You can learn a lot from watching where an experienced leader goes. In this time of spending cuts and tightening resources, what kind of actions are the large and successful federal contracting companies taking?  Who is divesting or acquiring, and what are they targeting? Where are resources being directed—are new departments or divisions emerging? Tracking such movement can help navigate the changes ahead in contracting.

In gathering this overall perspective, one thing quickly becomes clear: It’s a tough environment out there. Here’s how investment banker Bob Kipps, with Kipps DeSanto & Company, describes today’s federal contracting landscape: Like Death Valley and the Sierra Nevada mountains. “There are a couple of peaks—and a lot of valley,” he says. “There’s a lot of activity, but it’s focused in those areas that are peaking.”

This issue of GovConExec explores the peak markets. It’s true that the $1.5 trillion debt-reduction deal means smaller or flattened budgets, but analysts and participants alike see plenty of movement that is nothing less than tectonic.

Company executives are shifting energies toward the areas they believe offer the best returns: markets equipped to realize the benefits of increasing efficiency, reducing waste, and cutting costs.

And the debt bill’s emphasis on accountability only intensifies pressure on the sector. Jack Hughes, a leading government-contracting finance veteran with more than three decades’ experience, and a current “buy-side” M&A consultant for Altus Associates, stresses that “companies providing products and services will have to be extremely flexible and nimble.” He sees growth for “mid-size and large companies that can acquire other companies in areas government will continue to fund,” such as cybersecurity and healthcare.

While some companies will, of course, continue to pursue growth through innovation, today’s winners are not always those engaged in the development of the next technology breakthrough. Companies are looking more for a return on improvement than a return on investment.

Health IT’s major advantages, for instance, lie in its ability to eliminate redundancy and, in the long run, improve overall health and lower care costs. Companies in this market may not be turning unprecedented profits; but they’re churning up savings. And these savings add up—which is certainly advantageous to the the federal government, federal contractors, and the people both serve.

Finding the Five

The editors of GovConExec have analyzed movement in the market, reviewed economic statistics, and consulted those active in the government contracting sector, to identify five promising areas for peak performance:
1 Cybersecurity: Threats ramp up, spending gets tight, and aging tools and practices go down—these are the challenges in this fastest-growing sector. The surprise: People may matter more than systems, with skill at a premium.
2 Healthcare IT: Sweeping policy reforms drive opportunity here—and more companies are applying existing talent and capacities to this emerging and increasingly complex market.
3 Cloud computing: This technology innovation has become the workhorse of the federal world, solving problems, providing cost savings, and garnering advocates.
4 Mobility: From the citizen accessing federal data to the soldier using an iPhone in combat tactics, all computing is trending smaller, quicker, and mobile. Challenges—wireless access, interoperability, security—abound, but so do opportunities for solutions.
5 Rule of Law: Rebuilding a stable government and economy takes plenty of tools and talent—and contractors are gathering the who and the what needed to tackle the tough work of infrastructure and institutional development.

1 Cybersecurity
IT’S BEEN QUITE THE YEAR FOR CYBERSECURITY.

The first half of 2011 saw an unprecedented number of high-profile cyber attacks, turning the web domain into a digital Wild West where conflict and crime thrived. As financial institutions and federal agencies scrambled to restore their systems and networks, cybersecurity contractors made big business in developing solutions to protect the electronic infrastructure. And what a business it is: Research firm Deltek projects that the cybersecurity market will grow at an annual rate of 9.1 percent to $13.3 billion in 2015.

Larger firms eager to capture a share of the market are acquiring smaller companies with niche capabilities or with key customer relationships to position themselves in the burgeoning cybersecurity market. Case in point: HP Enterprise Services, which last year bought ArcSight and Fortify Software to bolster its cybersecurity portfolio. HPES’ focus is twofold and involves “[connecting] the science and technology of cybersecurity with practical services, products
and solutions,” said Betsy Hight, vice president of the Cybersecurity Practice at HPES.

Those offerings include the Cyber Security Command and Control Solution, which detects and responds to cybersecurity threats in near real-time and
provides options to help clients address security incidents, and CATA — short for Comprehensive Applications Threat Analysis — which ensures security is built in throughout the full lifecycle, Hight said.

Another firm offering niche capabilities is QinetiQ North America. In the wake of attacks on the International Monetary Fund and Google that exploited human weaknesses, the defense contractor’s subsidiary Cyveillance unveiled the Social Engineering Protection Appliance.

The software is designed to protect government employees from infiltration attempts, espionage campaigns and foreign threats through the use of Email Intent Analysis, real-time URL, link analysis and high-value target protection, said John Sutton, senior vice president of business development
for QinetiQ NA.

“Organizations have to provide the level of proactive protection needed just to keep pace with the nation states, virtual gangs, individuals and criminal organizations determined to stop our customers from accomplishing their missions,” he said.

Understanding proactive protection is at the very heart of technology company Sevatec’s mission. The firm focuses its cybersecurity initiatives on Identity, Credential and Access Management — ICAM — a critical component of securing the federal government’s physical and virtual assets, said Burke Cox, chief
operating officer at Sevatec. Among its users are the Department of Homeland Security headquarters, the Transportation Department, Immigration
and Customs Enforcement, and the Social Security Administration, just to mention a few.

