When CEOs around the beltway can’t sleep at night, chances are these issues are keeping them up: in-sourcing, organizational conflicts of interest (OCI), the stimulus package, healthcare, and cybersecurity.  Here’s our take on these hot-button issues:

In-Sourcing

In-sourcing has worried CEOs around the beltway since President Obama took office in January and pledged to move “inherently governmental” functions out of the private sector and into government.  Also, claims abound that the government is “poaching” the best talent from the private sector with lucrative job security and health and retirement benefits.

Our reporting shows that some sectors will be hit harder by in-sourcing.  First: acquisitions.  Jim Moran told ExecutiveBiz this when we interviewed him in July: “…11,000 [acquisition jobs will be] converted from contracting positions.  The acquisition process is inherently governmental.” Congressman Gerry Connolly agrees that the acquisition process should be brought back inside government.

Second: data center operations.  Regina Gibson of OnPoint Consulting offered this in a recent ExecutiveBiz exclusive interview: “There could be some reorganization of work, especially in areas like data center operations…As far as our long term planning, we are looking at the opportunities that would not be affected by competitive insourcing or at least less affected.”

Organizational Conflicts of Interest

The new Presidential administration brought a slew of new ethics rules which are challenging the business models of large integrators.  Contractors are becoming victims of their own success: a large and successful advisory services business unit can hamper the ability of a major integrator to stay in the new swim lanes of contracting.

Trouble is, the only buyers available for a multi-billion-dollar advisory services practice would face the same ethical restrictions as the seller, leaving major integrators with developed advisory services business units up a creek without a paddle.

Healthcare

As healthcare legislation struggles through Congress, most integrators know there’s a pony in there somewhere.  It’s just hard to find.  Since the value proposition of healthcare IT to government is cost-cutting, leading some executives to wonder how they can expect to maintain healthy profit margins in the long-term.  The opportunities are in implementing administrative changes undertaken by healthcare reform.  The biggest opportunity: interoperability, specifically making DoD electronic health records (EHRs) compatible with the VA’s.

Stimulus

The American Recovery and Reinvestment Act of 2009 (ARRA) passed on February 17, but so far only $159 billion of approximately $270 billion allocated for major projects have been distributed, leaving major integrators asking “where’s the rest?”  And, with a significant percentage earmarked for transportation, infrastructure, and public safety projects, many govcon executives are wondering if federal contractors will ever get a significant share of stimulus money.

Our opinion: don’t hold your breath.  Most of the money will likely wind up in the hands of state and local contractors, rather than federal players.

Cyber

Cybersecurity is a lot like a unicorn.  We all know what they look like, we just can’t seem to find any.  President Obama’s speech in May 2009, in which he announced the creation of a “cyber coordinator” position, was widely greeted with approbation. It is now November and we are still waiting for the White House to name someone to the position. Jim Lewis of CSIS calls the delays “indecision and turf fighting,” while Susan Collins has called for the cyber coordinator to sit in the Department of Homeland Security rather than the White House.

A number of contracts have already been awarded for cyber security, largely as a result of the still classified Comprehensive National Cybersecurity Initiative (CNCI), and more money is still available in these areas. Companies that secured these contracts are in an ideal position, particularly given the growing focus on cyber security throughout the government.

In-Sourcing: two hyphenated words with the power to strike fear into the hearts of government contractors.  While it’s true that at a basic level, in-sourcing means fewer jobs contracted out to private industry and therefore fewer contracting dollars, proponents say the news isn’t all bad.  Here are some thoughts from local, recognizable leaders of government and industry on the subject:

• Congressman Gerry Connolly: “There are some functions, like acquisition, that are properly brought inside government, but in terms of other responsibilities and functions, frankly, I think they should be examined on a case-by-case basis…Bottom line: it’s not a matter of theology.”
• Larry Prior, President and COO of ManTech International: “Government needs to re-badge. [The government] needs to bring talent in that does planning, budgeting, source selection, and acquisition management. They need to make sure, however, they can also execute on missions across every agency.”
• Congressman Jim Moran: “The acquisition process is inherently governmental.  [The process] should not have been contracted out, so we are going to bring it back in.  There are other functions that can far more efficiently be provided by the private sector and those will continue to be done in that way.”
• Shiv Krishnan of INDUS: “If the government starts converting contractors and hiring contractor positions from companies into government employees it creates a challenge in terms of these companies losing their employees and making them all government employees and the business is suffering.”

