Outgoing Federal CIO Warns of 'IT Cartel' In DC

CWmike writes "In a wide-ranging discussion Friday with President Barack Obama's top science advisors, Federal CIO Vivek Kundra warned of the dangers of open data access and was sharply critical of government IT contracting, telling the committee: '...We almost have an IT cartel within federal IT' made up of very few companies that benefit from government spending 'because they understand the procurement process better than anyone else.' He added: 'It's not because they provide better technology.'"

Comments

And this applies exclusively to IT.

[Anonymous Coward]

Not any other area of federal contracting. No sir, this is exclusively an IT problem...

Re:And this applies exclusively to IT.

[BuildingSnowmen]

Exactly. How does it work again?
1.) Get lowest bid proposal from committee insider.
2.) Make slightly lower bid to win contract.
3.) Win contract, and use money from contract to fund committee insider's re-election campaign.
4.) Rinse, repeat.

Re:And this applies exclusively to IT.

[h4rr4r]

If he sees problems there, hell yes.
This whole BS MBA compartmentalized mentality is killing America.

Re:And this applies exclusively to IT.

[kaizendojo]

I would hope that the janitor would be able to call out the CIO if he found him to be wasting company resources. At least that's th way W. Edwards Deming saw it, and I've always been inclined to agree. He said that the most important people in the company are usually the lowest on the corporate pyramid because they have day to day contact with the customer. All workers need to be empowered to be part of the quality control equation becuase they all function within the system. It seems to have worked quite well for Japan and many of the other Asian nations...

Re:And this applies exclusively to IT.

[cayenne8]

Somewhat.

But his larger point of knowing how to use the system and apply for the contracts...is what keeps the major few companies as being the only IT companies doing business with the feds.

The hoops you have to jump through are many. The larger contract houses have staff devoted to NOTHING but writing proposals. The small guy, cannot compete with this.

And even when there are contracts dedicated to SM's....the only way that truly works, is, the larger contract houses, *back* the small business and join to them...basically using them as a front to get the bids on the small business contracts.

They generally find a small company, it must be female or minority owned about 99% of the time, to get federal consideration.....then, the big guys basically do most of the proposal work, and the so call PRIME contractor that wins...gets a good kick of money in, but they really aren't in control of anything.

Happens all the time.

You'd need to rewrite the oversite rules...somehow...to try to prevent this. To make the application process simpler....but I don't see that happening any time soon. But, ever since they've been trying to make mandates that the Federal govt workers be more oversite and managers, rather than hands-on tech, you're gonna see more and more of this.

That and the situation that really kills the small companies off....is the hesitance of the feds to hire individual contractors as 1099's directly....they'd rather hire a large IT company which then wires the 'contractors' as W2 employees....giving you essentially the worst of both worlds.

You don't get the bill rate you should get as a true contractor, but you do get the lack of stability of a contractor. This bastardization of the contracting paradigm has really hurt things....

Re:And this applies exclusively to IT.

[AvitarX]

You missed the part where you over-run the cost by a factor of 2-3 (thought the slightly higher bid was by a company with integrity that wouldn't of done such).

Re:And this applies exclusively to IT.

[jellomizer]

If federal government is anything like New York state I would agree (I would expect the feds to be even more so)
While there are rules around to prefer small and minority own businesses, their policies make it impossible for such groups to put their foot in the door. And don't blame just the Republicans or the Democrats they both added to the mess.

1. Open bidding isn't anything like an open bid. They take the resumes and profiles of companies they want to use and create a bid so only such company can win, the bid. You will see odd things in the bids like 10 years FORTRAN experience required or 4 Years networking experiences for doing a VB6 to .NET conversion job.

2. The company often makes the bid. Employees actually have little time to make a bid so a few companies may propose bids for them to put out. Then they choose which one the like and bid them out.

3. Expensive requirements, companies need a large line of credit open to show proof that they are not overnight operations... However such line of credit hurts the small business.

4. If you are in, then you stay in. One you got your foot in the door you will never leave unless you really really mess up.

Re:And this applies exclusively to IT.

[pixelpusher220]

This whole BS MBA compartmentalized mentality is killing America.

I sooo much prefer the "Palinization" spewing word salad on any topic imaginable that they know nothing about...

Re:And this applies exclusively to IT.

[Jah-Wren Ryel]

The hoops you have to jump through are many. The larger contract houses have staff devoted to NOTHING but writing proposals. The small guy, cannot compete with this.

Sometimes they can. Maybe it helps to be stoned.

Re:And this applies exclusively to IT.