“At the Social Security Administration, we are developing a solution to streamline the identity and entitlement recertification process through automated campaigns,” he said. “The recertification process will touch every user’s privilege at SSA. This is a huge effort without any automation in place.”

For firms not focusing on technical solutions, the key to the market lies in manpower. Consulting firm Booz Allen Hamilton, for example, offers experienced leadership and “thousands of experienced cyber professionals” to provide cybersecurity solutions to the federal government in the defense, intelligence
and civil sectors, said Roger Cressey, a senior vice president at Booz Allen.

“With the astronomical rise in the number of cyber attacks on government and the private sectors, we must accept and understand that technology alone will
not thwart this growing persistent threat,” he said. “Success starts with a mission-driven cyber policy, which in turn guides cyber operations.”

Stressing how solutions have moved beyond a perimeter-focused construct, Cressey said the most important aspect is to find the right people.

Recruiting, developing and retaining a cyber-ready workforce, he said, will define leaders who can drive the change management that cybersecurity inevitably requires. A recent award to support the Space and Naval Warfare Systems Center Pacific embodies just that sort of work: Under the multiyear deal, Booz Allenbwill help SSC Pacific assure superiority for the warfighter in the cyberspace and provide science, research, engineering and technology integration, Cressey said.

Evolving with the Market
As Internet use continues to expand and cybersecurity becomes increasingly woven into the fabric of everyday life, the cybersecurity contractors who spoke to GovConExec foresee a bright future marked with opportunities and growth.

The government has repeatedly stressed the importance of private-public partnerships — a concept highlighted most recently in the International Strategy for Operating in Cyberspace. The framework notes that cyberspace has not only become an incubator for new forms of entrepreneurship and advances in technology, but it will also help drive U.S. economy, a crucial factor in times of diminishing budgets.

For Sotera Defense Solutions, Inc., formerly known as Global Defense Technology & Systems Inc., the answer lies in training the defenders of the digital networks and systems — the cyber warriors, if you will. The firm is currently supplying skilled personnel for the U.S. Cyber Command, which was established last fall at Fort Meade under the direction of Gen. Keith B. Alexander.

The entire spectrum of cyber operations — from computer network defense/information assurance to computer network exploitation and computer network attack capabilities — will be an area of growth for Sotera’s national security customers, President and CEO John Hillen said. “[M]uch of our focus will be on Computer Network Exploitation and Computer Network Attack, which are unique mission sets that are particularly important to our national security clients,” he added.

Cox predicts that cloud computing security, ICAM and Federated Identity Management will continue to dominate the federal market landscape. Sevatec is investing in user privilege certification and recertification processes, and leveraging lessons learned in the financial industry, he said.

In looking ahead, sometimes it’s wise to first take a retrospective approach, Hight noted. Every decade or so, she said, there are “disruptive technological advancements that call into question many of our assumptions about IT and cybersecurity.”

“Today, we are in the midst of one of these disruptive cycles with the advent of cloud computing, paired with the increasing reliance on mobile solutions that transcend traditional boundaries between the work life and private life,” she said. “Consumerism is the tail wagging the dog, and public and private enterprises must adapt.”

2 Healthcare IT
THERE’S NO OTHER ORGANIZATION that has more to benefit from driving efficiency improvements in healthcare delivery than the federal government,” said Deltek’s Kevin Plexico.

Thanks to sweeping policy reforms, budgetary pressures and systems in need of modernization, federal contractors are finding evolving opportunities in the increasingly multifaceted world of healthcare IT.

Spurred by the American Recovery and Reinvestment Act of 2009 and the Health Information Technology for Economic and Clinical Health Act, Electronic Health Records — or EHRs for short — remain a spending staple, as federal contractors busily support agencies in the 2011–2015 push to get Medicare and Medicaid providers certified for EHR meaningful use. Two examples of this work include the certification test methods Booz Allen Hamilton developed for the National Institute for Standards and Technology and the National Level Repository Northrop Grumman created for the Centers for Medicare and Medicaid to help providers meet EHR meaningful use requirements.

But EHRs are only the tip of the healthcare IT iceberg. For the Defense Department, healthcare IT can involve using remote diagnosis and surgery to bring specialist expertise to the battlefield. For the Department of Health and Human Services, it includes medical data for research, epidemic monitoring and food safety. For CMS, it’s developing more streamlined, efficient claims processing to accommodate impending leaps in enrollment. And for agencies across government, it means enterprisewide IT transformation for many reasons: a continued response to ARRA requirements, preparation for Affordable Health Care for America Act requirements and a means to efficiently and cost effectively meet objectives and deliver taxpayer ROI.

“Fundamentally, the government has many legacy systems in need of modernization and replacement and is looking for innovative ways to make that
transition,” said Alisoun Moore, vice president and general manger of CSC’s North American Public Sector Health Services Division. Moore cited CSC’s work to transform the current CMS legacy applications into a serviceoriented architecture platform. “This new system will modernize and consolidate CMS systems to help improve the quality of healthcare and save money,” she said.

