Systems integrators fall from grace, but many doubt that government can run without them
"It takes very special skill sets to do large systems integrations. The folks with deep experience are not cheap."? Renato DiPentima, former president and chief executive officer of SRA International Inc.
Major setbacks for the Coast Guard's $24 billion Deepwater program are casting a shadow over the use of lead systems integrators on other large federal contracts and could result in a reduction in that contracting approach.
As Deepwater's effects ripple outward, recent developments are adding to the uncertainty about future contracts and programs in which lead systems integrators are already being used, such as the Army's Future Combat Systems (FCS) and the Homeland Security Department's Secure Border Initiative.
These recent developments include the following:
- On April 17, citing failures with the patrol boat conversion portion of Deepwater, the Coast Guard reclaimed the lead systems integrator role from Lockheed Martin Corp. and Northrop Grumman Corp. It is also seeking a refund for eight boats it deemed unacceptable. The loss is estimated at $60 million to $80 million.
- On May 17, the House passed a Defense Authorization bill for fiscal 2008 that includes language to phase out the Pentagon's use of private-sector lead systems integrator contracts. Under Section 806, introduced by Rep. Duncan Hunter (R-Calif.), the Defense Department would no longer be able to award such contracts beginning in October 2011. That gives the department four years to redevelop its workforce to handle additional program management responsibilities. The Senate has not yet acted on that provision.
- Recent legislation submitted by Sen. Susan Collins (R-Maine) and co-sponsored by Sen. Joseph Lieberman (I-Conn.) calls for a governmentwide definition of lead systems integrators and regulations to improve the oversight of such contracts.
As a result of those developments, experts say the lead systems integrator role, which was never secure to begin with, is now in serious jeopardy.
- "The lead systems integrator role, as we know it with the Army's Future Combat Systems and Deepwater, is going to die," said James Carafano, a senior research fellow specializing in homeland security and military operations at the Heritage Foundation.
At the same time, the need for lead systems integration on complex systems will continue, he said, and the role of integrators might need to evolve into new hybrid formats to improve oversight.
"We still need systems integrators," Carafano said. "The government still does not have that experience and capacity."
The next program that could be affected is DHS' border-surveillance system, although its piecemeal structure could help it avoid the types of problems Deepwater encountered, he said. Work on the SBInet component's initial 28-mile section in Arizona is due to be completed this month.
In the meantime, lawmakers' intense scrutiny of the lead systems integrator's role is not likely to end anytime soon.
"For someone like Duncan Hunter, who is very contractor-friendly, to be trying to rein in lead systems integrators makes it clear this is a serious issue that will not go away," said Beth Daley, director of investigations at the nonprofit Project on Government Oversight. "This is not limited to Deepwater any more. It is something Congress is grappling with throughout the government."
Hunter's office did not respond to requests for comment.
The lead systems integrator role has evolved and broadened since it became popular in the late 1990s with the government's award of the National Missile Defense contract to Boeing Co. It reached a pinnacle of sorts in 2002, when the Army awarded its $200 billion FCS prime contract to Boeing and Science Applications International Corp. and the Coast Guard chose a joint venture of Lockheed Martin and Northrop Grumman for Deepwater, initially valued at $17 billion. In September 2006, DHS selected Boeing as the lead for the SBInet contract, which is worth about $8 billion.
In a March 26 Congressional Research Service report, analyst Valerie Bailey Grasso defined lead systems integrators as contractors that execute large, complex, defense-related acquisition programs, especially so-called system-of-systems programs. For example, FCS seeks to create synergies by networking at least 18 systems, including those related to weapons, vehicles and communications devices.
Lead systems integrators perform functions that include developing requirements and technologies, and constructing, modifying, administering, managing, testing and validating systems.
The growth in the approach coincided with the reduction, by half, of the Pentagon's acquisition workforce from 1995 to 2005. One of the main drivers was the belief that the government lacked the technical sophistication and managerial expertise to perform such functions.
Now that the lead systems integrator role is being challenged, questions are arising once again about the government's ability to carry out such functions by itself, especially if Congress adopts the 2011 deadline. More immediate concerns focus on the Coast Guard's need to quickly take on that role for Deepwater.
"To think that in five years, by 2011, you can develop that talent within the government ? they will find out the hard way that you cannot do that," said Paul Cofoni, president of U.S. operations at CACI International Inc. "To create that kind of expertise takes a generation."
One of the chief impediments to re-empowering the government acquisition workforce will likely be the difference in salaries between the public and private sectors, said Renato DiPentima, who retired April 1 as president and chief executive officer of SRA International Inc. Experienced project managers in the private sector can make $200,000 to $400,000 a year, he said, while in government, the maximum Senior Executive Service salary is $168,000.
"It takes very special skill sets to do large systems integrations," DiPentima said. "The folks with deep experience are not cheap. It is not going to happen unless the government really changes its hiring practices, hires more people and has competitive salaries."
Carafano said government, industry and possibly third parties such as federal research centers should work together to create a hybrid approach to lead systems integration. Another possibility is to create elite government teams that can move from contract to contract. But that type of flexibility is not typically government's strength, Cofoni and others said.
Other suggestions in the Congressional Research Service report include having government agencies divide contracts for complex systems into separate procurements or improve oversight by increasing the reporting and transparency requirements. Agencies should also safeguard against conflicts of interest and self-certifications and add third-party assessments. In addition, introducing periodic recompetition could improve the performance of such long-term contracts, according to the report.
The deadline of 2011 as the end of the lead systems integrator role is "a simple solution to a complex problem," Cofoni said. "I disagree with the idea that the [lead systems integrator] role is a problem. I hope Congress will avoid a panicky rush to judgment."Staff writer Alice Lipowicz can be reached at firstname.lastname@example.org.