Breaking the mold

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

turn.

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

agency."

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

"Soft Landings."

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

get self-indulgent."

Verton is a senior writer for Computerworld.

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