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White House crackdown on IT might be a moneymaker for vendors

Some contractors are welcoming the White House's threat to cut off funding for risky information technology projects as a moment that could be financially advantageous to them.

The Office of Management and Budget on Monday released a list of roughly 30 at-risk, mission-critical IT projects worth about $30 billion that need reworking. Simultaneously, OMB officials are deciding the fate of about 30 financial system projects a historically costly class of IT systems that the White House halted on June 28. Agencies must downsize the projects or scrap them to start afresh.

The drastic measures are part of the Obama administration's effort to end the traditional practice of rolling out complex IT systems that take years to build and often fail.

OMB now wants agencies to break projects into smaller chunks that can be deployed more quickly and cheaply. This means some system contractors will be paid less while agencies stop to redirect wayward projects.

That's just fine for some suppliers of easy-to-configure software, even though they were affected by the pause in the projects. Executives from these companies said they could receive more business when departments recompete canceled projects, or when they buy smaller systems in the future.

"When you get beyond the fear and anxiety of, 'Oh my God! I'm on the list,' most people who've been around will confide in you that this [megaproject] model has to go," said David Lucas, chief strategy officer for Global Computer Enterprises, which provides Web-based hardware and software for financial management. GCE is the contractor for the Labor Department's new financial system, which is one of the projects OMB put on hold.

GCE specializes in delivering small, incremental functions that take less than 18 months to deploy, an approach that aligns with what the administration is encouraging all agencies to embrace, Lucas said.

He claimed the company has attracted more attention from chief information officers and chief financial officers since the White House put the freeze on financial system development.

Industry group TechAmerica, of which GCE is a member, came out with a statement on Monday that raised concerns about the criteria the White House used to identify projects in need of adjustments. The trade group has argued that instituting blanket freezes on IT projects will force contractors to raise prices to protect themselves from financial losses if work is halted.

But Lucas said, "You have to be able to say, 'Maybe I am going to make less this year, but the end goal is to be able to help the agency in the long term.'"

Executives with software maker Agilex view the acquisition reforms as a business opportunity rather than a risk. The company produces computer programs using a process called agile software development, which sticks to a specified budget and deadline but leaves open the scope of a system's capabilities. Often, White House directives, congressional mandates and agencies' changing priorities will demand projects add or eliminate requirements. Agilex officials said the company's practices allow agencies to inspect and try products during coding to decide whether they meet constantly evolving needs.

"Agile software development really focuses on exactly the business process that the government is really trying to achieve: incrementalism, chunking. I can't wait 12, 18, 24 months to see if something is working," said Larry Albert, an executive vice president for Agilex. "Just don't show me slides. I need to see active working code."

Agency managers also can access an internal Agilex website that displays performance metrics for each application as it is being created.

Albert said a number of agencies have approached the firm since late June, when OMB began issuing memos detailing IT acquisition changes. Agencies, however, have not yet talked to Agilex about any of the projects OMB called out on Monday, he said.

GCE and Agilex said the move to deploy systems more quickly should benefit most providers of cloud computing applications, which are IT services accessed via the Internet that users can turn on and off on demand. The Obama administration has been prodding agencies to consider cloud-based IT as a way to save energy and money.

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