[tnk1]

One shouldn't open their mouth unless they can back it up. As CIO, he has the experience to be able to make his point about IT. He has the budgets, he has worked with the players, etc. That's not compartmentalization, it's simply discretion and good sense.

The difference between Vivek Kundra and someone like me is that if he talks, people will print it. He is a "senior official", and as such, even if he doesn't know anything about the defense budget or procurement process, people will listen to him talk about it. It is only good sense that someone with that level of visibility remains circumspect about things outside their own experience even if they have something to say about it.

Re:And this applies exclusively to IT.

[compro01]

Should the CIO of a company be calling out the Marketing Dept?

If they did, maybe we can get some actual honesty out of marketing.

Re:And this applies exclusively to IT.

[ChronoFish]

You don't need to be a baker to know when you've had a bad pie.

-CF

Re:And this applies exclusively to IT.

[JustOK]

Bahahaha.

In Manitoba we have a system in place on how to handle bribes ethically.for the right price

there, fixed that for you.

Re:And this applies exclusively to IT.

[tiedyejeremy]

as a defense contractor, I can assure you this is status quo for all government contracting. it has nothing to do with price, quality or delivery, but everything to do with the procurement process.

This aptly describes the problem.

[Bob the Super Hamste]

I believe that this aptly describes the problem.

How can you take him seriously?

[MikeRT]

"My view is we should only have three major data centers across the entire U.S. government," said Kundra.

Set aside the procurement debate for a moment and let this one quote sink in. Three data centers is not enough to give each of the branches of the military its own dedicated data center for operations. There are five (technically) branches: Army, Navy, Air Force, Marine Corps and Coast Guard. Each one of those should have at least one "major data center" except maybe the Coast Guard.

Let's face it, Kundra doesn't appear to be any better than the very people he's criticizing.

Re:How can you take him seriously?

[Amouth]

explain to me why we need that much overlap? i understand the different roles that each branch fills.. but there is zero reason why each of them can't use the same data center.

Re:How can you take him seriously?

[h4rr4r]

Why do they need to be separated. Sounds more like a pride issue than a resource issue. If anything we should be reducing the number of branches.

Re:How can you take him seriously?

[mosb1000]

In the era of cloud computing, you should be able to do everything with a single data center. You would have three for redundancy and to distribute the load.

Re:How can you take him seriously?

[Nimey]

Why do you assume that only one of those three data centers would host military stuff?

What makes you think that just because computers are physically adjacent that they can talk to one another?

Re:How can you take him seriously?

[Amouth]

So i assume the pentagon is a horrid idea and that we should never have the leaders of these branches in the same area as each other?

aside from your "cruse missile" (which by the way would work just as well now as it would then) comment the other stuff is already covered inside a data center - just because the info is in the same building doesn't mean the networks talk to each other - nor does it mean one side knows what the other is doing..

Re:How can you take him seriously?

[cayenne8]

I assume they wouldn't have just one data center... but they'd consolidate all military data under one collective of centers distributed throughout the nation, buried in non-disclosed locations.

LIkely impossible. Each branch has systems, of systems of systems....many undocumented (no, they don't actually know how they all really interract)...many of them stove pipe systems with maybe special interfaces (and yes, sometimes even these are still sneakernet) to talk to each other. Old OSes and hardware....it is a mess. There is no standardized version of data between the branches....do a little research on DIMHRS, which didn't work out too very well trying to get all of them to just get manpower and pay on a single system.

And, you can't change a lot of these things either...because many times they way the do things isn't just policy, it is mandated by laws or a set of laws....going WAY back in history.

Consolidation? Sure, it would be a good modern way of doing things...but damned near impossible in reality with the old service branches.

And I've not even gotten into the red tape, bureaucracy, or "we've done it this way always" mentality in each branch.

Re:How can you take him seriously?

[Talderas]

The military is one place where consolidation doesn't work too well. Rules and lines of though get established within sections and deviation from that line of thought tends to be frowned on and will screw up your career.

A classic example of this was the tank in the US post WW1. There were three dominant lines of thought.

1. Merge the tank with the infantry and have it support the infantry as mobile pillboxes.
2. Merge the tank with the cavalry and have it perform the roles traditionally filled by the horse.
3. Make tanks their own corps.

1 is the method we ended up pursuing and it probably a dominant reason why US tanks were never on par with the Panzers. 2 received opposition from within the cavalry because their existed a number of officers that still had a romantic vision of the horse and rider with cavalry charges despite WW1 showing that horses were no longer suitable. 3 would have been the best option but neither artillery, cavalry, or infantry wanted a 4th corps in the army to compete with for funding.

