Is small business ready for DHS' $3B FirstSource II?

Homeland Security Department officials unveiled the details of their new seven-year, $3 billion FirstSource II contract.

The FirstSource II draft Request for Proposals was released Oct. 31. The final RFP is expected no later than December 31, officials said.

FirstSource I, a $2 billion contract launched in 2007, is expiring and its replacement will concentrate on commodity purchasing through value-added resellers, William Thoreen, director of the Acquisition Division in the Office of Procurement Operations, told 600 small business owners Tuesday at the Ronald Reagan Building.

“We really believe FirstSource II is going to become a very important piece of our portfolio both for IT and strategic sourcing,” he said.

Under FirstSource I, DHS has bought commodities through value-added resellers, including the purchase of computers, desktops, laptops, network cards, routers through small businesses, Thoreen said.

“The scope of the commodities we buy under it is very broad because we need a lot of different IT commodities,” Thoreen said, and added that FirstSource II will also include VAR purchases of new IT commodities.

“We have learned an incredible amount from that [initial] award and we are going to incorporate a lot of changes in FirstSource II that makes sense for us and we hope makes sense for you,” he said.

For one, “FirstSource II targets specific [small-business] categories that will help our program managers meet their individual goals,” Thoreen said.

FirstSource II “is going to be different. It will provide opportunities for small businesses to partner up for us. The most important thing is that it succeeds in fulfilling our mission needs. We’re not just contracting for contracting sake; there are mission needs and they need to be primary,” Thoreen said.

DHS CIO Richard Spires summed up the dilemma of most of his peers in government. “I’ve got more things coming at me than ever, more demands,” he said. “And I’m going to have less dollars – a pretty classic problem, right? – we’re feeling the squeeze right now.”

Spires said the new contract would address four DHS priorities: infrastructure rationalization, overall IT improvement, elimination of duplication and balancing the CIO workforce, which has grown to 260 employees during the past few years, to meet the new realities.

“We’ve got to make significant changes, particularly in our infrastructure and the commodity IT arena to be able to offer at least the same level of service – and I would hope more service – to my customer base,” he said.

“Data center consolidation, really looking hard and driving true cloud-based services both in the private cloud, out of our own enterprise data centers, as well as in the public services are certainly a couple of things that we’re doing that are very visible,” Spires said.

Spires added that he wants to leverage DHS’ great buying power as exemplified by FirstSource II “to bring components together in ways that we never have before across a lot of functions within DHS.”

As a result of discussions with the Small Business Administration and others, “we’re going to be able to use all five of the small business categories in which we have set-aside authority,” said Kevin Boshears, director of the DHS Office of Small and Disadvantaged Business Utilization.

“To our knowledge, this is the first time this has been done in the federal contracting arena,” he added.

As a result, FirstSource II will have clear set-aside awards to 8(a), HUBzone, Service Disabled Veteran-Owned, Economically Disadvantaged Woman-Owned, and general small business.

But Boshears urged all small businesses “to be aware of the individual aspects of these [five] programs. There are common themes that run through all five of them, but there are individual details that may be germane to [only] one of the individual five categories.”

“So be certain that you are comfortable with the rules and all that has been asked of you to participate in any of the five categories,” he added.

Addressing the issue of teaming, Boshears said although teaming has always been a successful part of DHS contracts and because First Source II is all for small business, “we want each participant to be absolutely clear about which firm is serving as the prime contractor in both the pre-award phase and the post-award phase.”

He said that’s important for proposal preparation, for meeting all the requirements of the small business program and for transparency.

To answer “the question I get the very most – how many awards are you going to make?’ Boshears said the proper answer is “competition determines the final number.”

But a scan of previous DHS-wide multiple award contracts, including Eagle I, have averaged 27 to 28 small business prime contracts, he added.

“That doesn’t give you the absolute final number,” he said, “but it does give you kind of an idea of what we’ve done on previous projects.”