New OFPP Memo: a Beacon of Opportunity for Technology Companies that do Business with Government

Tomas OKeefe_65x85Tomas O’Keefe, Senior Analyst, Market Intelligence

The new OpportunitiesOffice of Federal Procurement Policy (OFPP) head, Anne Rung, released a memo focusing on updates to federal acquisition policy. It’s no secret both agencies and vendors have struggled with overly long solicitations and proposals, complicated contractual language, and unique government requirements. The OFPP memo outlines specific actions that agencies are expected to adopt in the coming year in an effort to improve acquisition and transparency across the board. This falls in step with a new trend brought to the forefront by the Obama administration that aligns with the Digital Services Playbook, modernizing IT infrastructure and how the government purchases IT.

The memo entitled “Transforming the Marketplace: Simplifying Federal Procurement to Improve Performance, Drive Innovation, and Increase Savings,” highlights three areas that agencies will focus on in FY15:

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Proceed with Caution: Little-known Cybersecurity Risks in IT Consolidation

Lloyd McCoy_65x85by Lloyd McCoy Jr., Consultant

As budgets Warning Sign Cybersecurityconstrict, agencies across the federal government are looking to IT consolidation as a means of driving cost savings. The Department of Defense is no stranger to these pressures. One key aspect of the Department of Defense’s drive to consolidate all of their networks under a common security architecture is the Joint Regional Security Stacks (JRSS) initiative. Currently, bases and forts have their own cybersecurity architectures — at the local level. These architectures will now get handed off to regional facilities or nodes, making networks more unified, secure, and ultimately ensuring capabilities are universal at every fort and base. The benefits of the JRSS are it gives DOD a birds-eye view of their network activity, improves their network security posture by reducing attack surfaces, and reduces costs.

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A New Event for Government Sales and Marketing Professionals

Photo of Allan RubinWe’ve been hearing it quite a bit from our manufacturer clients and channel partners recently: it’s tough out there. Companies that sell technology to the government have faced one challenge after another. Most of us survived Sequestration, continuing resolutions, and the shutdown — often with some scars to show for it — and we hope those are in the rear-view mirror for good.

Uncle Sam is still spending a lot of money on technology products and services, but that growth curve has flattened, and budget pressures have increased competition for every order. Add to that the significant shifts we’ve seen in technology requirements, acquisition methods, the movement towards lowest-price technically acceptable (LPTA) procurements, difficulty in meeting face-to-face with customers…and the increased pressure you’ve probably seen from your corporate office to exceed revenue goals while cutting back on personnel, marketing, and other resources. There’s a long list of reasons for those in our industry to lose sleep.Print

Luckily, it’s not all doom and gloom. Pockets of technology, like cyber security, remain strong with growing demand. The state and local market is heating up. While some agencies and programs face budget cuts, others are expected to invest more heavily in IT products and services. There are reasons to be optimistic, but you have to know where to look … and what to look for.

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DATA Act: Open for Business?

Stephanie Headshot 65x85by Stephanie Meloni, Senior Analyst

On April 10, 2014, the Senate (unanimously!) passed the Digital Accountability and Transparency Act (DATA Act). The bill would require the government to standardize and publish financial management, procurement, and related data in electronic formats that can be easily accessed by the public. Open data will give our industry new insights into federal spending, and potentially new business opportunities. The House is expected to vote on the bill later this month, where it is expected to pass quickly.

The DATA Act will be the most powerful transparency mandate since the passage of the Freedom of Information Act in 1966. The goal of the bill is to publish the executive branch’s entire spending portfolio as standardized open data.  The DATA Act will be used to provide visibility into wasteful spending and duplicative programs.

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Shielding Yourself from Sequestration

photo_Chris Wiedemann_65X85- one postby Chris Wiedemann, Senior Analyst

If you had a chance to view immixGroup’s Market Intelligence briefing on sequestration yesterday, you hopefully have a better understanding of what the proposed cuts mean to IT companies.  Tim Larkins summarized the history of this situation – what sequestration is, when it became law, and just how those cuts (which weren’t really supposed to happen) actually arrived. He also covered some of the projected long-term impacts of sequestration on federal spending. This information is all vital – it will help you understand your customers’ pain and better equip you to discuss the cuts they’re experiencing.

Today, though, I want to take a minute to reemphasize some of the key components of Tim’s presentation: what does this mean for federal sales? The “snowquester” is actually a pretty good metaphor for the impact of these spending cuts on the federal IT market: some segments will stay pretty dry, while others may well get buried. So what should we be doing to shield ourselves from sequestration?

First and foremost, when you’re finalizing a deal with your customer, make sure the money is there. That means asking your customers two questions: what activity account is funding the purchase, and is the right amount of money in that account? Remember, while program people are creating demand, they have to request that money be transferred from Treasury into the right activity account before they can actually buy anything. This is the step where the sequestration cuts are actually taking place – think of them as a leak in the cash pipe. That leak could mean that money intended to purchase your products is actually getting lost before it ever lands in the right activity account. Don’t forget: unless you and your customer both know 1) which account is funding a purchase, and 2) whether that account contains the right amount of money, you’re subjecting yourself to potential delays and hang-ups down the road. You might even not get paid.

A few more points that I want to emphasize:

  • Although the long-term impacts of these deficit cuts will probably be minimal, we are going to feel the pinch in the short term. Federal IT spending will decrease overall this year, particularly in DOD, where they have been spending as though the sequester would not be implemented.
  • Most of the cuts to IT spending will probably be felt by systems integrators and services contractors, both large and small. All the language coming out of OMB and other government sources indicates that there are many duplicative or otherwise unnecessary IT services contracts that will probably be descoped (or cancelled outright). This is bad news for small business subs on large contracts, but is actually good news for the COTS community, since government will need to buy more tools to perform the tasks that they used to outsource.
  • Keep your audience in mind. At the executive level, demonstrating cost savings and value is going to be more critical than ever – if you can’t demonstrate real ROI within two years of purchase, your customer likely won’t be interested.
  • At the end of the day, there is still a mission that has to be met, and government customers won’t be able to use sequestration as an excuse not to do their jobs. If you or your clients can help them meet that mission, you will still find a willing audience.

As always, if you have more specific questions, I urge you to reach out to the Market Intelligence team. Good luck and happy hunting.

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