What you need to know about changes at Air Force Space Command

Stephanie Meloni_65x85By Stephanie Meloni, consultant

More big changes may beOrbital view on Earth from space coming to the Department of Defense outside of CYBERCOM’s anticipated elevation to its own Combatant Command.

Late last month, the House Armed Services Committee voted to move forward with their own version of the FY18 National Defense Authorization Act (NDAA), which would create a new military branch—the “Space Corps.” This would create a sixth military branch that would be solely responsible for combat in space.

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DOD Cloud Demand Increases, but DISA’s Role May Change

Lloyd McCoy_65x85by Lloyd McCoy Jr., Consultant

DISA’s role as the central broker and provider of cloud services for all of DOD is in jeopardy. Back in July 2012, Department CIO, Teresa Takai designated the agency as the DOD cloud broker. That means DISA manages the use, performance, and delivery of cloud services for DOD customers. The precursor to this designation was, DISA First, a policy where Defense agencies would consider the Defense Information Systems Agency (DISA) for data hosting before considering other options. The outcome of these policies, ideally, was DISA being the key facilitator for all things cloud. So far these strategies have worked with mixed success.

DISA’s $450 million draft RFP, released in the summer to supplement its private cloud services with commercial cloud offerings is now being revisited because of lukewarm buy-in from the rest of the Department. Also, Takai’s push toward a cloud-based and DISA managed enterprise email system is facing resistance from important DOD stakeholders like Navy and Air Force. The consistent thread through all of the opposition is cost, as many within the military branches believe it would be cheaper to purchase cloud services directly from industry. Also, while they may not say it publicly, there is resistance within many in the Department to outsourcing cloud procurement outside of their respective silo. The result is that DISA’s first two major initiatives, the cloud contract and enterprise email, have met mixed success.

That’s not to say that adoption of cloud technology is shrinking within DOD. The 2012 National Defense Authorization Act directed that DOD move in the direction of adopting cloud solutions for its data. Trends suggest the Department is indeed following this mandate. Cloud image 2The Navy, for example, is working with commercial cloud providers like Amazon Web Services (AWS) for many of its public websites. The Pentagon is still closing data centers and reducing applications, thus increasing the need for cloud services down the road. These are just a couple of the many examples of cloud adoption spreading across the Department.

Expect cloud buyers to be distributed across the Department and less focused around DISA, an outcome that Teri Takai may not have wanted, but one that doesn’t necessarily impact the dollars spent on cloud offerings. DISA will still play a key role in cloud implementation and management for the Department, particularly with regard to private hosting requirements, like for sensitive, non-public data. Also, the Joint Information Environment, a conceptual end-state featuring interconnected and shared IT infrastructure across the DOD enterprise will rely on core data centers that will be managed by DISA. That will not change.

If you are selling cloud services into the Department, know that trends toward cloud adoption are here to stay and be aware of the following challenges they have highlighted as pain points:

  • Cyber security
  • Continuity of operations
  • Resilience
  • Data migration and management
  • Overcoming network dependence in low-bandwidth environment

The bottom line is that if you are a cloud provider working in the Defense market, whether your particular DOD agency or military branch is pursuing a go-it-alone strategy or going through DISA, the cloud market for DOD will remain robust for the foreseeable future.

2014 House NDAA Continues Procurement Tinkering

photo_Steve-Charles_65x85by Steve Charles, Co-founder and Executive Vice President

As it does every year, Congress passes procurement law changes in the National Defense Authorization Act (NDAA). This year is no different.

So what’s in store for 2014? It’s too early to say with certainty, because while the House has passed its version, the Senate is still cogitating. One thing we do know: The Senate, House, and White House all agree, within a billion dollars or so, on the level of Defense spending next year. Strangely, none of them take into account sequestration, which is still the law of the land under the Budget Control Act. It’s likely your customers are scratching their heads too, and that means extra sales resistance in store for 2014 until buyers know exactly what their spending authority will be. In the meantime, provide your customers with the information they need to complete perfect purchase requests so when the money drops, orders flow.

When it comes to procurement, we don’t see the sweeping changes of the last couple of NDAAs, but the 2014 bill is not absent of them, either.

Here are key highlights from the House Armed Service Committee’s bill, H.R. 1960, that would affect proposals and dealings with DOD customers:

  • The bill would exclude the salaries of some contractors’ top five earners as allowable expenses on DOD cost-reimbursement contracts, but not lower the rest of them nor cap them at $400 thousand, as the White House would like to do. The bill leaves the current cap of $763,029 (inflation adjusted) in place and changes the list of possible exceptions just from scientists and engineers to “narrowly targeted” ones “in the science, technology, engineering, mathematics, medical and manufacturing fields.” Significantly, the provision now covers contractors who received more than $500 million during the previous fiscal year. (Imagine the cost accounting challenges for contractors at the edges of this proposed threshold!)
  • Section 816 revamps bid evaluation by requiring that prices receive importance at least equal to technical (or other) criteria when evaluating proposals. This is a subtle but important change deep in the language of the U.S. Code Title 10 ((a)(3)(A)(ii) to be precise). The bill would require the head of the buying agency to sign off on any deviation from the increased emphasis on price, and issue a report on the allowed exceptions every year.
  • Sections 811 and 812 amends Section 818 of the 2012 NDAA written to prevent counterfeit electronic parts from entering the DoD supply chain. The proposed Section 811 emphasizes “electronics” seemingly broadening the scope of counterfeit concerns beyond “electronic parts” while Section 812 would limit contractor liability when government requirements include obsolete parts no longer available from the Original Equipment Manufacturer (OEM) or its authorized       distributors.

Detection and Avoidance of counterfeit electronic parts, while the law since 2012, has yet to be implemented in regulation. What would a DoD-approved system for this purpose look like? Proposed DFARS Case 2012-D055 attempts to tackle this and comments are due July 15. One of the key elements requires that DoD and its contractors purchase from an OEM or an OEM authorized distributor/reseller. Check out our new Trusted Supplier program to help minimize the risks from potentially counterfeit or tainted commercial products.

There’s a long way to go before the proposed NDAA provisions become law, and then even more time until they get implemented in regulation. We encourage you to be aware of and track procurement-related statutes and implementing regulations as even small changes can warrant significant changes in go-to-market tactics.

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