Project Protection Comes at a Price

A few months ago, a major systems integrator put out a request for proposal inviting other companies to bid on the chance to come in and second-guess its work. The reason: The integrator's customer, a major federal agency, was unhappy with the outcome of a systems development project carried out by the integrator. But the company, which declined to be identified for this story, believed it had fulfilled its contractual requirements and met the agency's specifications.So the company decided to hire an outside firm that would review the contract, compare it to the finished product and forward independent conclusions to the customer to prove the contractor had met its responsibilities and avoid the prospect of litigation.This is but one example of how contractors and agencies use independent validation and verification, known as IV&V. Many in the government market see IV&V on the rise as IT projects become more complex and agencies look for tools to control costs. "In general, IV&V is an independent ? that's a very operative word ? assessment of the design and actual building of a system," said Ray Bjorklund, vice president of consulting services with Federal Sources Inc., a market research and consulting company in McLean, Va. "It doesn't have to be software. It can be a variety of things, but it's often applied to systems that are software-driven." IV&V has been around for decades, especially in defense contracts, said Roger Fujii, vice president of systems engineering and technology in Logicon Inc.'s defense mission systems unit. The concept was developed as his company and others were trying to produce critical programs, from launching satellites to providing guidance for intercontinental ballistic missiles.The practice of independent review "came about in those days when the government was looking for an unbiased, highly technical firm that could come in and advise on [complex] projects," Fujii said. The idea was to "find the errors early and get the corrections made." Over the years, IV&V has migrated into the arena of some civilian agencies, as IT projects have become larger, costlier and more complex.The market for IV&V services is difficult to track, because spending on it is often buried in larger contracts, Bjorklund said. But he estimated about $100 million IV&V opportunities are on the street, and the market is growing. Another sign of growth is that companies such as San Diego-based Science Applications International Corp. have created IV&V divisions."We've been doing IV&V for over 20 years, [but] it's officially been a division for just over a year," said Chris Stoddard, manager of SAIC's IV&V and software assurance division. "It grew large enough that we could become a [profit and loss] center."Stoddard said in the past, his group had to convince customers to include IV&V in their projects. "Now we're getting phone calls asking us," he said.IV&V is needed because so many projects, particularly software projects, fail, said Chuck Schue, vice president of WR Systems Ltd., a 300-person engineering and consulting firm in Fairfax, Va. WR Systems takes on two or three IV&V projects a year."The reason [for the failures] is because nobody's paying attention to them, or they're huge and technically complicated. As buyers, [agencies] may not have the technical skills to know whether they're getting what they wanted," Schue said.There usually are three points in a contract's life cycle when IV&V might be called upon: ? When a project starts, and the IV&V is run in conjunction with the prime contractor's efforts; ? Some time during the project's execution, if schedules slip or other kinds of problems show up; ? After a project is completed, if a client agency is unhappy with the outcome. WR Systems takes on an IV&V assignment in part because it helps the company win new business, Schue said. If problems are identified, "we hope we'll get asked to provide the fix," he said. But IV&V often is not a very popular concept with many systems integrators. "Some contractors have complained that the IV&V process can result in unreasonable testing requirements conducted by outside firms that do not fully understand the contractual requirements, causing more development time and higher contract costs," said Jim Fontana, vice president of corporate development and law at Getronics Government Solutions LLC, McLean, Va."I have been involved in a case where a dispute arose between the contractor and the government over the proper scope of the IV&V contractor's oversight," said Richard Rector, a partner with the Washington law firm Piper Marbury Rudnick & Wolfe LLP. "The contractor was concerned the IV&V contractor was micromanaging. ... There was a tension in that case because the IV&V contractor viewed its role as very hands-on."Fontana said contractors also worry because the IV&V provider has access to their proprietary information and development methods. Contract clauses typically require the IV&V contractor not disclose proprietary information, but "contractors, nevertheless, fear the worst: that it's just too hard to keep the fox out of the henhouse when the henhouse door is wide open," he said.And there is the issue of cost. IIT Research Institute, a not-for-profit engineering and research firm based in McLean, estimates that IV&V can add anywhere from 5 percent to 30 percent to a project. In an era of shrinking federal budgets, it becomes harder to convince agencies that including IV&V at the beginning of a project will pay off."Many customers go into the Stockholm syndrome with their developers," said Phil Abold, vice president of IITRI's AB Tech Group. Agencies don't like to shut down programs if problems arise, because they may never get the funding for it again, he said. "It's easier to live with the overruns and keep going," Abold said.IITRI staffers compare the rationale for IV&V to talking with one's kids about safe sex: It's not a very easy thing to do, but the alternatives can be far worse, he said."The question the customer has to answer is what is the cost of failure," Abold said. An agency is better off paying more up front to include IV&V and have the project completed on time and within budget, he said."Research in the past has proven that while there is a cost to doing IV&V, the payback you get more than pays for it," said Logicon's Fujii.For large projects, Logicon's research found the costs were higher overall when IV&V was not used, he said."There is no silver bullet" to keep programs on track and spending under control, said Skip Saunders, executive director of the platform group for Mitre Corp., Bedford, Mass. "IV&V shouldn't be thought of as a single solution, but as one tool in the arsenal. ... Whatever tools or techniques are brought to bear should be early rather than late."XXXSPLITXXX-IBM Corp. took home the big prize earlier this year, winning the $1.3 billion Customs modernization contract.But the U.S. Customs Service separately awarded a contract to Mitre Corp. of Bedford, Mass., to provide independent validation and verification of the performance of IBM and its teammates.Rather than fret over the involvement of Mitre, IBM representatives are adopting an open-arms policy toward the IV&V contractor."The best way to work with the organization in the IV&V role is to be as open and forthright as possible, because if they believe there are issues you're withholding, they become more suspicious, and maybe more aggressive," said Harry Sundberg, IBM's project manager for the Customs contract. "It's always good to have an independent view."IBM has an internal independent quality assurance group, and many companies have similar groups, but IBM isn't worried about an outside party becoming overly involved.It comes down to the idea that both the team running the project and the IV&V team have the same goal, Sundberg said."The bottom line is really to ensure the federal government receives the value for which it's paying," he said.