The race for technology reform

President Barack Obama’s first 100 days in office brought in a fresh approach to new technologies and an ambitious reform agenda, but they also stirred anxieties about how far he will go in promoting procurement change and stringent new transparency rules.

The volume of opportunities anticipated from the White House’s $787 billion economic stimulus package heartens information technology contractors. Other welcome news is the April 18 appointment of Aneesh Chopra to be the nation’s federal chief technology officer and the initiation of a comprehensive cybersecurity review.

Above all, contractors are pleased with the White House’s apparent ease with IT and amused by the uptick in federal officials’ use of Twitter, social media and mobile devices. “We are very pleased that the administration has placed so much emphasis on adoption of technology by government,” said Trey Hodgkins, vice president of national security and procurement policy at TechAmerica.

At the same time, there is a sense of uneasiness about how aggressively the Obama administration will proceed on the acquisition reform agenda the president laid out March 4. The White House issued a memo calling for a focus on fixed-price contracts, a move to in-source as much government work as possible, and an end to contracting abuses.

“It’s time for this waste and inefficiency to end," Obama said at a March 4 news conference. "It’s time for a government that only invests in what works.”

Contractors felt stung by some of those comments. “The memo itself was very thoughtful, and there is not much to argue about,” said Stan Soloway, president of the Professional Services Council and a columnist for Washington Technology. “It is the rhetoric that was somewhat out of balance.”

“There are lingering negative feelings,” Hodgkins added.

The March 4 presidential memo on acquisition reform was just the first step in a policy development process by the Office of Management and Budget that is likely to take several months, and contractors are wondering about the next stage.

“There is tremendous opportunity, but there also are questions and potential peril,” Soloway said. “To have a policy review is positive and does not change much, but there is always the potential to have a monkey wrench thrown in the works.”

At this point, the White House has not yet outlined what changes it wants to see in procurement rules. “We have not seen a lot of proposals yet on contractor reform,” Hodgkins said. “Signposts, but no detail.”

“We are in a wait-and-see mode on acquisition reform,” said Deniece Peterson, principal analyst at Input Inc., a market research firm in Reston, Va.

Transparency pledge

Meanwhile, the economic stimulus dollars are a high priority. Faced with a sharply declining economy when taking office Jan. 20, Obama began promoting the idea of an appropriations package to boost the economy. The resulting American Recovery and Reinvestment Act contains about $60 billion in technology-related spending, including allocations for projects such as electronic health records, broadband networks and smart electric grid development.

“It is a lot of money, and the contractors are putting time and effort into pursuing the opportunities,” Peterson said. “These are dollars that were not expected in fiscal 2009.”

“The contractor community is certainly optimistic about the opportunities being created through the stimulus, and they are ready to get in there and compete,” Hodgkins said.

Obama pledged that the recovery spending would be transparent and more open to scrutiny than traditional federal spending. That includes new OMB reporting rules for contractors and subcontractors to account for expenditures, rules favoring fixed-price contracts, and new regulations that require access to contractor employees by federal auditors.

Contractors have mixed feelings about those transparency and oversight rules and consider them a risk while working under tight deadlines for implementation, Peterson said. “Some contractors feel the risks are too great to ignore,” Peterson said.

The White House also issued a memo March 20 that places strong restrictions on face-to-face meetings with registered lobbyists for companies seeking contracts on specific stimulus-funded projects. The memo requires disclosures of meetings between federal agency executives and lobbyists.

Lobbyists have opposed those rules as contrary to freedom of speech. “There has been a chilling effect on communications with the government,” Hodgkins said. Technology industry groups have found it more difficult to provide expertise and feedback to federal agencies as a result of that memo, he said.

Obama’s cybersecurity platform has received mostly positive reviews, but it has been slowed by a debate on whether the National Security Agency should play a lead role.

Contractors are pleased by Obama’s appointment of Chopra to be CTO, but the position’s scope and authority is not clear yet. “The CTO provides a focal point for the improvement of technology in government,” said Ray Bjorklund, senior vice president and chief knowledge officer at FedSources Inc., a market research firm in McLean, Va. But it is too early to say where and how the CTO will have the most impact, he said.

Similarly, Defense Secretary Robert Gates outlined April 6 major shifts in weapons programs and a plan to boost the defense acquisition workforce. But it will take many months for those proposals to come to fruition, and Congress is likely to block some of them. Gates’ goal of transitioning contract employees into government employees seems especially challenging because of the shortage of skilled acquisition workers and engineers, Bjorklund said.

“The reality is that both the government and industry are having difficulty with hiring certain skill sets,” Hodgkins said. “We are not training enough people to fill all the openings.”

Budget delays

But workforce issues have always been a long-term goal. In the short term, although the first 100 days are over, the Obama administration is still in its early stages. One significant benchmark is the new president’s first budget. Contractors are eagerly awaiting details for the fiscal 2010 proposed budget request, which is well overdue and is now expected in May.

“Contractors will not know where to put their emphasis [in marketing] until they see the budget details,” Bjorklund said.

Overall, now that the 100 days are over, contractors are in a better position to gauge the Obama administration’s top priorities for the next three years and plan accordingly.

“We are seeing a shift to domestic priorities,” Bjorklund said, “and we are advising the industry to begin their strategic realignments.”