The following item was posted by Jill R. Aitoro.

A discussion board recently posted an unclassified PowerPoint presentation from the Federal Bureau of Investigation, which provides an in-depth look at the criminal investigation into the selling of counterfeit Cisco networking equipment to federal agencies.

The presentation reports a spike in the total number of seizures of products that violate intellectual property rights from 8,022 in 2005, valued at more than $93 million, to 14,675 in 2006, valued at more than $155 million.

Counterfeit Cisco equipment – including routers, switches, and other hardware components -- finds its way into federal networks because of weaknesses in government procurement and problems with Cisco’s own sales practices, according to the presentation. In the case of the former, agencies purchase from uncertified suppliers using government credit cards or from subcontractors that are two or three levels separated from the manufacturer and allow “blind drop” or “drop ship” methods of fulfillment that limit the possibility of quality assurance checks within the contracting community by delivering the products directly to the agency from the supplier.

For Cisco’s part, reliance on distributors and resellers for the sale of products, combined with a lack of coordination between the company’s brand protection and sales teams perpetuates the problem, according to the presentation. Furthermore, it notes a lack of any vetting of companies selling equipment to government, beyond standard background checks, by either Cisco or the General Services Administration.

The presentation highlights a number of cases where counterfeit Cisco equipment managed to infiltrate federal agencies, including one that involved a top tier partner sourcing equipment from China, that eventually landed in a secure Navy facility.

I want to draw your attention to my colleague's, Tom Shoop's, FedBlog item "Zero Tolerance for Charge Card Abuse." The item refers to a report on the abuse of government purchase cards. In just a couple of hours, the item received, at last count, more than a dozen comments. "Why do we keep hearing these excesses?" asks James Boyd. "The cards have controls that can be programmed into them." And more.

Join the discussion here, or the one already talking place on FedBlog.

Last week Commerce Department Secretary Carlos Gutierrez told a House panel that the Census Bureau was dropping plans to use newly developed handheld computers to collect information from Americans who did not mail in census forms for the 2010 census. In his testimony, he said the handhelds were part of a larger plan to make the census "better, faster, and simpler."

The plan, Gutierrez said, was to address the increasing problems that the bureau is facing that threaten the accuracy of the census, including a larger population, the changing shape and diversity of American families, and a decreased response rate to the census because of a growing distrust of government and because of privacy concerns. These problems have led to lower productivity of the temporary workers the bureau hires to go door to door to count Americans, which requires hiring even more temporary workers to make up for the lost work. Gutierrez said the bureau developed the GPS enabled handhelds to collect more accurate address locations to make it easier for the workers to find residences.

Today, there is a looming crisis in the federal acquisition arena that overshadows specific actions to reform the system: Roughly half the federal acquisition community is eligible to retire from government service within the next eight years. This gives rise to two threatening scenarios. First, an already burdened contracting and procurement system will find itself further shorthanded. With the outflow of experienced professionals, Congress is worried that there will not be enough people to handle the program management, contracting and procurement needs of government.

Second, the federal acquisition professionals who will be left behind lack the experience of those who have departed. Congress has expressed concern that a substantial portion of government’s institutional memory will be lost in the next few years. As a consequence, we will face a situation where we have fewer acquisition professionals serving government, and these people will have lower skills levels than the old guard.

Congress recently received testimony from three key acquisition management institutional players: the Federal Acquisition Institute (FAI), the Defense Acquisition University (DAU), and the Office of Federal Procurement Policy (OFPP). Leaders of these government organizations were asked what they were doing to stem the flow of experienced acquisition professionals. The response: We are instituting inducements to keep experienced professionals from bailing out, we are strengthening training of existing professionals, and we are actively recruiting fresh blood to fill the ranks.

These are good answers to Congress’ question. However, it is not clear that Congress asked the right question. In view of the fact that the acquisition process has struggled over the past several decades, do we really want to take extraordinary efforts to retain the institutional memory associated with a problem-filled acquisition process?

A better question that Congress should raise is: With the exodus of the current acquisition workforce, what are the DAU, FAI and OFPP doing to change the mindset of acquisition professionals so that we have a new generation of professionals who understand that effective acquisition management requires good business sense and goes beyond the mindless implementation of the Federal Acquisition Regulations?

The following are quotes from experts in the federal information technology community about the suspension of International Business Machines Corp. from any new federal contract.

"You don't see this very often, particularly for large companies. This happens with small companies more frequently. But IBM -- wow."
Ray Bjorklund, senior vice president and chief knowledge officer for FedSources, quoted by Nextgov.

"We are going to cooperate with investigators but we are also going to take all appropriate actions to challenge the scope of this action."
Fred McNeese, IBM spokesman, in a telephone interview with Reuters.

"It is rare for entire companies to be suspended. Suspending operating units of large companies is less rare and for smaller companies where all operations in one place we see an entire company suspended more often. I am hoping there was a lot of communication between EPA and IBM. I have the impression that there was not which would be unusual."
Alan Chvotkin, executive vice president and general counsel for the Professional Services Council, quoted by Federal News Radio.

"A suspension is normally not assessed unless there is a very serious infraction that has been not only alleged but documented. The EPA move is "very unusual" and "it has enormous ramifications."
Stan Soloway, who heads the Professional Services Council, a trade group representing IBM and other government contractors, quoted by the Associated Press.

"The U.S. government contributes only 2 percent of IBM’s total revenue, roughly half of which comes from existing multi-year contracts that are not expected to be affected by the suspension, according to Citigroup analyst Richard Gardner."
FP Trading Post article.

"Just 0.2 percent [of the companies debarred from government contracting] share IBM's 'Suspension by any federal agency pursuant to Executive Order 12549 and the agency implementing regulations based on an indictment or other adequate evidence (a) to suspect the commission of an offense that is a cause for debarment or (b) that other causes for debarment under the agency regulations may exist.'"
Melissa Smith, INPUT blog

More details are coming out on the suspension of International Business Machines Corp. from receiving new federal contract. Reuters reports that the contract in question involves the modernization of the Environmental Protection Agency's financial management system. In 2006, IBM bid $80 million on the contract, which EPA has yet to award.

Reuters reports: "'What we are saying is that the case stems from information provided by an EPA employee to IBM employees,' [IBM spokesman Fred] McNeese said. 'Prior to Friday, there was not a hint that there were any type of issues with this contract.'"

In case you missed the story yesterday, the U.S. Court of Federal Claims came down this week on the side of the companies protesting the awards of the General Services Administration's Alliant contract. The contract, estimated to be worth $50 billion over 10 years, provides agencies a way to buy information technology services.

Of course the big question now is: What's next? GSA is keeping mum for the moment and none of the parties involved in the case have been eager to comment on the decision's implications. However, Kelly Fleury, federal sales manager, with MTC Technologies in Dayton, Ohio, one of the original Alliant awardees, contacted me this morning to discuss her company's outlook following the decision.