 Latest Health IT Buzzword: “Meaningful Use”

Dr. David Blumenthal, National Coordinator for Health IT, plans to issue “meaningful use” requirements for American Recovery and Reinvestment Act Health IT awards.  “Meaningful use” has not been defined yet, but some leaders believe it to be acretive to implementation and interoperability.  In other words, if it isn’t useful, it isn’t meaningful use.  Here are some thoughts from local industry leaders:

• Krish Venkat of Congnizant’s Healthcare and Life Science practice offers: “stakeholders in this ecosystem should not view this as just a technology change for the sake of technology change. It is a fundamental change in terms of business processes, optimizing cost of care, avoiding duplications, easier exchange of information, and improving the quality of care.”
• Adam Clark of the Health IT Policy Committee said: ”the definition is going to have to be broad enough to include small or even individual practices as well as large practices” and “adaptable to the primary care settings as well as specialty services.” 

Government contractors should be seeing green, because the first “meaningful use” contract awards are coming, even though the standards haven’t been written yet.  The Georgia Hospital Association (GHA) has awarded CSC a contract to help them meet “meaningful use” standards to receive the federal incentive payments outlined in ARRA.

Check Your Desktop: The Government Might Already Be There

Glenn Beck reported on his Fox News show on July 31 that a disclaimer on the website for the federal government’s “Cash for Clunkers” program technically transfers ownership of the computer accessing the site to the federal government while connected to www.cars.gov.  Don’t try this at home, because the warning reads “This application provides access to the DoT CARS system.  When logged on to the CARS system, your computer is considered a Federal computer system and is the property of the U.S. Government.”

Also this week, the federal government announced a review of its policy on cookies, ostensibly to improve customer service on government websites.  Vivek Kundra, federal CIO, and Michael Fitzpatrick of the OMB wrote in a blog post dated July 24 that the policy review is intended to improve customer service by allowing agencies to analyze how people use their sites and to remember visitors’ “data, settings or preferences.” But privacy advocates like EFF, EPIC, and the Center for Democracy and Technology have voiced their concerns. “Our primary concern is that the [Federal Government] has failed to protect the privacy rights of U.S. citizens,” said EPIC Executive Director Marc Rotenberg. 

Twitter Goes Down on Anniversary of 2008 Russo-Georgian Conflict

Twitter shut down briefly on Thursday morning because of a massive denial-of-service attack (DDoS). The perpetrators are unknown, but suspects include Russian and Georgian sympathizers, since Thursday marks exactly one year since the Russian-Georgia conflict. LiveJournal and Facebook , also experienced similar attacks on Thursday morning.  Biz Stone, co-founder of Twitter, released a statement on the site describing the downage as caused by ”a single, massively coordinated attack.” Then again, it might just be coincidence that the attacks on the wildly popular social networking sites occurred exactly one year after the border dispute.

Here’s a re-cap of a few executive transitions since early June: Larry Prior moved to ManTech, Walt Havenstein moved to SAIC, and Tony Zinni moved to BAE.  In his first interview since taking office, Larry Prior talked about his top priorities and how he’s furthering ManTech’s position as an ‘essential partner’ in cyber and national security. Here are some

Larry Prior

highlights:

• “Systems engineering and technical assistance as well as mission support, for example, require lots of experience and core technical talent. That’s a great opportunity for industry.”
• “Government needs to re-badge. It needs to bring talent in that does planning, budgeting, source selection, and acquisition management. They need to make sure, however, they can also execute on missions across every agency.”
• “Cyber is a wonderful opportunity for us to expand our business…we’re focused on several questions: How do we help defend networks that aren’t in our typical space? How do we help improve network resiliency everywhere we go?“

Jim Moran on Cyber Threats

Congressman Jim Moran

spoke with Congressman Jim Moran on the subject recently, and here are the highlights:

• “…there should always be a constructive tension between the private and public sectors.  We tipped that balance in the last few years by outsourcing inherently governmental work, in my opinion.  That’s why I support Secretary Gates’ effort to establish 20,000 more acquisition personnel as an example…”
• “On the whole I’d have to say there is a relatively negative attitude towards contractors and we are working every day to improve that image and to try to discourage the kinds of activities and rhetoric that underscore people’s negative feelings towards contactors. It is a two way street.”
• “We need to march forward and not be intimidated by… Cyber Attacks.”
• “…it behooves the IT contractors particularly to work with my office and with Gerry Connolly’s and Steny Hoyer’s, people who represent large IT defense workforces.  The more participation and contact we have, the better results we get for all concerned..”

