Manufacturing giant Hewlett-Packard (HP) announced yesterday that it has closed its $13.9 billion purchase of Electronic Data Systems (EDS). With the purchase of EDS, HP immediately became one of the largest IT service providers at the Department of the Navy. Over the last decade, thanks largely to the Navy-Marine Corps Intranet (NMCI) contract it won in 2000, EDS had become the highest earning systems integrator at Navy, totaling $1.758 billion in obligations in FY 2007 alone. As of late, EDS also appeared to have turned a significant corner in the NMCI project, achieving an 84% satisfaction rating among surveyed Navy personnel. The recent success of NMCI, after years of struggling to get the system up and operating, has likely positioned EDS (now HP) in the forefront of integrators planning to compete for the Next Generation Enterprise Network (NGEN) contract later this year.

Although the acquisition of EDS gives Hewlett-Packard a significantly larger presence at the Navy, HP also benefits from EDS' established business elsewhere at the DoD. This includes the Defense Finance and Accounting Service (DFAS), where EDS is a leading IT contractor with $47.8 million in reported obligations at the end of FY 2007. Similarly, HP vaults into the top-tier of IT contractors at the Office of the Secretary of Defense (OSD). FY 2007 spending at OSD obligated to HP contracts topped off at an estimated $57.1 million, while spending obligated to contracts held by EDS in the same year totaled approximately $114.8 million. This growth effectively represents a tripling of HP's contracting business at OSD. Hewlett-Packard will also double its contracting business at the Defense Information Systems Agency (DISA) ($41.6 million obligated in FY 2007), as spending obligated to EDS contracts at DISA totaled $56.8 million in FY 2007.

For example, EDS did predominately more business with Navy in FY2007 than any other Federal Agency:

The wisdom of buying EDS extends beyond individual contracts into the realm of Multiple Agency Contracts and the other large ID/IQ contract vehicles that the Defense community is so fond of using. Via its EDS buy, HP now holds Navy SeaPort-e and DISA ENCORE II contracts. HP did not have these contracts previously so it can now compete for task order contracts competed through those vehicles. To date, the Navy has competed more than $3.6 billion in contracts through SeaPort-e. If historical spending data is any indication, the flood of contracts awarded via SeaPort-e promises to increase, as spending jumped $778 million between FY 2006 and FY 2007. DISA appears to be moving in the same direction. After funneling nearly $2.1 billion in requirements through the first incarnation of ENCORE, recent statements by DISA officials indicate that an even larger number of requirements will be competed through ENCORE II.

Having the ability to compete for contracts and winning them are of course separate things. Later this year, the competition for NGEN will be the first big test for the newly expanded HP. This said, with its purchase of EDS, Hewlett-Packard clearly intends to be a leading provider of IT solutions for the Navy and Defense community and a contracting force to contend with in the coming years.

Serco announced today it will buy SI international for $423 million.

Acquisition trends: British buyers (QinetiQ, BAE Systems, Serco) continue their buying spree. Mid-sized contractors continue to disappear.

Valuation: Relative to other acquisitions in the government contractor market, Serco appears to be getting a deal (or conversely SI earning a low valuation) paying less than 1x revenue. SI has revenue of $555 million in the last 12 months as of June 2008. SI shareholders are not getting a bad deal, with Serco paying a 40% premium on the August 26th closing price.

SI's cancelled acquisition: SI dropped its acquisition of Arrowpoint in late July. At the time, no reason was given. The announcement today is a good candidate.

British buying spree:

The Connecticut Department of Motor Vehicles is working on a total overhaul of their vehicle and licensing systems and business processes. These changes are coming at the hands of federal and state legislation such as the Real ID act and various legislation regarding Graduated Driver's License and Learner's Permit regulations.

This initiative began when the DMV released its strategic plan in June 2007, which detailed a variety of initiatives that were to be implemented in the upcoming years. DMV's vision was to achieve five different goals: Expanded Customer Services, Integrated Suppliers and Partners, Integration with Other Government Agencies, Accountability to the Public, and Sound Financial Management.

INPUT is in the process of tracking a variety of these initiatives, including the Connecticut Integrated Vehicle and Licensing System (CIVLS) modernization project RFP and DMV's Digital Driver's License system upgrade. These projects, along with a variety of other transportation and homeland security initiatives related to the DMV (currently being tracked by INPUT), will be pursued by the state in the upcoming year.

Essential federal funding is enabling Colorado to expand telehealth efforts and compliment Governor Bill Ritter's goal to expand broadband communications in the state.

The Colorado Hospital Association (CHA) was awarded a three year, $4.6 million dollar telehealth grant from the Federal Communications Commission (FCC) in November 2007 to build a statewide fiber optic broadband network. According to Government Health IT, the grant will cover 85 percent of the costs associated with design, development, engineering and implementation of the network, as well as hardware and installation for hospitals and clinics. Additional funding has been provided by the Colorado Behavioral Healthcare Council in the amount of $9.8 million. The Colorado Health Foundation is funding administrative support services for the project which are not covered under the FCC grant. Further, a 15 percent match from participating providers will supplement the project.