During our phone conversation, discussion of the court's ruling and GSA's plans were off-limits, but I did get the impression that MTC remains confident that this program will move forward eventually and without radical changes.

"We have no reason to believe that we need to change our business plan," Fleury said. "We are moving forward with our business plan very aggressively." She went on to talk about the marketing efforts her company is planning for April. "It's a big push towards educating end users about what Alliant is and how it can be of benefit to them," she said.

Fleury also talked at length about the importance of informing all those involved in the procurement process -- from chief information officers and program managers on down -- about the advantages of Alliant.

Noticeably missing from our conversation was any mention of a definitive date for the Alliant kick-off. "We're in no position to comment on GSA's kick-off date," Fleury said. But she added, "As of now, GSA has not announced any date, but we believe we're in the home stretch."

When asked whether the company's educational outreach efforts were in violation of the judge's ruling that prohibits further work by contractors or GSA on Alliant, Fleury again declined to comment.

So it looks like there's more to come, especially regarding the GSA's reaction to the decision, which so far has amounted to the canned two-sentence response at the end of the article. While there is widespread speculation on what the GSA is planning, the two most likely options seem to be either negotiating with the eight protesting companies in hopes of finding a mutually satisfactory solution or revamping the entire awards process and starting over. Obviously the former would be much more palatable than the latter.

The Risk Factor blogger Bob Charette, a risk management expert who consults with federal agencies on risk management, picked up yesterday's story on the deep trouble that the Census Bureau's handheld computer contract is in. In his blog post, he questions the credibility of the Capability Maturity Model Integration (CMMI®). Harris Corp.'s Government Communications Systems Division, which is the prime contractor on the $600 million handheld contract (now likely much more than $650 million after all the costs from changes, errors and delays are included), has a Maturity Level 3 rating. "The Level 3 rating denotes superior process maturity within the division's program management, engineering, quality assurance, and other disciplines, and achievement of this rating has become a competitive differentiator on many government programs," Charette quotes.

Charette wants to know: "At the very least, I think the division's CMMI rating may need to be re-evaluated, or maybe better, the U.S. government better start looking at what, if anything, SEI CMMI Level 3 actually means in practice."

Or it could mean, the customer, the Census Bureau, put too many demands on Harris -- so many, in fact, that no maturity designation, no matter how high, could have avoided the very problems that now threaten the viability of the U.S. census.

Government Executive's Robert Brodsky reported today about how the Environmental Protection Agency may have wasted millions of dollars in extra fees to contractors for meeting performance thresholds. "EPA regularly gave contractors ratings of 'exceeds expectations' or 'outstanding,' which facilitated the higher incentive fees, according to" an EPA inspector general report.

Brodsky cites one of the nine contracts the IG analyzed, in which a high rating "was justified only with the following comment: 'The project management was excellent with no problems encountered and costs were within scope of work.' A project that merely encountered no problems or stayed within budget should have earned a grade of satisfactory, the IG said."

Since government projects typically miss deadline and come in over budget, encountering no problems and keeping costs within scope may seem like quite an accomplishment. Others may view it it as simply doing your job.

The Homeland Security Department may be considering some changes to FirstSource, its indefinite delivery, indefinite quantity small business contract for purchasing of commodity IT goods.

The contracting vehicle, which complements the Enterprise Acquisition Gateway for Leading Edge Solutions (EAGLE) contract for acquiring IT services solutions, was awarded to 11 businesses in February 2007 and is worth up to $3 billion if all options are exercised. So far, FirstSource has more than $380 million in pending and awarded orders.

Despite all the money funneling through, the contract has had its fair share of critics, largely due to the inclusion of joint ventures. Small businesses with fewer than 150 employees were eligible to bid FirstSource, but under the rules of the Small Business Administration's 8(a) Mentor-Protégé program, a joint venture between a small business (the protégé) and a large company (the mentor) qualifies as a small business as long as the protégé firm meets the size requirements. In theory, the program was developed to provide small businesses with guidance and direction, encouraging small-business growth.

Three joint ventures were awarded FirstSource contracts:

-- EG Solutions, a joint venture between Alaska-based Eyak Technology (fewer than 150 employees) and Chantilly, Va.-based GTSI (700 employees, and 2007 revenue of about $850 million)
-- ST Net Apptis, a joint venture between Gaithersburg, Md.-based St Net Inc. (about 20 employees) and Chantilly, Va.-based Apptis (1,500 employees and 2006 revenue of about $700 million)
-- MultimaxArray, a joint venture between Greenbelt, Md.-based Array Information Technology (fewer than 150 employees) and Herndon, Va.-based Multimax (more than 1,000 employees)

In June 2007, Multimax was acquired by Harris, who reported $4.2 billion in revenue in 2007.

A source close to the contract that asked to not be named said that the presence of those three joint ventures has left a bad taste in the mouths not only of their competing small businesses, but also DHS contracting officers, driving a decision to reevaluate the contract and consider some restructuring.

Why? Multiple sources on the contract claim that the protégé companies are doing little to none of the work under FirstSource, while their mentor counterparts provide the bulk of fulfillment and claim the majority of dollars.

It’s true that in many cases, contracts awarded under FirstSource are awarded directly to the large business. This is technically in violation of the rules, as the joint venture company holds the contract, not the mentor company alone. In January, for example, Nampa, Idaho-based MPC Computers, a wholly-owned subsidiary of MPC Corporation, announced that it will team up with “prime contractor Apptis” to fulfill a multi-year contract to supply desktop and notebook PCs to the U.S. Coast Guard, under DHS’ FirstSource contract. There was no mention of St Net or even St Net Apptis.

Regardless of whether or not joint ventures keep in the spirit of the small business program, a lot of speculation is swirling about what DHS may or may not do to adjust FirstSource requirements. A DHS representative said that, at this time, there are no plans to re-compete FirstSource and provided no other information.

SBA, on the other hand, all but verified changes, stating in an email that "there is nothing that requires DHS to exercise a contract option,” once the current contract expires in February 2009, and that “the new contract we are told will still be set-aside for small business with ‘expanded’ small business categories.”

While vague, mention of a new contract with different small business standards certainly supports claims that a change may be in the works. SBA directed all further inquiries to DHS, who remains mum.

Read more about concerns associated with joint ventures at GovernmentVAR.

We think you, the technology manager in the federal government and industry, have a pretty good insight into just what are the hot issues and events that will unfold in 2008 for the federal IT market. Over the past few weeks we've invited you to take an online survey to let us know what you think; we just want to take this opportunity to invite you to take the survey again, if you haven’t.

We are conducting the survey in conjunction with our friends at Government Futures, which is also offering readers a chance to place bets on what’s going to happen in the federal IT community using the prediction markets on Government Future's Web site.

If you have taken the survey and placed your bets, thank you. If you haven't, please visit the site and give us your opinions. The questions cover a number of hot areas, including information security, the next-generation Internet and federal information technology spending.