Melissa Hathaway Resigns

Melissa Hathaway

Melissa Hathaway, Top 10 Beltway Game Changer to Watch in ‘09, resigned her post as current acting Senior Director of Cyberspace for the National Security and Homeland Security Councils.  Ms. Hathaway recused herself from consideration for the position of Cyber Czar two weeks ago, citing personal reasons.  She intends to continue her work in the interest of national cybersecurity in the private sector.

Hacker Conference Hacked by Spies

Jeff Moss, prominent hacker, founder of the BlackHat hacker organization, and member of the DHS advisory board on cybersecurity, hosted his annual DEFCON hacker convention in Las Vegas this week.  But when four “South Korean journalists’”  interviews did not cover normal topics for the conference, the four were escorted out of the conference. In fact, the Korean visitors were “intelligence gathering” individuals: spies. The incident comes after the July 4th distributed denial of service attacks (DDoS) on U.S. and South Korean government and private computer networks.

India Emerges as GovCon Market

No, this isn’t about outsourcing IT solutions to India, but rather selling DoD and military services to India. India’s defense budget for fiscal ‘09-10 will increase by almost 35%, in an effort to modernize its mostly Soviet-era materiel.  India will spend over $30 billion a year on defense for the next five years, and American defense contractors are leading the charge to strengthen America’s strongest and most populous ally in South Asia:

• Raytheon has secured $82 million in contracts to modernize India’s air navigation systems
• Lockheed has completed delivery of six C-130J aircraft for $1.1 billion and is negotiating the sale of another six for $1.1 billion next year.

It seems like American money is making a round-trip, jetting to India through outsourced jobs and coming right back through defense contracting dollars (or rupees).

Congressman Jim Moran (D-VA) spoke to us recently about Capitol Hill’s view of government contractors, what jobs he feels are best left inside the government, compensation for procurement personnel, CIO Kundra’s federal dashboard, and more.  Moran told us what the new Armed Services bill means for IT RFPs, and weighed in on who the new Cyber Coordinator should be.

ExecutiveBiz:  Where do you feel the balance lies between government insourcing and contracting with respect to driving innovation?

Jim Moran:  That is a difficult question because there should always be a constructive tension between the private and public sectors.  We tipped that balance in the last few years by outsourcing inherently governmental work, in my opinion.  That’s why I support Secretary Gates’ effort to establish 20,000 more acquisition personnel as an example, 9,000 new positions and 11,000 converted from contracting positions.  The acquisition process is inherently governmental.  It should not have been contracted out, so we are going to bring it back in.  There are other functions that can far more efficiently be provided by the private sector and those will continue to be done in that way.

ExecutiveBiz:  What role do you think Congress should play in getting the highest quality executives involved in the procurement process and retaining those executives?

Jim Moran:  I think that there needs to be more flexibility in terms of compensation for government personnel particularly in the Pentagon’s principle areas of responsibility.  The personnel system that was established has merit.  I think it needs to be refined but I think we will move forward on it because we have seen that we have lost much too high a quantity and some of the best quality people to the private sector because federal salaries have not been competitive.  We need to make those salaries more competitive, taking into consideration the generous benefits package that can be offered to the federal government.  I introduced three pieces of legislation on the Armed Services Authorization Bill and hopefully will be incorporated by the Senate that would provide incentives for personnel to come back from the private sector back in to the government.  For example, if people want to work part time they won’t be penalized. They’ll be paid consistent with the level of the compensation they received for most of their career.  If they made withdrawals from their retirement funds, they will be able to pay those withdrawals back so they will not be penalized after a hiatus spent in the private sector.   We will fix the sick leave system so that unused sick leave benefits can be cashed out at the end of a career.  These are things that we need to work on, but primarily we need to be more competitive with the private sector in terms of compensation.

