 19 of the agency's midlevel managers recommended drastic managerial changes
throughout the agency.
In response to this, Hayden called for a sweeping overhaul of NSA's
management and information systems — a program he dubbed his "100 Days of
Change." It would be, in Hayden's words, "just a beginning — a starting
line from which NSA can begin to transform into a first-class, 21st century
Likewise, a $20 million, five-year contract signed in 1998 with CSC
to provide technical support for NSA's older computer systems could serve
as a model for Ground-breaker, according to an analysis by consulting firm
Federal Sources Inc. As part of that contract, CSC agreed to hire agency
employees displaced by the contract to work on any IT jobs the company had,
rather than only on NSA work covered under the contract. The pilot project
became part of a series of limited IT outsourcing initiatives nicknamed
However, a major part of Hayden's transformation plan came from an External
Team Report completed in October 1999 and delivered in tandem with an internal
report by a group of industry advisers. The industry experts made five major
recommendations, including one to develop a framework for outsourcing all
programs that are not related to core competencies, such as IT support.
In a break from previous pilot programs, the report's authors suggested
that when government jobs are outsourced, the contractor should not be required
to hire 100 percent of the affected workforce.
"Over the last 30 years, NSA has hired many government employees to
perform jobs that are best done by the private sector," according to the
report. "The present culture is to attempt to do all the jobs in-house,
with whatever resources become available. This erroneous process does not
provide the correct answers and therefore does not provide the best value
to the government."
Still an Experiment
The Information Technology Association of America has set up an NSA
Groundbreaker Task Group, which is working on educating members of Congress
about the program before last-minute glitches pop up, as they did with the
Navy's NMCI contract.
"Our congressional efforts have been aimed at explaining the seat management
approach, allaying concerns about the treatment of the employees who will
be transferred to the private sector, and the benefits to NSA," said Olga
Grkavac, executive vice president of the Enterprise Solutions Division at
ITAA. "Since all the employees affected have security clearances, they will
be in great demand." However, she added that "after some visits to Maryland
congressional offices and [Senate] intelligence committee staff, we are
temporarily on hold due to the elections."
John Pescatore, a former NSA analyst and now an information security
analyst with consulting firm Gartner Group Inc., said NSA has hired contractors
to run the systems at NSA facilities for years, but Groundbreaker is a little
different. "Service-level agreements will be used, and the contractor will
manage all the resources," Pescatore said. "This is the area where NSA needs
to learn that it can get lower cost by outsourcing and still be able to
micro-manage. It will be hard for them to break the habit of being able
to micromanage contractor personnel, but they've been slowly moving toward
doing this since 1994."
Expensive outsourcing projects such as Groundbreaker are simply a function
of maintaining a first-class operation, according to John Shissler, a former
military intelligence officer now on the staff of Johns Hopkins University's
Applied Physics Laboratory. "All that is being done is that the existing
structure of stifling regulation, oppressive bureaucratic oversight and
political correctness [is] being circumvented through outsourcing," Shissler
said. "Whether this is good or bad for the country in the long run has
yet to be determined."
Fred Feer, a former NSA analyst, is also a little skeptical about the
outsourcing approach at NSA. "I think the incentives are better if employees
are given the training and freedom to explore for relevant technologies,"
Feer said. "Contractors are fine once a problem and related technologies
have been well enough defined to lay down a project and measures of performance.
My experience as a contractor is that the return to the government is directly
proportional to the skill and knowledge of the contract monitor — the inside
guy. Left to their own devices, even the most scrupulous contractors can
Verton is a senior writer for Computerworld.
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