Government Clouds: Interior Dept. Sets New Standard

Aug 21, 2013 (08:08 AM EDT)

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9 More Cloud Computing Pioneers
9 More Cloud Computing Pioneers
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The Department of the Interior's (DOI's) decision to invest as much as $10 billion to migrate its IT operations to the cloud, through a set of 10 competing contracts, is perhaps the most significant example yet of how important cloud computing is becoming to federal agencies -- and to leading federal IT service providers. Experts also believe it will set the agency on a path toward becoming a major government cloud service provider.

By committing to a series of contracts, where individual projects will be awarded via task orders, DOI believes it can speed up the acquisition process and generate significant savings by creating a more competitive landscape among service providers, according to a blog post by Andrew Jackson, deputy assistant secretary for technology in DOI's Information and Business Services.

Ten companies have signed indefinite delivery, indefinite quantity (IDIQ) contracts, with each contract potentially valued at $1 billion. Those companies are IBM, AT&T, Verizon, Unisys, Lockheed Martin, Aquilent, Smartronix, CGI Group, Autonomic Resources and Global Technology Resources. All 10 contracts could cost DOI up to $10 billion. The agency, however, believes the money it will save transitioning to the cloud will outweigh the costs. DOI estimates saving $100 million a year between 2016 and 2020 in IT costs with the new model, according to DOI's Jackson. That money will fund future investments and applications, according to the agency.

[ Is IBM fudging its cloud business numbers? See IBM's Cloud Business: Ex-Employee Divulges Shortfalls. ]

The initiative is also aimed at making DOI data more accessible to the public and employees, a move that supports federal projects such as the 25-point Implementation Plan to Reform Federal IT, the Federal Data Center Consolidation Initiative and the Cloud-First Policy.

"The Department of the Interior has really moved out very aggressively and creatively" with its approach to the cloud, said Anne Altman, IBM's general manager for U.S. Federal, in a phone interview with InformationWeek Government. "Cloud computing is not just about the hosting; it's about the deep skills and services to support agencies ... and the software that goes along with that. What DOI has demonstrated here is there is a lot more to cloud than moving the workload," she said.

Cloud computing has proven to be a valuable business model for federal agencies, both economically and operationally, said Kevin Jackson, VP and general manager of NJVC Cloud Services, commenting on the DOI contracts in an interview with InformationWeek Government. But cloud computing also is a critical element for those agencies that provide shared services to other federal agencies and departments.

"By leveraging experience and scale, some agencies -- like the Department of Agriculture -- are also pursuing strategies to become government cloud service providers. I see the DOI Cloud Foundations award through both of these lenses," NJVC's Jackson said. "The National Business Center (a part of DOI) already provides government-wide services. NBC-managed offerings would be a natural evolution for the DOI cloud computing platform."

DOI's approach to acquiring cloud services is perhaps as significant as the department's technology moves themselves.

IDIQ contracts typically provide for an indefinite quantity of services or suppliers for a fixed period of time. The initial project under these contracts is for SAP application hosting. NVJC's Jackson said additional services will likely include virtual machines, storage, database hosting, secure file transfers, Web hosting, and development and test environments. The contracts could be extended through April 2023. DOI will compete individual projects among the awardees, and then assign them via task orders, one for each project. It's expected the competition from across the 10 selected vendors will result in more competitive and innovative offerings.

The first task order already went to Unisys. The vendor is currently at work on that project, which will run up to five years and is worth up to $44 million. Under the task order, Unisys has begun transitioning DOI's financial and business management system to the cloud. The mission-critical system is based on SAP's ERP software platform and is used throughout the department to account for all income and expenditures.

The DOI's transformation is one of the first examples of a cabinet-level department embracing a cloud broker model, said Venkatapathi Puvvada, group VP of civilian agencies at Unisys Federal Systems, in an email interview.

"Government agencies are facing severe budget restrictions. This government-wide contract can allow the DOI and other government agencies to significantly reduce the time needed to obtain cloud services while cutting costs through consumption-based pricing rather than paying for idle servers and maintaining and operating applications," Puvvada said. "What DOI is doing is very innovative."

Lockheed Martin's VP of energy solutions Frank Armijo said moving to the cloud is an affordable and low-risk transition path for the DOI, as it shifts away from traditional IT. The company, which offers a solutions-as-a-service platform, will use its expertise to identify the right cloud, mobility and collaboration products and services to help the agency operate more efficiently, said Armijo, in an email interview.

IBM is competing to provide the DOI access to its Smart Cloud for Government, which is hosted at the vendor's federal data center, as well as IBM AIX Cloud and SmartCloud Enterprise, IBM's public cloud infrastructure-as-a-service.

Aquilent is another vendor bringing a strong offering to the table. Instead of building its own cloud, the company partners with commercial cloud providers capable of meeting federal security guidelines. "Since the contract aligns with our internal cloud approach about making it easier to move to and manage the cloud, we will be actively marketing the DOI IDIQ," said Aquilent's CTO Mark Pietrasanta, in an email interview.

For Verizon, it could be one of its largest federal cloud contracts to date. Verizon has a history with the DOI, providing the agency with advanced networking and security products. In addition to competing for cloud-based storage, secure file transfer, virtual machine, as well as database, Web, and development and test environment hosting services, Verizon was one of four selected by the DOI to offer SAP application hosting services.

"This is a change we've been eager to make for a while. The cloud hosting award was on hold until recently, when a contract protest was dismissed by the U.S. Court of Federal Claims," said the DOI's Andrew Jackson, in a written statement announcing the contracts last week. "Now that we can finally move forward with these contracts, we're expecting significant reductions in hardware, software and operations costs to the taxpayer."