“On the whole I’d have to say there is a relatively negative attitude towards contractors and we are working every day to improve that image and to try to discourage the kinds of activities and rhetoric that underscore people’s negative feelings towards contactors. It is a two way street.”

-Congressman Jim Moran

Jim Moran:  I think the Armed Services Bill that just passed through the House does some of that.  It enables more partnering and provides for some venture capital investments to make bids more competitive.  We’ve got ten pilot projects which are designed to find the most effective ways of issuing IT contracts using different acquisition processes.  That’s an admission that things need to be improved.  The Pentagon can also assign some of its current employees to work with the private sector and can take people in the private sector into the Pentagon so as to enable a contract to be more effectively understood and applied to meet the Pentagon’s needs.  There is also a provision that amends their current reporting requirements dealing with the acquisition of software in terms of programs. 

ExecutiveBiz:  What do you think the consensus view on Capital Hill is of government contractors?

Jim Moran:  Well, where you sit is where you stand.  In the Washington area I think you would get some pretty positive reviews because that is a large share of the economy that we represent and benefit from.  Out in the Midwestern plains areas and much of the south I think contractors have gotten a bad rap and a bum rap.  In California I think you will see more support for contractors.  The members are normally going to reflect the disposition of their constituencies.  On the whole I’d have to say there is a relatively negative attitude towards contractors and we are working every day to improve that image and to try to discourage the kinds of activities and rhetoric that underscore people’s negative feelings towards contactors.  It is a two way street.  Contractors have to conduct themselves in such a way that it brings honor to the industry and the Congress needs to fair in its assessment of what it expects of contractors.  Clearly there was some gross abuse on the part of contractors in Iraq.  I think you see less of that in Afghanistan.  There was just too much money being made available to contractors with too little oversight and too many connections with the executive branch.  It contributed to a negative attitude that was understandable toward contractors.

ExecutiveBiz:  We are all still waiting on the announcement of the new position of Cyber Security Coordinator.  What kinds of qualifications and what kind of qualities do you feel like that person should appoint and do you have any idea of who it might be?

Jim Moran:  It should be a person just like Tom Davis, if not Tom Davis himself. 

ExecutiveBiz:  What do you think of the job that Aneesh Chopra who is one of your constituents is doing as Federal CTO?

Jim Moran:  Terrific, I think the world of Aneesh Chopra.  I think he is an example of just the kind of bright, energetic, creative, hard working person we need in the federal government.

ExecutiveBiz:  How do you plan on protecting government contracting jobs?

Jim Moran:  By maintaining the funding for the programs for which contractors provide an essential support function and defending them against unfair accusations both in the media and on the floor of the House. 

ExecutiveBiz:  In meeting the President’s priorities in areas like energy independence, government transparency, and better education, a lot has been made of employing information technology.  Do you think that increased centralization of information technology via the internet makes us more vulnerable to cyber attacks?

Jim Moran:  I think we need to march forward and not be intimidated by the possibility of cyber attacks.  As we march forward even with the centralization of information we need to be conscious of ways to protect the security of that information, to block out cookies, to preclude people from being able to hack into the conduits of information.  We are fully capable of doing that.  I certainly don’t think we should restrict ourselves from technological progress out of fear of the information going into the wrong hands.  We can do both.  We can enhance our IT capabilities while doing a better job of protecting the integrity of that information. 

ExecutiveBiz:  What do you think of CIO Kundra’s new dashboard for IT spending in the federal government?  Do you think that the measures to increase governmental transparency in the stimulus spending?

Jim Moran:  I think it remains to be seen.  The jury is out.  I think the intention is great.  The follow through has yet to be proven but I think it is too early to reach an assessment.

ExecutiveBiz:  Is there anything else that you want to add?

Jim Moran:  Just that all of these issues are ongoing and it behooves the IT contractors particularly to work with my office and with Gerry Connolly’s and Steny Hoyer’s, people who represent large IT defense workforces.  The more participation and contact we have, the better results we get for all concerned.