In January, we’ll host a webinar to discuss the results of the survey and present an analysis of the predictions.

In the December issue of Government Executive, we discuss some trends that IT experts told us would be important. Now, we want your opinion. So, please take the survey and join the government futures market to help us figure it out.

The General Services Administration’s stepped-up pricing checks has schedule contract holders second guessing whether they want to do business with the federal government. But GSA has extended pricing checks to those information technology vendors that do not hold a GSA Schedule. Ingram Micro, which neither has a GSA contract nor sells directly to the federal government, recently had GSA come knocking.

Ingram Micro is an IT distributor with corporate offices in Santa Ana, Calif., and Williamsville, N.Y. The way the company’s federal business works goes something like this: Ingram partners with IT hardware and software vendors; IT resellers (typically small to medium sized) sign on as Ingram customers; those solution providers bid federal IT contracts based on product pricing provided by Ingram and, when they win, place orders for the required products through Ingram, which sources the products from vendor partners. Ingram doesn’t hold federal contracts. Solution providers sell to federal agencies using their own contracts or those held by the IT vendor. In essence, Ingram acts as a middle man.

Until recently, that business model has kept Ingram off GSA’s radar. No longer, said Bob Laclede, vice president and general manager of government and education at Ingram. GSA recently requested the distributor’s pricing data, including discounts. That’s information that Laclede did not think GSA had the authority to ask for. Not true, said GSA spokesperson Brian Filpot. “If an offeror or current contract holder proposal states that [pricing] is based upon [commercial sales of a company] other than its own, then commercial sales practices data must be provided for the manufacturer or distributor or both so that the contracting officer can determine price reasonableness,” he said.

That fact was reinforced Nov. 7 – the same day we asked GSA about the inquiries with Ingram – in a Defense Department memo sent to Defense agency directors by Shay Assad, director of Defense procurement and acquisition policy (DPAP). The purpose of the memo was to “ensure that contracting officers are successful in obtaining the necessary information and data for determining fair and reasonable prices for purchases made from exclusive distributors/dealers” and require notification to the DPAP office when a distributor or dealer refuses to provide required cost data. Chances are Ingram got targeted first because it’s the largest among the IT distributors.

Fair enough, Laclede said, which is why Ingram has been working to provide the data. But when contracting officers start badmouthing his business – that’s another story. Apparently, GSA contracting officers have told resellers that “Ingram is not an authorized GSA distributor and that they [resellers] should take their business elsewhere,” Laclede said. The company’s legal counsel has been alerted of the claims. Explanations for why GSA needs the pricing information make sense, Laclede said, but “what a few of the COs are telling our customers does not.”

Let’s hope GSA finds common ground with distributors, for agencies’ sake. A total of 2,454 Ingram resellers sold into the federal space in 2007, driving $690 million in revenue for Ingram. Take away Ingram and other distributors’ right to supply, you take away many of their contractors’ ability to sell products and services.

In August, the federal IT market research firm INPUT released a report showing agencies spending a greater portion of their IT budgets in the government’s fiscal fourth quarter. That’s up from 28 percent from the four year time period of fiscal 1997 to fiscal 2000.

Tech Insider blog item wondered if such an increase in IT spending over such a short period of time increased the chance that agencies may not be aligning spending with strategic goals and wasting money.

The answer may very well be yes, according to the Treasury Inspector General for Tax Administration. In a recent report, the IG found that the value of purchases by the Internal Revenue Service made in the month of September increased 671 percent from 2002 to 2006. Reviewing purchases made in August and September 2006, the IG “identified deficiencies with 14 (15 percent) of 92 procurement actions …,” according to the report. “We believe appropriations regulations may have been violated for four of the actions, while all required acquisition steps were not completed for the remaining 10 actions.”

The IG also wrote:

Inefficient and ineffective procurement actions can occur when there is a rush to use funds before they expire at fiscal yearend. This rush increases the risk that items purchased may not meet the requester’s need, thus requiring a second procurement action; were not obtained at the best possible price; or did not use the best vendor or type of contract because Office of Procurement personnel do not have the time necessary to perform a full contractor competition process. Therefore, funds may be spent inefficiently and ineffectively.

Sun Microsystems Federal Inc., which has been the subject of a congressional inquiry into possible contracting abuses, plans to cancel its General Services Administration Multi-Award Schedule Contract by Oct. 12, according to an email sent by a public relations firm handling Sun Microsystems Federal.

According to the statement released by 463 Communications in Washington, D.C.:

We can confirm that Sun has notified the U.S. General Services Administration (GSA) that it is canceling its current GSA Multi-Award Schedule Contract effective October 12, 2007. We took this step reluctantly, as we have always valued our relationship with GSA and its team of committed professionals. Sun and GSA have enjoyed a successful relationship as partners for a number of years during which Sun has provided government agencies with some of the industry's most innovative, energy-efficient, open source and secure computing systems.

Sun remains honored to be a federal contractor and, like other companies in our industry who do not have a GSA multi-award schedule, we look forward to continuing to serve our government customers.

Asked if the inquiry by Sen. Charles Grassley, R-Iowa, who has asked for documentation on how much Sun has charged the government for its products, was the reason for Sun's decision to cancel its GSA schedule, a spokesman initially said, "Yes, it is in relation," but added that he would provide a further statement later.

According to a Government Executive article on the subject:

The review involves a contract extension awarded to Sun in September by GSA. The contract has faced scrutiny partly because House Oversight and Government Affairs Committee Chairman Henry Waxman, D-Calif., called GSA Administrator Lurita Doan to testify about her alleged meddling during the business dealings.

At a March hearing, GSA Inspector General Brian Miller stated that Doan and her top staff intervened in negotiations with Sun, going against the judgment of three career contract officers and choosing a higher-priced offer from Sun.

The Air Force Space Command’s Space and Missile Systems Center has hit another speed bump in the development of the next-generation Global Positioning System satellites. But to find out, you need to start the day reading, and then deciphering, obscure contract notices on the GSA’s Federal Business Opportunities Web site.

Last week the Space and Missile Systems Center announced it intended to award sole source contracts to Boeing and Lockheed Martin, which are competing for the multi-billion GPS III contract, for something called “GPS Phase A Sub System Risk Reduction.”

Buried in that contract notice is the speed bump: a line that says that the GPS III Key Decision Point-B has been delayed from August until December. If you want to know what that means, it’s easy to find out if you happen to have, hanging around the office, a copy of chapter 39, Title 10 of the U.S Code, section 2366a.

That code says, in quite plain English, that any major Defense Department project cannot proceed unless higher-ups in the Pentagon determine that the program is affordable, that its technology has been demonstrated in a relevant environment and the program demonstrates a “high likelihood” of accomplishing its intended mission.

