LGS CEO Kevin Kelly on His Outlook for Commercial Tech in Gov’t, the Defense Industrial Base and GovCon’s M&A Picture

Kevin-Kelly-LGSThe April release of documents for a draft request for proposals on a future nationwide public safety communications network marked another step in the government’s push to further examine how it can make greater use of commercial technologies.

Also in April, Defense Department announced its own move to explore the commercial sector’s offerings in April with the release of Better Buying Power 3.0 and the Department of Homeland Security unveiled its plan to open an office in Silicon Valley.

ExecutiveBiz recently spoke to Kevin Kelly, CEO of LGS Innovations, in this two-part interview to the more perspective on this push at many agencies to increase their commercial technology usage and his outlook on how FirstNet could evolve over the next five years.

Kelly also offers his view on where the defense industrial base could hone its efforts and the current status of M&A activities in the GovCon sector.

ExecutiveBiz: What tools should the military and other federal agencies use to acquire commercial technologies in greater numbers?

Kevin Kelly: Looking at commercial solutions, particularly Internet service providers, cellular service providers, long-distance carriers — the big consumers of communications technology where LGS is most relevant — you will find a lot more collaboration, as well as sharing of needs and strategic assets like network migration plans and data migration plans.

In the commercial marketplace, there is a more collaborative interface between vendors — big carriers, ISPs and telephonic carriers — and consumers. They invite vendors and solution providers to come and integrate their solutions in a model environment, constantly testing and evaluating solutions to achieve economies of scale and to avail themselves of emerging technologies that may give them a leg up over their competitors.

The use of these technologies can help companies enter new market areas. The government, who is not looking to capture market share, has different motivators. They are looking to serve a mission in a more efficient and effective way through the deployment of advanced technologies in hopes of achieving capabilities that either enable a war fighter or provide a civilian agency with a greater degree of work efficiency and throughput.

The government's acquisition process and its whole infrastructure are not set up to be collaborative. The government is extraordinarily concerned about showing favoritism or providing an unfair advantage to one vendor over another by having discussions about requirements in advance of an acquisition or discussions between a CIO or network architect and a vendor about their needs or challenges.

If I were to single out one item to effectively integrate commercial solutions into the government's infrastructure, it would be to create a more open and collaborative environment where information can be exchanged freely and the government feels it can have detailed discussions about their problem set ahead of an official acquisition strategy.

Due to public criticism over government spending, many government employees have been excluded from attending conferences, where a lot of these exchanges of information, demos and discussions with vendors about advancing the ball occur. The government's inability to participate in collaborative discussions results in just buying more of what was bought last year, and not being able to take advantage of new technologies, new offers and new vendors.

There are new names that have no market presence in the government's infrastructure. As a taxpayer, that is not necessarily in our best interest. We want to avail ourselves of technologies that help the government achieve its mission in a reliable and efficient way.

ExecutiveBiz: Where are the potential opportunities for the defense industrial base?

Kevin Kelly: In an austere environment, where budgets have pulled back from their high water mark, the government is forced to look more strategically at acquisitions for solutions – and they're looking harder for differentiated offers. Firms either in this market or looking to enter it should keep in mind that there's less of an appetite for commodity or need-to offers. There is and always will be commodity services in the government or any marketplace.

That's really a cost shoot-out for the lowest price bidders. If you've cracked a nut to deliver 100 dollars-worth of service for 80 dollars of expense, you ought to be in the commodity service space. However, the majority of companies looking to enter this space need to be focused technologically or offer differentiated services.

As a technology firm our focus is on making our services, products and research industry leading and differentiated from our competitors through the application of technology. We have a low likelihood of success if we cannot adequately explain how we are differentiated and why the technology we have applied in our solutions advantages the government's mission, whether it is defense, intelligence or civilian.

That goes for all firms in this marketplace. We are quickly finding ourselves partnering with other companies that have the same philosophy as LGS, which is to really look for technologically differentiated offers. The more companies we find with that same vision and strategy, the more successful we become.

ExecutiveBiz: How do you see the FirstNet initiative evolving over the next five years?

Kevin Kelly: FirstNet is interesting because it is a needed service for the first responder community. In terms of the solution, they are looking for something that largely exists in the commercial world — a highly reliable and leverageable 4G cellular network. All of us have at least one wireless device in our pocket that takes advantage of somebody's commercial network with that same description today.

FirstNet differs from conventional commercial cellular infrastructure on two important features: the need for priority and preemption. Both exist but are not currently offered in existing networks. In the commercial world, sometimes our signals don't go through, we all buy service plans at the same rate and carriers are not inclined to give anyone priority.

When police, firemen or medics push the button on their radios, the signal has to go through 100 percent of the time. It is a life or death situation that relies on mission-critical communications. FirstNet seeks to build that functionality into a network that largely uses commercial technologies, which will save taxpayer dollars.

The government has looked at whether or not they should own and operate the cellular network, turn the frequencies over to commercial carriers or share the spectrum. These are important economic challenges to tackle due to an affordability problem. To pay for the monthly operations of a large nationwide cellular network, you need tens of millions of subscribers, which is not the number we are talking about for first responders.

To help pay for this network, the government will have to share service with other subscribers ““ school systems, state governments, and maybe commercial entities as a lower cost service. The shared services model will be more difficult to manage in coming years.

We will have mission-critical, always available, life support wireless infrastructure that is also shared with the county library that doesn't need that type of service but will be on the same network. Putting up towers and servers will be an easier problem to solve than some of the social and political issues that will come.

Challenges will center on subscribers to the network, fees for service, and willingness of local governments to have their service preempted in case of a forest fire or a national event.

Click here to read part two of our conversation with Kevin Kelly.

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