Regulatory Capture

[TheSync]

"'because they understand the procurement process better than anyone else.' He added: 'It's not because they provide better technology.'""

This is another example of Regulatory Capture, where private entities use the regulatory process created for the public interest to forward their private interests.

Whenever we open up complex regulatory regimes (such as the incredibly insane Federal government procurement process, campaign finance regulations, etc.), inevitably someone will figure out how to game the system for their private benefit.

The best regulations are simple ones, as complexity breeds gaming. Complex regulations also encourage corruption on the government side as well.

Re:Regulatory Capture

[jellomizer]

The Republicans favor the rich.
The Democrats create law so complex that only the rich have the resources to follow.

IT Cartel

[kalalau_kane]

"very few companies" that benefit from government spending "because they understand the procurement process better than anyone else."

Too many IT contracts are written with overly broad personell and systems security requirements, essentially requiring that the people working on these contracts originally coming from military or government offices to start with. Essentially built-in job security for those leaving government jobs.

Par for Course

[pavon]

Welcome to all government procurement of any sort. We have rules to prefer small businesses over big companies. So who gets this business? Not all the existing small businesses in town who know their product, can answer questions, keep stock on hand, are a generally helpful. They can't handle the bureaucratic overhead of government procurement.

Instead we have to buy from companies created for the sole purpose of being middle men to the government, whose only benefit is their understanding of the procurement process. Bonus points if they are owned by a woman or minority. They don't keep anything in stock, and add another 2-5 days to the shipping process compared to buying direct from the manufacturer. They are even more expensive than the local shops. They don't know what their products are used for and can only regurgitate what catalog in front of them says. But since they do so little they can turn over tons of revenue with only a few employees and thus remain a "small company".

Re:Par for Course

[trout007]

I worked for a government contract that was up for bid every 5 years. It was a small disadvantage business set aside. So basically ever 5 years I worked for a new company working at the same job, same desk, and with the same government people. Only the owners of the shell company that ran the contract changed.

Re:Par for Course

[mosb1000]

My company actually hired an employee specifically to handle procurement for one of our more needy government clients. We told them, "if this is how it's going to be, we are going to hire someone to do this and bill you for their time" and they were ok with it. Madness.

HSPD-12 badges

[oneiros27]

So, the infamous 'HSPD-12 badge', aka, the 'CAC card' ...

Supposedly they run $200 each. We all got bitched at for it ... have I *ever* used it to slot into a computer? Nope, because our network runs OSes that don't support the CAC functionality, and a lot of the folks on our machines aren't federal employees and remote users, so we'd have to have them run a background check (which we already do), then come in (from out of the country), finger print 'em, wait a month, then have them come back for a badge.

And then we'd have to issue them CAC readers and force them to use Windows or some OS that can use the CAC readers (MacOS? nope).

And if you loose the badge? Well, good luck on that one. Took me months to get a replacement. All the while, I couldn't enter any secured rooms, so I had to get issues a 'temporary' key card, and a 'temporary' badge ... which were EXACTLY like what we had before, only not at $200 a pop.

And the temp badges? They have HUGE text on them for the things that matter -- expiration date (the HSPD12 badges run for 5 years, no matter the length of your contract), affiliation (just says 'Contractor' in tiny type), and has an indication of your security access more than just foreign national / US cltizen / civil servant (I'm guessing because then they'd have to issue new people badges 3-4 times as their various background checks get done).

So ... more expensive, no new functionality that actually gets used ... and less secure, in that it's possible to enter the facility with an expired badge because the text is so tiny the guards can't read it, and they don't tie badge expiration to your contract, so a person with 1 year on their contract still gets issued a 5 year badge.

Not just an IT problem

[gmcraff]

It's a military, construction, health, fill-in-the-government-blank, problem.

General Dynamics, Raytheon, Boeing, Halliburton, etc provide a critical service: they understand government regulation. If you've ever seen a printed out copy of the Federal Acquisition Regulations, you'd be surprised that gravitational collapse isn't happening.

For most businesses, it's not worth taking a government contract until they're asking you to provide a COTS solution, where you know what you're selling, and the government pays you, and that's the end of it. The government is getting exactly what the commercial market gets. Firm Fixed Price contract, no surprises.

As soon as the government wants it customized in any way, and they're willing to pay you to customize it, that rabbit hole goes all the way down. Every stipulation of the contract must be assessed for compliance, and every assessment requires some kind of test, and every test has a schedule towards passage of the test, and every last one of these things costs time and resources, which means money, which the government is going to pay you, because the government wants its double cheeseburger in a way that no-one else wants it.