In the case of GPS III, this includes a constellation of higher powered satellites that have jam-resistant capabilities for military users and new civilian signals to support civilian users, such as the FAA, which plans to base its new air traffic control system on GPS.

The Space and Missile Systems Center sugar-coated this delay by saying that the Risk Reduction contracts awarded to Boeing and Lockheed will provide them with additional time for system design work, including mature space system design and navigation payload subsystem design.

But time is running out if the Air Force wants to design and build GPS III satellites to replace those satellites on-orbit within six years. The Government Accountability Office reported this April that among if the first GPS III satellite is not launched by 2013 “constellation sustainment will be at risk.”

The Risk Reduction contract notice from the Space and Missile Systems Center indicates that it may be difficult to meet a 2013 launch date. It asked Boeing and Lockheed to provide it with life cycle cost estimates “consistent with a high confidence, low-risk capability insertion program plan for a FY 2014 launch availability” and additional cost estimates for an accelerated launch availability before FY 2014.

Anyone want to bet the first GPS III bird will be launched in 2013?

The Homeland Security Department's huge agencywide IT services contract, the Enterprise Acquisition Gateway for Leading Edge Solutions (EAGLE) contract, seems to be attracting a good amount of business early in its conception, according to an INPUT analysis. One reason, according to Jeremy Potter, a senior analyst at INPUT who covers DHS, is the contract’s assurance to DHS buyers that it will provide a quick turnaround for customers.

EAGLE contracting officers seem to be meeting their goal. For the first 15 task orders issued on the contract, DHS contractors made a contract award in an average of 30 days, according to Potter. That continues a decline in IT contract awards, with the average time to award of 159 days for contracts let between 2000 and 2004, 225 days for contracts let between 1995 and 1999, and 425 days for contracts let between 1990 and 1994, according to INPUT. But Potter says he is not sure if DHS can continue to keep its turnaround for EAGLE task orders to 30 days, if demand for its services increase.

One of the biggest challenges that the Homeland Security Department has always faced is creating a "DHS identity" among the thousands of employees working at the disparate 22 agencies that make up the department. If DHS' top management can pull that off, they will encourage agencies to work together and share information, which will lead to more efficiencies in IT.

One way to develop that "oneness" is to create a contract from which all DHS components can buy information technology. The Enterprise Acquisition Gateway for Leading Edge Solutions (EAGLE) contract is supposed to be that contract. Consolidating IT contracts departmentwide into EAGLE (which has a $48 billion spending ceiling) is designed to create a "one DHS view," says Jeremy Potter, a senior analyst with the federal marketing research firm INPUT.

Whether DHS can pull that off using EAGLE is still up for debate, although early indications show the contract is attracting large task orders, according to an INPUT analysis. In a webinar for IT vendors held today, Potter said the EAGLE contract has attracted 49 task orders worth $575 million from DHS agencies. Another $1 billion worth of IT task orders are expected to be submitted to EAGLE in the next 12 months, according to INPUT.

But one webinar attendee asked whether DHS may create a new agencywide contract because the attendee had heard that EAGLE was not popular among DHS contracting officers because its fees were too costly and it didn’t provide enough choices. Potter responded that it was still too early to draw any conclusions on EAGLE's success and added that he had not heard any "rumblings" of a new acquisition vehicle at DHS.

The request by the National Geo-Spatial Intelligence Agency 9NGA) for contractors to move the agency from six locations in the Washington, D.C., area to new digs at Ft. Belvoir, Va., in 2011 has attracted the attention of not only moving and relocation management companies, but also aerospace contractors and systems integrators.

Steve DeLane, business development veep at Alexander's Mobility Services (an Atlas Van Lines affiliate in Baltimore), told me that representatives from Northrop Grumman and Lockheed Martin showed up earlier this month for an informal NGA presentation and walk-through on its requirements for the move.

Delane said the two companies may have been attracted by the requirement that the movers have Top Secret/Special Intelligence/Talent Keyhole clearances, and he wondered if the solicitation was written in such a way as to attract players from outside the moving industry.

If either Northrop Grumman or Lockheed Martin wins the job, they’re going to need a lot of trucks to move 8,500 NGA employees, the contents of their offices and assorted highly classified gadgets and gizmos, Delane said. He estimated it would take about 400 tractor trailer loads to handle the NGA move, which he estimated could take a year and cost about $2 million.

Delane said his company is well positioned to handle the NGA move. Alexander's Mobility Services is currently handling the move of the Army's Military Surface Deployment and Distribution Command from the Washington area to Scott Air Force Base in Illinois. But Delane may be reluctant to bid on the NGA move if a wide range of vendors decide to go after the job.

Katrina Redmond, a spokeswoman for Fox Relocation in Boston, said her company has personnel who can meet NGA’s security requirements, and she added that the agency’s planned move is the kind of work her company does well. However, she didn’t say whether Fox intended to bid on the job.

I have yet to hear back from Northrop Grumman or Lockheed with official word on whether or not they intend to get into the moving business. But after a flurry of calls on this and other stories today, I am convinced I am one of the few people working in the federal space not on vacation this week.

It isn't much of a secret that the federal government spends a large portion of its information technology budget in the fourth quarter of the federal fiscal year (July through September). But what may not be so evident is that the fourth quarter, known in federal parlance as "the buying season," is becoming more of a buying frenzy, according to a report released today by the federal market research firm INPUT.

From fiscal 1997 to fiscal 2000, the federal government spent 28 percent of its total IT budget in the fourth quarter, with IT spending fairly even for the rest of the year, according to the INPUT report (purchase required). That percentage increased to 31 percent in fiscal 2001 to 2004, and then increased again to 34 percent in the fiscal 2005 and 2006 period. In fiscal 2007, INPUT projects the federal government will spend one-third of its IT budget in the fourth quarter, equaling 2005-06.

What's happening? INPUT gives two reasons. First, agencies have a spend-it-or-lose-it mentality. Agencies are fearful that Congress may reduce their IT budgets if they do not spend the entire budget before the end of the fiscal year. That means money hanging around at the end of the fiscal year, which typically is a fairly large portion of the budget, must be spent -- and spent quickly.

Second, an increase in continuing resolutions (because Congress can’t pass spending bills on time) means more IT budgets are frozen at levels equal to the previous fiscal year. That means IT spending stays flat. It is frequently months into a new fiscal year before Congress passes the budget for that fiscal year. Because the IT budgets typically increase from year to year, this creates a pent-up demand for IT spending for the fourth quarter. (It would be similar to receiving your annual raise five or six months into the year. All of a sudden, you're flush with money.)

"Operating under a CR, if even briefly, limits the ability of these agencies to move forward on their planned IT investments and often stalls them until the second quarter," according to the INPUT report. "In FY 2007 only the Department of Defense and Homeland Security had their appropriations bills passed by Congress – all other agencies are operating under a year-long joint funding resolution that sets their budgets at 2006 levels with a few exceptions. The full impact of this will not come to light until well into 2008. The current round of 2008 appropriations bills is on a rocky road and may fare no better."