Currently, 72 hospitals, 118 health clinics and 184 mental health centers have elected to participate in the initiative. The initiative is projected to be the largest healthcare telehealth network in the US.

The project is considered a sub-network, leveraging the existing enterprise Multi-Use Network which was launched in 2001 as a collaborative effort between the state government and Qwest Communications. The Multi-Use Network was a 10 year, $70 million investment spanning 64 county seats using a broadband, fiber-optic-based network. Qwest Communications has committed to upgrading the existing statewide network infrastructure and establishing a special tariff for the new Ethernet service. The plan is to sustain operations beyond the planned period of federal support and to migrate the new Ethernet service to a one-tier, flat rate statewide tariff. According to CHA's FCC application, "This will occur in concert with the state's rebidding of the base contract for Multi-Use Network telecommunications services. This contract, currently held by Qwest, will be re-competed for award on July 1, 2010."

As a result of INPUT's Government Community outreach initiative, the Montana MACWIS Program Manager contacted INPUT, asking us to inform the vendor community of an upcoming SACWIS Vendor Fair that the state will be holding in October 2008.

The State of Montana Department of Public Health and Human Services (DPHHS) is planning the implementation of a new Statewide Automated Child Welfare Information System (SACWIS). The new system, known as the Montana Automated Child Welfare Information System or MACWIS, will replace Montana's current legacy child welfare system with a federally compliant system that combines modern information technology practices and tools with a high degree of system integration and usability. In 2007, the Montana State Legislature appropriated $27.15 million to build the new Montana child welfare system.

During the week of October 20-24 2008, a Vendor Fair will be held for any and all vendors with SACWIS solutions and mobile technology solutions in an auditorium setting. During my phone conversation with the MACWIS Program Manager, she indicated that they envision all types of users from across the state attending and evaluating each solution at this Vendor Fair. Attendees will have the opportunity to see different types of features, functionality and possibilities, thus helping the state arrive at a solution that is preferred by all users at many different levels.

For information regarding Montana's Child and Family Services Division, please visit the website; or if you are interested in attending the Montana SACWIS Vendor Fair to show off your wares, please phone or email the MACWIS Program Manager, Jamey Ereth. For more information on the Montana SACWIS Project, please see INPUT Opportunity ID #37866.

Register and access the INPUT Government Community for free: http://www.input.com/corp/govcommunity/join.cfm.

FCC chair Kevin Martin's support for free public wireless access will create a "trifecta" for public safety wireless communications.

In a surprisingly under-reported declaration, Federal Communications Commission (FCC) Chairman Kevin Martin has come out in support of free wireless broadband nationwide. The Bush administration has not been uniformly against subsidized broadband service. It has provided limited funds via the FCC and the U.S. Department of Agriculture for rural broadband service--mostly of the wireline variety and targeted toward health care services. However, this wireless broadband would be provided via a set-aside from the spectrum operated by private providers of wireless service. This is well within the purview of the FCC's authority since the finite electromagnetic spectrum is regulated by the FCC as a public resource not unlike forests or waterways.

At any rate, the implications of this high-profile declaration are significant for public sector information and communications technology in the area of public safety. The FCC has already set aside spectrum for public safety wireless interoperability. While the FCC has struggled to gain interest in developing this thin slice of spectrum, it will continue to reformulate its approach until it finds the right incentives. Furthermore, the digital TV transition will ensure that virtually all American households will eventually have TVs capable of receiving detailed public safety messages. Free wireless spectrum could be harnessed during emergencies to ensure two-way communications with populations on the move without reliable access to TVs or wireline broadband. Low-income households have shown much more interest in spending their limited dollars on mobile communications than home broadband. During a crisis, it's to everyone's advantage (regardless of income level) that the maximal amount of coordination be achieved.

Industry resistance to this new set aside is sure to be strong in the short term, but--merely by putting the option on the table in a high profile way--Chairman Martin has instigated a discussion that will have long-term impact.

Last week, the Pentagon released a memo throughout Air Force that announcing that the Cyber Command initiative (AFCYBER) was being put on hold. Staffing and budget plans have been halted, delaying the October 1, 2008 stand-up date originally planned. The announcement came the same week as the Georgia/Russia conflict placed a spotlight on cyber warfare. The timing is interesting, but considering the highly visible missteps at the Air Force this year, it's no wonder that newly appointed Air Force Chief of Staff General Schwartz would want to put the brakes on Cyber Command for the moment and take a look under the hood.

The Senate confirmation committee issued some questions for General Schwartz to answer in advance of the hearing. One section was dedicated to AFCYBER. The questions and responses are below:

How do you envision Cyber Command integrating and interacting with the Department and the other services?

Cyber Command, if permanently established, will provide forces, in coordination with our joint partners and the Department, to Combatant Commanders to protect and defend US interests in the cyber domain at home and abroad.