On Tuesday, the Tysons Corner Ritz Carlton served as ground zero for the intersection of politics and technology, drawing hundreds of the area’s leading political and technology leaders. Through the hotel’s wood and glass doors and up to the 5th floor ballrooms streamed, among others, Virginia Governor Tim Kaine, Jim Moran (D-VA), and congressional hopeful Gerry Connolly. They were joined by area technology executives and innovators such as Mark Ein and CES head Gary Shapiro.

With the Presidential Election just days away, the undercurrent of politics was certainly palpable, but the Potomac Officer’s Club (POC) lunch event panel discussion featuring Gov. Kaine, Rock Creek Partners Managing Director (and member of Obama’s high tech brain trust) Julius Genachowski and Virginia Secretary of Technology Aneesh Chopra, really focused on recognizing and honoring Northern Virginia’s emergence as one of the nation’s true business and technology success stories.

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Jim Moran(D) Congressman for Virginia’s 8th District and serving his 9th term in office has shared with ExecutiveBiz his perspective on the upcoming elections and why he endorses Gerry Connolly(D) to sit beside him in Congress. The 8th district is a significant employer of government contracting jobs and Jim Moran has worked with employers and in congress to ensure the strength of the federal contracting market, particularly in Northern Virginia. 

 As he explains in his interview with ExecutiveBiz, his support of Gerry Connolly is aligned with his ongoing support of the business and government contracting sphere of Northern Virginia.  Click here to read more. 

Click here to read our interview with Gerry Connolly.
 

Gov. Tim Kaine Talks Technology on Oct 28th

Last Chance to Register for the Potomac Officers Club upcoming (members only) event about the technology that is impacting the presidential campaign. Governor Kaine will be joined by Julius Genachowski and Virginia Secretary of Technology Aneesh Chopra.

George Pedersen, Chairman of the Board and Co-Founder of ManTech International Headlines ExecutiveBiz Event 

On October 15, 2008, ExecutiveBiz welcomed George Pedersen of ManTech International as our “Been There Done That” luncheon speaker.  Mr. Pedersen co-founded ManTech International and has watched the company grow from two people to $1.45 billion in top line revenue.  He spoke to a full house of executives on relevant topics, from acquisitions to regional growth.  Click here to read more. 

Do you know Rick Attilio of Apptis?

ExecutiveBiz recently had the opportunity to sit down with Apptis’ CFO, Rick Attilio, and hear his thoughts on what it takes to be a successful CFO in today’s challenging business environment.  Rick believes that a key ingredient in today’s CFO is the ability to be “more than just your textbook accountant and financial person.”  In the last 2 1/2 years, Rick has defined the strategic vision of Apptis.  Click here to read more.

Keith Fimian and Gerry Connolly — two contenders vying for the same congressional seat. This past week, we got Tom Davis’s take on why he supports Keith Fimian to lead Virginia’s 11th Congressional District. Now Rep. Jim Moran (D-VA, 8th District), lets ExecutiveBiz readers in on why he’s backing Gerry Connolly, chairman of the Fairfax County Board of Supervisors.

You’ve been a friend, in certain respects, to the government contracting community.  Can you provide any insight as to why you believe Gerry Connolly would be a strong supporter?

Jim Moran: Gerry Connolly works for a government contractor, SAIC.  He understands how important government contracting is to Northern Virginia and to the country.  He has not taken any of these “no new taxes,” “no new government spending” and “no earmark” pledges because those are not helpful in terms of sustaining the federal commitment to government contracting.  The most important thing is that he knows the business, he used to be on the staff of the foreign affairs committee in the Senate and he’s done a good job as chairman of the county’s legislative committee.

How do you perceive Connolly’s business background at SAIC in particular as being an asset in Congress, especially these days?

Jim Moran: There are a lot of aspects of the contracting business that many members are not familiar with.  Tom Davis was familiar with them because Tom had worked for a government contractor.  I’ve been familiar with them because I have worked with them closely as well, but I think it is important to understand the role that outsourcing plays, that A76 plays, and the fact that we need war procurement specialists in the government.  We need to accelerate the pace of funding government contracts.  The world of government contracting is an alien world to too many members of Congress and Gerry, having worked for government contractors, presents a unique asset that we have very few of within Congress today.
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