The question that INPUT's research now raises is this: Does the spending spree have any effect on agencies' buying judgment and the value these agencies receive from their purchases? In an email, John Slye, manager of INPUT's federal industry analysis, said, “That’s a great question,” and he tried to answer it this way:

It would stand to reason that when people are up against a deadline that they have less time to weigh value options, although there's probably a point where they would balk at an obviously unreasonable option. Off the top of my head I'm unaware of any studies that explore this, but yeah, if the primary objective is to exhaust the resources, then that probably has a negative impact of value pressure. One thing to consider though is that some buyers may have researched their buy in advance, possibly even lining up proposals with the hopes of getting a green light for the purchase at quarter's end. It's probably fair to say that some of these last minute purchases come as agencies look at their "must-haves" and "nice-to-haves" along side what money they have left at the end of the year.

Sen. John Kerry, D-Mass., chairman of the Committee on Small Business and
Entrepreneurship, says he is "cautious" about statistics the Small Business Administration released today on how much business federal agencies are giving small businesses.

The SBA today released its "first-ever Small Business Procurement Scorecard," in which half of the agencies it tracked did not meet goals to award a certain percentage of contracts to small business. Out of 24 agencies graded, 12 were given a red score indicating they had not awarded a certain percentage of business to small businesses. See all the scores here.

SBA also said it revised its 2005 statistics for how much government business small businesses received. Small businesses received 23.4 percent of the value of all government contracts in 2005, down from the original reported figure of 25.4 percent, according to an SBA press release.

But the report -- along with the revised numbers -- didn't sit well with Kerry. "Despite the federal contracting budget increasing by at least $20 billion last year, the percentage going to small businesses decreased, and the government still isn't counting the whole pie because of special exemptions and exclusions," Kerry said in a statement. "It's critical that we continue to improve the reporting system and count all contracts in calculations so we know the reality on the ground."

That means small businesses are actually falling behind in securing the increasing amount of government work and the problem could be worse. We just don't know because the procurement statistics the federal government keeps are so suspect. SBA says it will continue to work with agencies through its Goaling Program to improve the reporting process for contracts awarded to small business.

Dell Federal said it won a $248 million contract from the Veterans Affairs Department in a deal which names the company as the department’s “exclusive” provider of desktop computers.

Dell said under a three-year lease agreement it will provide the VA with a minimum of 249,000 of its OptiPlex desktop computers and monitors, along with a variety of professional services including deployment, asset management and removal of the PCs – if VA so desires – at the end of the contract.

The math on this deal works out to about $1,000 a box. A quick check of the Dell Web site shows if anyone wanted to buy one OptiPlex PC, the price today runs from $342 to $497 plus another $249 for a monitor and $149 for the Vista operating system.

That puts the total retail price of a Dell OptiPlex PC with software and monitor at $730 at the low end and $995 at the high-end.

I’m sure the number crunchers at the VA view their $1,000 price per box for a three-year lease with professional services thrown in makes for a good deal, but I wonder why they leased instead of buying.

Does VA throw away its computers every three years?

As a side note, Dell's latest customer satisfaction numbers -- as measured by the just-released American Customer Satisfaction Index (and look for the heading "Personal Computers: New Problems for Apple, More Problems for Dell") -- fell "to one of the PC industry's lowest scores with a 74," reported the Austin American-Statesman in Austin, Texas, this week.

The Defense Department plans to stop using commercial electronic data interchange (EDI) systems to process payments and instead will require contactors to use the Department’s Web-based Wide Area Workflow - Receipt and Acceptance system.

Defense wrote in an Aug. 14 Federal Register notice that neither the American National Standards Institute X12 EDI nor the Web Invoicing System cannot process all Defense contract payment requests and cannot be made available to all government offices and organizations.

Wide Area Work Flow is the only system that can process all payment types. According to a fact sheet from the Defense Business Transformation Agency, it uses a virtual folder that contains the three documents required to pay a contractor: the contract, the invoice and the receiving report.

The Wide Are Workflow helps eliminate lots of paper documents, which also can be misplaced, and compresses the contract payment process from weeks to days or minutes, according to the fact sheet.

According to the Federal Register notice, the change in Defense Federal Acquisition Regulations requiring use of Wide Area Workflow will require about 1,000 small businesses to switch to the system – a relatively low number compared with the 20,000 small companies already using it. (Contracting officers can allow the use of other payment systems if they choose.)

Defense said it will take comments on the proposed rule change until Oct. 15. The department said it anticipates that the use of Wide Area Workflow will fully automate its payment process, significantly improve the timeliness of payments and reduce interest charges on late payments.

In 2004, Defense had $206 billion in contract payments subject to the Prompt Payment Act, according to a May 2006 Government Accountability Office report. Out of a pool of some $24 billion in payments the GAO studied, Defense was late in paying an average of 10 percent of the payments to large vendors, while late payments to small vendors ran about 14.5 percent, according to the report.

Since it takes only one hour to learn how to use Wide Area Workflow, according to the the Federal Register notice, it seems the new change in rules will be a boon to small vendors, even though I have yet to encounter any computer program that can be mastered in an hour.

It’s as slow as molasses in Colorado Springs in January. That's a good way to describe the progress of the Air Force Space Command’s $800 million Uniform Communications (Uni-Comm) information technology services contract. The contract – once awarded – will provide a single network for 40,000 personnel at Los Angeles and Vandenberg Air Force bases in California, Malmstrom Air Force Base in Montana, F.E. Warren Air Force Base in Wyoming, and Peterson and Schriever Air Force bases in Colorado. Besides voice, video and data networks, the Uni-Comm contract also calls for operation of base land mobile radio systems.

Uni-Comm was originally hatched in December 2005, with a request for proposals slated for this summer and an award date planned by Oct. 1.

But summer is almost over, and the Colorado Springs-based Space Command said Aug. 10 that it does not anticipate issuing the RFP until early or mid-September. The command gave no deadline for awarding the contract.

The Uni-Comm contract, which some vendors view as a Naval Marine Corps Intranet for Space Command, has attracted interest from a wide pool of bidders, including integrators such as CSC, EDS, Lockheed Martin and communications companies such as the federal business unit of Verizon Business.

They probably hope they do not have to wait another two years for the Air Force to award the contract.

It seems as if the Homeland Security Department doesn't want to be outdone by the Defense Department. On May 16, the Defense Academy for Credibility Assessment (formerly the Defense Department Polygraph Institute) released a request for proposals asking industry to provide ways it can use information technology and/or behavioral analysis methods to screen large groups of people who may be, say, preparing to board planes or attending an event. (See Government Executive's "The Shrink Approach to Airport Checkpoints.")

DHS released July 9 an RFP asking industry to provide IT solutions that use sensors to scan individuals who plan to board planes, trains or other modes of public transportation as well as people planning to attend "Special Security Events."