If you're an action oriented kind of entrepreneur, this will drive you insane. So you don't do it yourself. You go in as a subcontractor to one of the big Gov-BS-Handlers. You do the work, they firewall you from the BS, 50% for you, 250% for them (after change orders and spec changes and reviews and program management overhead) and everyone is happy with the $500 hammer (non-sparking, minimal toxic release, aircraft rated, 8 pound, loading bracket hinge, for the hitting of, one count)

Re:Not just an IT problem

[blackC0pter]

I completely agree with this and I see it happen all the time. IMHO, the biggest issue with the government is that they always want to customize anything they buy. They'd be 10x better getting an off the shelf product and spending 1/5 the cost and 1/5 the time implementing the product. Maybe it doesn't give them everything they want but the reliability, cost and time to implement will more than outweigh the costs of going custom. Also, if anything goes wrong then they can pick up and move to another product. Once you go down the customized route, you are stuck with that product and vendor for a long time to come.

Also, how about we give incentives to government agencies to not use all of their grants? Right now they have no incentive to use only a portion of a grant. Once an agency is given money from the state/federal government for a project, they feel the need to spend it all otherwise they will lose that money. Don't forget that the money they received can only be used for the specific purpose it was requested. So they are going to spend it all in that one place when it might make more sense to put it in other places or...give it back unused! Let's also not forget that it's easy to find out how much money an agency received on a particular grant. So guess what the vendors bid on a project with a known budget? Even worse, so many agencies state the amount of money they have for a project. The bidding then becomes a competition of how close can you get to the grant value while still being under your competitors.

Re:Not just an IT problem

[gmcraff]

No, this is the state of play even before we start talking about lobbyists.

The regulations accumulated like that as the result of some grievously bad deal that happened a long time ago on a project you've never heard of. Because of this forgotten screw-up, Congress passed laws to require oversight and record keeping for this, that or the other detail.

Also, when Congress appropriates money in the budget, they allocate the money for certain purposes. In government, they call that "colors of money". Certain colors can pay for R&D, certain colors for initial purchases, other colors for maintenance, things like that. This can guide certain government decisions, such as whether to pay for more R&D now to have lower initial procurement costs, or buy cheaper components in initial procurement and plan for higher maintenance costs, etc. Using funds for purposes not consistent with the appropriated purpose is a crime.

Let's use my cheeseburger example. If you want one, you determine what kind of money you have and what quality you want, and some qualities may be out of your price range. You then go to McDonalds, or Red Robin, or Rainforest Cafe, whatever, and you pay your money and you get a (restaurant name) cheeseburger. Let's say they advertise a double quarter pounder, medium rare with Tillamook medium cheddar cheese with pickles, onions, tomatoes on a sesame seed bun, and you want all that.

Now, let's say the government wants the same cheeseburger, only they're going to buy 10,000 of them. As a result of the FAR, the following certifications must be established before delivery and acceptance by the Decision Authority:

- Weight of each hamburger patty must be +/- 5% of the Critical Performance Metric of 0.25 lbs. Continuous sampling, measurement and reporting must be done to maintain quality/quantity standards to the governments specifications (The restaurant/manufacturer's own QA process is done separately and in parallel, but has no bearing on the government's metrics.), reported monthly
- The cooking process must be certified to achieve a 95% outcome of Medium Rare (see appendix A for definition). Sampling, measuring and reporting to be provided monthly.
- Quality of other ingredients are also to be sampled, measured and reported, monthly.
- The economic health of the providers of cheese, tomato, onion, ground beef, buns, etc must be assessed for economic viability, and a multi-source procurement process must be implemented for any critical material to ensure the supply of all components even in the event of a supplier going out of business. If a component can only be procured from one source (possibly for proprietary reasons), the liability of the manufacturing line must be assessed and if necessary, the government will buy the whole plant to assure the production of the material even if no one else on the market wants that product any more.

Without considering corruption, wastage, inefficiency, lobbying, political favors, etc, this is how you make a $200 hamburger. All by the regulations.

Same old crap.

[MaWeiTao]

This is where the real government waste exists and this is exactly the sort of thing that will never be addressed. Instead useful programs are cut wholesale because that's what makes the most visible impact to your average ignorant voter.

Who is in the IT Cartel

[byteherder]

The article did not name those companies that are in the IT Cartel. Let me start it off with the ones I know.

1. IBM
2. Accenture
3. Booz Hamilton
4. Deloitte
5. SAIC
6. HP
7. CACI
8. CSC

Why do they win all the IT contracts? They have huge staffs dedicated to understanding the myriad of procurement rules. The little guys don't stand a chance.


Can you name some more.