In the competitive world of information technology, vendors must be alert to major changes within the potential customer base. In the federal IT market, the U.S. government increasingly has been using its status as the world’s single largest IT customer to acquire products and services at competitively favorable costs.
U.S. government spending for a combination of legacy IT operations and new projects has reached some US$90 billion annually.
If IT providers want to continue pursuit of federal contracts, they will have to adapt to changes in the government’s approach to procuring significant chunks of business. It appears that providers are willing to accept the government’s use of an enterprise-wide IT acquisition strategy.
The federal IT “market” is made up of so many government entities that in reality it is significantly fragmented. Multiple agencies have tended to go their own way in acquiring IT, using a plethora of federal contracting vehicles.
That is changing, however.
Federal agency purchasing managers have been trying to use the massive buying power of the government to negotiate comprehensive agreements with IT providers to obtain both performance and cost benefits on behalf of individual federal agencies.
Collective Impact of Purchasing Power
For example, he federal General Services Administration this summer concluded a new government-wide enterprise software acquisition agreement with Veritas Technologies for data governance and cloud management. The agreement provides agencies with access to Veritas solutions through a single contract. Additional savings are gained due to the collective impact of selling to all government agencies through a single vehicle.
The agreement provides government buyers with negotiated pricing and easy access to Veritas’ data management and security software capabilities, GSA said. In addition, the contract provides agencies with price consistency and allows for more efficient budgeting throughout the program lifecycle, including tiered discounts based on leveraging the buying power of the government.
The Veritas agreement is one in a series of contracts GSA has negotiated to provide IT solutions focusing on a variety of specific software resources. As part of an initiative spurred by the Federal Information Technology Acquisition Reform Act, or FITARA, GSA launched a “Schedule 70 Enhancement Program” in 2016. Its purpose is to make those software capabilities available through the offerings on the agency’s standard list of IT products and services known as “Schedule 70.”
“The IT Schedule 70 FITARA Enhancement Program will provide government agencies with greater flexibility in accessing the innovative software solutions they need at a better value to taxpayers,” said GSA Federal Acquisition Service Commissioner Alan Thomas.
“Providing these solutions through a government-wide, enterprise-level contract is a great way to reduce duplication in our procurement process,” he said.
Congress in 2015 passed the FITARA legislation, which required GSA to put in place enterprise-wide agreements to support federal agencies in their acquisition of software. The Office of Management and Budget the following year required GSA to issue at least two government-wide software agreements annually, aimed at reducing costs and bringing innovative technology to the federal government through GSA’s Schedule 70. GSA so far has met that goal.
GSA Emphasizes Enterprise-Wide Approach
GSA this spring set up an enterprise-wide Schedule 70 software solution with IBM for the company’s DB 2 for Linux, Unix and Windows. The package includes training, migration assessments and priced service engagements. GSA earlier this year reached an agreement with ServiceNow for cloud-based software offerings that feature solution sets of varying sizes for IT service management, cybersecurity, and management of operations, customer service and human resources.
Other contracts GSA issued for this program include an enterprise-wide deal with Nutanix for hyperconverged cloud infrastructure, or HCI, solutions, which was concluded last fall. The capabilities offered under the contract cover common HCI applications that will enable agencies to simplify their data centers and transition away from legacy infrastructure to a more efficient, modern and optimized platform, GSA said.
GSA last year set a government-wide enterprise software agreement for IT management solutions with Hewlett Packard Enterprise Software (HPE). The agreement covers data center consolidation, software asset operations, application portfolio management, and Agile-Iterative software development.
GSA in 2016 reached an agreement with Adobe for best-in-class data-centric security and electronic signature solutions. The Schedule 70 capability enables federal agencies to comply with various data protection requirements. GSA kicked off the program in 2016 with a government-wide contract with geospatial software contractor Esri, noting results in improved efficiency, pricing, contract terms and transparency. The contract was facilitated in consultation with the Army Corps of Engineers, the U.S. Navy, and the departments of Agriculture and Interior.
The programs have generated positive results.
“They’ve been effective in achieving our goals of providing agencies easy access to packaged solutions and cost savings,” said Jeremy Wustner-Brown, deputy director of ITC Portfolio Outreach at GSA.
For example, GSA worked with HPE and its partner Carahsoft to provide HPE offerings that would enable customers within a government agency to pool together to trigger additional discounts ranging from 2-8 percent, depending upon their size.
To encourage the government-wide enterprise approach to IT acquisition, GSA has engaged the 24 major federal agencies to solicit their interest in specific commercial offerings under the program. Several agencies have agreed to participate in more detailed reviews of enhancements proposed by vendors.
“We are always looking for new industry partners and solution packages to work through this process,” GSA’s Wustner-Brown told the E-Commerce Times.
Carahsoft has assisted both vendors and GSA in arranging many of the Schedule 70 offerings. It is the GSA Schedule 70 contract holder and distributor for nearly 300 vendors, and in cooperation with GSA has supported the award of six “Category Management Addenda” that supplement Carahsoft’s basic federal supply schedule.
IT Vendors and Agencies Benefit
“Each Category Management Addendum allows the federal government to achieve savings based on annual spend on each vendor’s solutions,” said Carahsoft Senior Vice President Robert Moore.
“After negotiating each addendum, we work with our reseller partners and drive awareness for the program through webinars, mailing campaigns, and trade shows,” he told the E-Commerce Times.
Among the examples of Carahsoft platform utilization for the Schedule 70 enhancement program are offerings from Adobe, Nutanix, ServiceNow and Micro Focus.
“These solutions all support the government’s efforts toward purchasing more wisely and with an enterprise approach as outlined in various areas such as the Megabyte Act, Fitara, and Category Management policy directives,” Moore said.
Vendors have reacted positively to the Schedule 70 enterprise-wide approach.
“This deal reinforces our commitment to the public sector and will make it easier for agencies to realize the benefits of our services,” said Brian Marvin, vice president for federal sales at ServiceNow.
“With this agreement, government agencies will move into the 21st century, boosting operational efficiencies and workflow tracking, better securing sensitive documents, meeting strict policy requirements, helping transform legacy systems, and reducing contract duplication,” said Matt Schrader, Adobe’s director of government relations when GAS concluded its agreement with the company.
Nutanix declined to comment specifically about the impact of its work with the GSA.
However, “I can say that we’re excited to see the GSA making it easier for the federal government to adopt innovative technology solutions like ours,” spokesperson Kate Reed told the E-Commerce Times.
Overall, the contracts set by GSA for Schedule 70 software solutions represent only a tiny fraction of federal IT business in terms of total value, and the pace of adopting just two such contracts annually will not significantly increase that fraction in terms of sales volume. Still, the program will provide concrete experience for both agencies and vendors for utilizing the enterprise-wide approach that potentially could cover a broader range of IT equipment, programs, and services purchased by federal agencies.
“As the government is channeling resources toward IT modernization, GSA is putting a laser focus on acquisition solutions that will help federal agencies efficiently retire and replace legacy systems and software programs,” said Kay Ely, assistant commissioner of GSA’s Federal Acquisition Service.