"Persons involved in or planning to be involved in possible malicious or deceitful acts will show various behavioral or physiological abnormalities," and sensors can help detect an individual's intention to do harm by applying monitoring systems for provide information on "cardiovascular, respiration, ... eye tracking as well as other promising technology capable of providing behavioral indicators," according to the RFP. "The goal is to take the individual outputs of the distinct sensors and combine them into a decision matrix in order to provide a single decision."

Maybe the folks at Defense and DHS need to get together to see if they can work together on this one.

Hat tip: Wired

If your memory of those first PCs you bought back in the 1980s (if you're that old) were as expensive as a car, well, your memory serves you right. Just what kind of computer you could get for that money now is offered up by a blog post by The Atlantic's Matthew Yglesias.

Maybe President Bush's proposed $65.5 billion federal IT budget for fiscal 2008 (nearly twice what it was eight years ago) isn't such a good deal.

Sen. Charles Grassley, R-Iowa, has asked the General Services Administration inspector general to investigate a contract extension the agency awarded to Sun Microsystems Corp. last September. Grassley wants the IG to determine if the government is getting the best deal possible for the products and services offered in the contract.

Grassley is concerned that Sun Microsystems is charging the government more for its products and services than its private-sector customers. Under the GSA schedules, Sun is supposed to provide its best price to agencies buying off the schedules.

In a three-page letter dated June 5, Grassley asked GSA Inspector General Brian Miller to provide in 30 days a preliminary report on the Sun contract's price reduction clause, which states that Sun is providing its best prices for products and services. Grassley asked Miller to file periodic reports thereafter.

The contract's price reduction clause has been a major sticking point in the renegotiating the Sun contract since 2004. Federal officials have filed complaints against Sun for unreported discounts to commercial customers and improper pricing, according to the letter. The price reduction clause in the contract extension signed Sept. 2006 was based on discounts given to all commercial customers and not just the ones receiving the best discounts, Grassley says in the letter.

Grassley has asked the IG to use Sun's sales database to evaluate how much the government has saved or if the government has paid more as a result of the new price reduction clause.

In a statement, a GSA spokeswoman said that the agency "will fully cooperate with any IG audit and listen to their recommendations just as we have always done including during the renewal of the Sun contract."

"The Sun contract extension was a good deal for the American taxpayer that was concluded after Sun provided a corrective action plan which was reviewed by the IG and approved by the contracting officer," the spokeswoman said. "The IG requested that we not pursue the allegations. All the contracting officers who negotiated it should be commended."

GSA's IG did not respond to requests for comment on this letter.

Earlier today Government Executive reported that the Office of Special Counsel concluded that General Services Administration Administrator Lurita Doan violated the Hatch Act. The 21-page report, obtained by Government Executive, is a sharply worded document that calls into questions much of Doan's recollection, or lack thereof, of the charge that she violated the law by hosting a meeting at GSA headquarters, where a special assistant to the president showed a PowerPoint presentation that analyzed the results of the 2006 midterm election. Doan allegedly asked how GSA could help the Republican candidates.

The report is full of details of Doan's testimony and questions of how it contradicts other witness testimony, most of which we could not fit in the news story. We provide some for you here:

-- Throughout the report, investigator Scott Bloch suggests that Doan did not give an accurate portrayal of the events that occurred at the January meeting. For example, according to the report, Doan told investigators that she did not pay attention to the PowerPoint slide presentation on the 2006 elections because:

she dislikes PowerPoint presentations; she was uninterested in the topic; she does not care about polls; and, she felt the presentation had nothing to do with her or what she does on a daily basis at GSA. Lastly, Administrator Doan testified that she was on her Blackberry ... reviewing emails ... and only periodically looked up and down.

In a footnote, investigators report that Doan contributed $226,000 to Republican candidates and Republican organizations and asked Doan why she contributed to candidates and organizations when "she does not care about polls or election results. Doan responded by testifying that the contributions had been 'taken out of context.'" She told the OSC that she does not believe that $225,000 is a substantial amount in light of her other contributions to nonpolitical organizations, such as giving more than $1 million to her alma mater Vassar College, more than a half a million dollars to the New Harman Center of Shakespeare Theatre and more than $50,000 to fund minority businesses.

"Although Ms. Doan again repeated that her donations to these Republican organizations have been taken out of context," according to the report, "she failed to explain why she donated any amount to these organizations whose purpose is to elect Republican candidates."

Also, an OSC review of her e-mail use during the meeting failed to corroborate that she was checking or sending email via her BlackBerry.

-- The report challenges Doan's claim that she cannot remember whether or not she made any remark along the lines of "how can we help our candidates," but the report provides a long list of events at the meeting she did recall:

Administrator Doan testified that as she was getting ready to leave for the January 26 meeting, she was interrupted by a phone call or her personal digital assistant. She testified that she told Meghan and Brittany, her two assistants, that she would be down to the meeting in a few minutes. She remembered that they took with them the cookies she had purchased previously for the meeting. Upon entering the meeting, she remembers being surprised that the video conferencing system and the refresh rate were working. Ms. Doan also testified that she remembered thinking that there were not that many people at the meeting. Administrator Doan also remembered that she sat near Mr. Jennings and was sitting near a "young perky looking" woman, whom she thought might be a new GSA employee. Administrator Doan remembers that Kevin Messner was sitting at the far end of the table. She also remembered that three or four people left during the presentation including her Associate Administrator for Congressional and Intergovernmental Affairs. Despite remembering all of these details concerning the meeting, Administrator Doan testified that she could not remember whether she made any comment about "how can we help our candidates.

Doan also told OSC that she did not give Scott Jennings, who presented the slide show, a tour of GSA's offices and did not know if Jennings went elsewhere in the building after the presentation. But Jennings and GSA White House Liaison J.B. Horton told OSC that after the meeting, Doan gave Jennings a tour of the immediate area around her office and talked about the artwork.

-- Investigators report that Doan tried to defend her contention that she could not remember the statement regarding helping candidates by questioning the memory of the witnesses who testified that she did ask the quesiton:

Administrator Doan's implication that the adverse testimony provided by her political appointees should be questioned because of the alleged variations is unconvincing. Administrator Doan is holding the adverse witnesses to a standard which she does not hold herself. First Ms. Doan does not recall or remember anything about Mr. Jennings' presentation or any of the comments that Mr. Jennings' made, yet she claims to remember the statements made by attendees after Mr. Jennings' presentation concluded. Second, with respect to the alleged statements she can remember, they were preface with a caveat that she could not recall verbatim what she said.

The following item was posted by Bob Brewin.

Here's more news on health networks.

The Agency for Healthcare Research and Quality, another arm of the Department of Health and Human Services, issued May 21 a request for proposals
for a Network of Patient Safety Databases, which will house information on aggregated patient safety information. The data will not have any personally identifiable information.