What is your understanding of when a permanent headquarters will be established?

The headquarters will declare Initial Operational Capability by Oct 2008 using distributed locations. The Air Force is studying a list of potential permanent basing locations with an expected final decision in FY 09.

These answers are in line with the standard FAQ responses for AFCYBER, but what is interesting is that General Schwartz threw in "if permanently established," which possibly indicates his perception of continued evaluation of the plan. Considering that the issue was specifically brought up during the Senate confirmation process, it's not surprising that General Schwartz would want to make sure that the initiative was well-planned in order to be well-implemented.

A Government Executive article neatly summarizes many of the "high-profile blunders" that plagued the Air Force this year (including the nuclear weapons mishandling that led to the resignations of Air Force Chief of Staff Gen. T. Michael Moseley and Secretary Michael W. Wynne and the Boeing/Northrop Grumman tanker protest).

The need for a dedicated cyber effort within Air Force becomes greater by the day, so Cyber Command still has a decent shot at moving forward in some iteration. But it makes perfect sense that General Schwartz would want to make sure that a very tight plan is in place so that he doesn't join Moseley and Wynne.

According to a recent article in Government Computer News, the Committee on National Security Systems is close to releasing its instructions for a standardized certification and accreditation (C&A) process for all national security systems. NIST has made progress on doing the same for the Federal Information Security Management Act (FISMA) guidance as well. The plan is to eventually roll out the standards government-wide.

Two of the biggest roadblocks in government information sharing are standardization and security. In everything from case management to geospatial information, getting common government-wide (or close to it) information and security standards has been difficult in many areas. The Committee on National Security Systems' and NIST's security standards could help foster significant progress in many areas, like information sharing and collaboration. The concept of C&A is easy to understand: a system's security is evaluated and documented for certification, and then a designated authority approves the system for accreditation for operation. Implementing this within government has not been as easy as understanding the protocols. Many agencies have their own policies, and don't necessarily evaluate other agencies' security until the need to share information arises.

How much easier would this make life for contractors who have had to work around numerous security standards? How much time could this shave off the proposal and acquisition timelines? Maybe not much, but it's a start. And having government-wide security standards could also drive growth in some emerging technology areas such as Service-Oriented Architecture (SOA) and Software-as-a-Service (SaaS) - both of which have security concerns on the list of programmatic and cultural resistance.

Speaking of cultural resistance, this also rears its head regarding security standards. As with many solutions (including SOA and SaaS), the technology is the easy part - it's the "people" issue that causes many of the roadblocks in standardization. Conforming to a single security protocol, especially not one developed within its own walls, could be challenging for some agency cultures. Hopefully, a good change management program is in the works.

INPUT expects additional solicitations to be issued in the near future regarding statewide computer aided dispatch and records management systems. Recently contracted statewide CAD/RMS projects are valued anywhere from $2- $15 million depending on the agency.

On Tuesday, August 19, 2008, the Indiana State Police released a Request for Proposal (RFP) for a Regional Public Safety Computer Aided Dispatch (CAD) and Records Management System (RMS). This program is also intended to build on the success of Indiana Statewide 800 SAFE-T, as well as to provide foundation for a statewide CAD system to enhance data links and interoperability between public safety agencies and first responders in Indiana.

INPUT estimates this project to cost upwards of $5 million as it has potential of being implemented statewide. This project started in 2006 when Governor Mitch Daniels created an Office of Management and Budget and tasked the organization with evaluating the state government. Within their report, they recommended consolidating dispatching among state agencies as their current system is 10-15 years old.

A pre-proposal conference will be held on August 28, 2008. Questions are due September 4, 2008. Proposals are due October 2, 2008. INPUT estimates that a contract could be awarded before the beginning of 2009.

The Department of Administrative Services in Georgia has recently invested millions of dollars in new procurement processes and technologies that are anticipated to unify statewide agencies into one comprehensive purchasing consortium.

The consolidation of the state's procurement is a novel approach to procurement in the public sector. The idea of such a metamorphisis is to bring together spending across Georgia's entities, such as agencies, hospitals, municipalities and universities. These entities, which tend to operate independently, have the ability to harness dramatic cost savings and efficiencies if they act as a group, as opposed to individually.

In order for Georgia to obtain desirable results, they will rely on Sciquest's eprocurement solutions, as well as Peoplesoft's eprocurement system. In essence, Sciquest's eprocurement solution will be used for the provision of supplier capabilities as well as provide an intuitive online shopping environment to the state. This will then be integrated with Peoplesoft's proven eprocurement system to create a more holistic procurement process for the state and its entities.

This approach by the state is anticipated to assist with the removal of aspects keeping users from adoption that have burdened the state procurement initiatives, as well as provide all participants (state employees, users and suppliers) with access to real time information needed to make more strategic business decisions going forward.

Between GAIT 2010 and this new multi-million dollar comprehensive purchasing consortium, Georgia is proving to be a trail-blazer with the way they incorporate technology into their business practices.