The network will contain information submitted by physicians on a confidential basis about “close calls” in clinical procedures. The RFP does not define a “close call," but I imagine it can range from prescribing the wrong drug to surgically removing a healthy, rather than a diseased, organ. The close calls will be reported to Patient Safety Organizations, which are just now being created. The PSOs will use the aggregated information to improve the quality of care.

The network contract will run for three years, and although the Agency for Healthcare Research and Quality did not provide a value for the contract, it probably is big enough to attract the attention of a wide range of systems integrators.

The following item was posted by Bob Brewin.

The Office of the National Coordinator for Health Information plans to field its first trials of a computer network that will test how Americans’ electronic health records could be shared nationwide.

The office plans to award up to 10 one-year contracts to tie together state and regional health care groups that use electronic health records in their operations to become components of a larger network. The office gave no time frame for the awards.

The national coordinator’s office, part of the Department of Health and Human Services, refers to the system as a “network of networks,” which once built out will be called the Nationwide Health Information Network (NHIN). The national coordinator’s office envisions the NHIN allowing clinicians from Maine to California to exchange and view the electronic health records on every patient in the United States. President Bush has set a goal of creating electronic health records for most Americans by 2014.

In November 2005, the national coordinator’s office awarded contracts to Accenture, Computer Science Corporation, IBM and Northrop Grumman to develop regional NHIN prototypes by partnering with regional health care organizations. The upcoming trial apparently is the next stage of testing the NHIN by tying these regional networks together to test how the system could operate on a larger scale.

The national coordinator’s office plans to hold on May 23 a pre-solicitation Webinar on the network of networks trial and also plans to issue a request for proposals in early June. The office said it anticipates awarding up to a third of the contracts to small businesses.

The following item has been updated to correct a misstatement about the personnel files of GSA employees who had given sworn statements to investigators. The Office of the Special Counsel had requested the files.

General Services Administration chief Lurita Doan received an independent report Friday outlining its findings on whether she violated a law that limits government employees from participating in political activities.

The Office of Special Counsel investigated whether Doan violated the Hatch Act, and delivered its findings to Doan Friday, but the findings were not made public, government officials told Government Executive.

A spokeswoman for GSA said in a statement that Doan is "again disappointed in the failure to protect what remains an ongoing and confidential process." The spokeswoman would not comment on the contents of the report, which may or may not be made public. "It would be inappropriate for the administrator to comment on the investigation, until the process has been completed," the spokeswoman said.

A Jan. 26 meeting at GSA’s headquarters is at the center of the allegations that Doan violated the Hatch Act. The meeting, attended by Doan and about 40 other political appointees, included a PowerPoint presentation by Scott Jennings, a deputy to Karl Rove, the leading political strategist at the White House. Democrats on the House Oversight and Government Reform Committee say the presentation was clearly political. The slides listed Republican and Democratic House districts viewed by the White House as most vulnerable in 2008 and included a map showing the Senate seats up for grabs in the 2008 election and whether the White House believes Republicans will have to play "defense" or "offense" for each seat.

Doan testified before the panel that she thought the meeting was appropriate. But she said she could not remember the details of the meeting, other than that people arrived late, quite a few were absent and there were "cookies on the table."

According to government sources, Doan has two weeks from Friday to respond to the report. After she responds, OSC investigators will review it and deliver a final report to President Bush because Doan is a presidential appointee confirmed by the Senate -- known as a PAS. OSC cannot take disciplinary action against a PAS and there is no word on whether OSC will make its report public.

The OSC has requested GSA to provide the personnel files of GSA employees who gave sworn statements to investigators claiming Doan asked at the conclusion of the presentation how GSA could help "our candidates in the next election."

The following item was posted by Bob Brewin.

It’s going to be real hard for anyone outside the Defense Department or its contactors to get even a peek at the request for proposals for the advanced Global Positioning System III satellite contract. The Air Force Space and Missiles Systems Center in beautiful downtown El Segundo, Calif., has limited access to contract documents to folks with a Defense Common Access Card (CAC), capable of digital authentication through a Pubic Key Infrastructure (PKI) certificate.

The GPS III satellites, which the Air Force intends to start launching in 2012 represent a quantum leap in capabilities from today’s existing GPS satellites. So, it would be helpful to read about the specifications the Space and Missiles Systems Center has in RFP.

But the Air Force said in a notice on the procurement released May 18 that the GPS III RFP and its attachments are located in the bidders library at the GPS Joint Program Office, accessible only with a PKI equipped CAC or a Defense approved External Certification Authority PKI and handed out to industry partners or other organizations with which Defense wants to have secure communications.

This limitation on access to the GPS III RFP has been in place since early April, and when I first made a phone call about it last month, spokespeople at the GP JPO and the Space and Missiles Systems Center agreed on two things:

1. Even though I am a nice guy, they do not intend to issue a CAC card with a PKI certificate to me or any other reporter and;

2. The GPS III RFP should be a publicly available document, just like any other solicitation.

The Air Force has slipped the release of the GPS III RFP from May 21 to May 23, so maybe I will be pleasantly surprised by then that the contract documents have magically appeared on a Web site accessible to the public. My cynical side tends to doubt it.

House Oversight and Government Reform Committee Chairman Henry Waxman, D-Calif., said Monday that the investigation into the leadership of the General Services Administration continues, despite the fact that there are no hearings scheduled. "We're not holding public hearings on [Doan's alleged misconduct], but we're continuing our investigation into GSA," Waxman said.

On March 28, Waxman held the first and only hearing into whether GSA Administrator Lurita Doan violated a law that prohibits political activity within government offices, among other allegations.

The Office of Special Counsel is expected to release next week a report on Doan's alleged violation of the Hatch Act, sources have told Government Executive.

The General Services Administration just awarded the $48 billion Networx Universal telecommunications contract, but agencies are already drawing up plans to buy some of the contract's more sophisticated offerings, according to officials with Verizon Business Services, one of three holders of the contract. (The other two are AT&T Government Solutions and Qwest Government Services.)

At a press briefing held today at the telecommunication giant's Washington, D.C., offices, Susan Zeleniak, head of Verizon's federal business, said the three hottest technology services federal IT managers are interested in are private IP networks, managed services and security services. Agencies are specifically interested in how to leverage the Internet to improve services to the public, including upgrading call centers to use speech recognition and other services such as routing Americans' e-mail queries to a specific federal expert and instant messaging chat applications to help Americans navigate a federal Web site or fill out government forms online.

Charles Lee, Verizon Federal's chief technology officer, said agencies are also interested in applications that move content delivery and services "out to the edge of the agency" to serve the citizen, which means an increased interest in wireless technologies and the applications that secure those. "Across the board we are seeing agencies moving forward" to prepare to buy off the Networx contract, Lee said. "No one is sitting back and waiting."

Zeleniak expects most agencies to begin bidding out applications for Networx services by September or October, with a few agencies starting the bidding process before then. Zeleniak also said the transition to Networx should avoid the problems agencies encountered in 2000 when transitioning from FTS2000 to the then-new FTS2001 telecommunications contract.

The General Services Administration received bids late last month to provide voice and data services to federal agencies in the Washington, D.C., area (the District of Columbia, Northern Virginia and much of Maryland).

The $1.8 billion Washington Interagency Telecommunications System-3 (WITS-3) contract seems like a slam dunk for incumbent Verizon, whose service territory covers the greater Washington area. (The other incumbent is Qwest Communications.) But GSA invited competition for the contract by saying it intended to make multiple awards, and we hear that both Level 3 Communications and AT&T submitted bids. We also are told Jerry Hogge, senior veep of the Level 3 federal group, is real hungry for this one.

The bidders still must submit their best-and-final offers, and GSA does not intend to award the contact until the end of the year, shortly after which GSA will turn on WITS-3 finally freeing DC-based federal agencies from a so-yesterday "caller-ID," which under the current contract is “WITS 2001." -- Bob Brewin

The following item was posted by Editor at Large Bob Brewin.

Kevin Carroll, the Army's Program Executive Officer for Enterprise Information Systems, (PEO-EIS) told Tech Insider that due to the fracas over the Defense Department's 2007 supplemental spending bill – an issue way above his pay grade and ours – he has put his contractors on a “slow pay” schedule, either on a quarterly or monthly basis.

Spending on PEO-EIS programs, which provide the Army with all kinds of widgets and gizmos, ranging from computers to tactical network gear, is focused primarily on supporting deployed or about to be deployed units, such as the Maryland National Guard, Carroll said. “Stay back forces”, Carroll said, are going to have to wait for equipment until a supplemental budget is approved.

Carroll's grand plans to develop and field Enterprise Resource Planning systems to support the tactical Army have been put on hold due to the funding crunch, he added. But that might be a blessing in disguise. Commercial enterprises find that it sometimes takes almost as long to field an ERP system as DOD has been working on the Joint Tactical Radio System.

Two civilians working in an Army depot in Pennsylvania were charged yesterday with providing "inside information and no-bid contracts in exchange for cash and merchandise" to a computer supplier, the Associated Press reports.

Federal prosecutors charged Leo John Yesvetz and Charles Marsala, who worked at the Tobyhanna Army Depot, an electronics maintenance facility in northeast Pennsylvania, with steering $7.8 million worth of work to Computer Giants during a four-year period ending in April 2005.

Marsala sometimes used government credit cards to make purchases from Computer Giants to avoid the bidding process.

Prosecutors did not say how much Yesvetz and Marsala received in bribes but said other contract fraud occurred at several other Defense Department facilities, including Fort Bragg, N.C., and Ft. Belvoir, Va.

Maine's Department of Health and Human Services will pay another $7 million on a failed Medicaid claims processing system before it can kill the project, according to an article in Maine's Times Record.

The total cost of the claims processing system could surpass $70 million, close to five times the amount Maine agreed to pay in 2001, when it awarded a $15 million contract to CNSI to develop the system. When the system was switched on in January 2005, it immediately began to have processing problems. IT program management experts blamed the state for not following best practices for project management, as reported by CIO Magazine.

Maine decided earlier this year to scrap the system in favor of privatizing the claims processing system.

As part of its strategy to move away from building large proprietary information technology applications in favor of buying packaged commercial applications, the Defense Information Systems Agency said today that it will use an Army contract to buy the commercial services instead of developing its own contract for the services.

DISA plans to buy off the Army’s Information Technology Enterprise Solutions-2 (ITES) contract, which offers services from 16 companies, to develop its next-generation Service Oriented Architecture (SOA) for use throughout the Defense Department. A SOA allows an organization to use software applications throughout an organization, rather than in just one business area. DISA views SOA as a means to speed the delivery of new technology to DOD.

Bernie Skoch, a retired Air Force brigadier general who was principal director for customer advocacy at DISA and now a consultant for Suss Consulting, said DISA’s decision to use the ITES contract instead of running its own procurement could save the agency as many as two years time in developing the SOA and free up acquisition personnel for other projects.

DISA and DOD plan to use SOA as the foundation for a new way to deliver information and data to users worldwide, modeled on commercial Web services such as Google and online travel sites, which bundle a wide variety of information into one Web site. DISA said it will use the ITES contract for development, deployment and operation of its Net-Centric Enterprise Services Architecture (NCES) program, which is designed to deliver a variety of services including military versions of instant messaging, Web-based chat systems and online conferencing. DISA awarded IBM a $16 million NCES contract last July for those services.

Congress wants the Army to expand its use of firm fixed-price contracts, according to its top procurement executive.

But no single contracting method can reform the acquisition process, said Claude Bolton, assistant secretary of the army for acquisition, logistics and technology.

For one thing, the Army has used plenty of firm fixed-price contracts in the past. “Some of you may harken back to the 1980s when we did that more…You harken back to the World War II, you’ll see it again. You go back to the Civil War, you’ll see it, too,” Bolton said Thursday at the annual Program Executive Office Enterprise Information Systems industry day in Bethesda, Md. (For more blog entries from the conference, click here.)

Good contracting requires training, Bolton said. He told a story of meeting with a logistics program manager who, despite huge contractor cost overruns, was confident of the outcome because the contract was firm fixed price and the contractor was tied to a large parent corporation.

“This young man said, yessir! …‘I’ve got a core firm fixed price contract! They’ve got to book it!’” Bolton recalled. But, it turns out the parent corporation was divesting itself of the contractor, which means there would be no one to absorb the costs. “The manager almost fainted,” Bolton said. “You have to educate and train the people,” he later told Tech Insider.

Google’s ballyhooed venture into Web applications may be suffering a setback.

As InfoWorld has been reporting, Google’s premium online application suite has suffered three significant downtime failures in March.

“Google is having problems keeping its uptime pledge to some paying customers of its Google Apps suite of hosted services, throwing into question the company's ability to offer guaranteed levels of application reliability,” reports InfoWorld’s Juan Carlos Perez.

Information Week reported earlier this month that the FAA might skip a Windows upgrade in favor of Google Web Apps.

In response to a Tech Insider request, Google said they apologized for any inconvenience they may have caused. "While only a small portion of users of Google Apps have been affected, we understand the trust that all of our users place in us by using this service for critical business functions. We are absolutely focused on providing extremely high levels of availability for all users,” said company spokesman Emmanuel Evita.

NASA has announced the winners of its Solutions For Enterprise-Wide Procurement (SEWP) IV governmentwide acquisition contracts. A total of 37 companies made the cut, including 23 small businesses, seven of which are certified as owned by disabled veterans.We'll have more on this tomorrow. In the meantime, see Robert Brodsky's story from last week for full background on the awards.