The Centers for Disease Control and Prevention have enlisted Northrop Grumman for a $5 billion information management services contract to equip the agency with modern, secure and accessible systems and infrastructure. And the work of HP Enterprise Solutions “runs the gamut,” said Don Picard, vice
president of federal healthcare, U.S. public sector, “from helping agencies reduce costs by consolidating data centers, moving work to the cloud and securing networks from threats to developing applications and solutions that apply technology to improve customer mission and business effectiveness.”

Supporting Soldiers, Fighting Fraud, Grappling with Uncertainty At the time of this article’s publication, debt ceilings and budget uncertainty are looming over the healthcare IT landscape. In a July 13, 2011, presentation to the AMDIS 20th Annual Physician-Computer Connection Symposium, David W. Roberts, vice president of government relations for the Healthcare Information and Management Systems Society, noted several bills that could impact healthcare IT spending. The Spending Reduction Act drafted by the Republican Study Committee, for example, would cut or significantly shrink more than 200 programs.

Meanwhile, contracts of landmark size are underway. Supporting the healthcare needs of the nation’s troops is one area of defense spending that remains strong, particularly as veterans start returning from overseas. The Veterans Affairs Transformation Twenty-One Total Technology contract is allocating $12 billion over five years to 14 prime contractors — including Booz Allen Hamilton, CACI, Harris, HP Enterprise Services, SAIC and SRA International — for IT programs to help ensure timely delivery of healthcare and benefits to U.S. veterans across its 150 hospitals, 800 clinics and 135 nursing homes. DoD is also dedicating $8 billion to Defense Systems Integration Design Development Operations and Maintenance Support contract, which Plexico described as “very IT centric.”

Given the administration’s focus on transparency and accountability and today’s overall environment of spending scrutiny, agencies are upping efforts to increase efficiencies and weed out waste, fraud and abuse. For instance, HP is providing application and operation support to CMS for up to $132 million to improve Medicare Part A claims processing and up to $200 million to improve Medicare Part B claims processing.

Expanding Capabilities and Perspectives
In response to increasingly multifaceted demands, contractors are pushing to swiftly acquire additional capabilities, as CSC did with its acquisition of iSOFT, or bring them in from experience in other disciplines. Lessons learned from cybersecurity and intelligence work, for instance, can be a plus when dealing with HIPPA, HITECH and other requirements.

“We’ve developed substantial capabilities in cybersecurity through our longstanding partnership with intelligence agencies and the military,” said Kristine Martin Anderson, a senior vice president who oversees Booz Allen’s health IT practice. “Given heightened concern about privacy and security among government agencies, patients and healthcare providers, we believe that we can make substantial contributions to securing protected health information.”

In addition, the broad healthcare IT umbrella encompasses both the agencies that develop and enforce the regulations and the private-sector entities that must comply. Areas of focus include EHR meaningful use, ICD-10 coding standards and HIPPA — identified as priorities in the 22nd Annual Healthcare Information Management Systems Society Leadership Survey — as well as regulatory requirements still being finalized, such as those involving Accountable Care Organizations.

“Our commercial group is proactively engaging with private-sector organizations such as private healthcare insurers and hospitals that are anticipating and preparing for healthreform activity,” said Robert Wah, chief medical officer and vice president of CSC’s North American public sector business unit.

The Next Frontier: Patient-Centered Care
Rising on the healthcare IT horizon are efforts in support of the patient — from analytics to understand population health, to systems that coordinate healthcare providers in the delivery of cost-effective, quality care.

“As chronic disease continues to rise across the nation and healthcare costs continue to increase, there will be an ever greater need to better understand the value of the care that is being given,” said Amy Caro, vice president of health IT programs with Northrop Grumman. It’s a view the industry supports: Forty-one percent of HIMSS survey respondents identified clinical quality and outcomes as places where IT can have the biggest impact on patient care.

Caro anticipated that “the increasing costs and disease burdens in our healthcare system will lead to the development of new and alternative modalities to support health communication, interaction and delivery, ultimately fostering 24/7 patient-centered care.”

“As the industry grapples with new models of care, such as ACOs and Patient Centered Medical Home, the opportunity lies in delivering health analytics technology that demonstrates patients are receiving the best possible care outcomes with the greatest efficiency,” said Giovanna Patterson, vice president,
federal healthcare industry leader, IBM Global Services.

3 Cloud computing
WHEN IT COMES TO FEDERAL IT, never has a recent innovation been touted more of a multiproblem solver than cloud computing. And what’s not to like:
Whether it’s private clouds, hybrid clouds or community clouds, the technology has the potential to deliver cost-savings, drive innovation and boost efficiency — all crucial considerations in times of economic constraints.

Shrinking budgets and greater efficiency requirements, as well as federal mandates have helped accelerate cloud adoption within the public sector. The “cloud-first” policy requires agencies to move at least three services to the cloud within an 18-month period, and evaluate secure cloud options before making new investments in IT.

As cloud computing becomes more of a staple within the government, contractors are seizing the opportunity to grow their businesses and boost their revenue. Although the competition among cloud providers is getting fiercer, analysts say much of the market is yet untapped.

The Cloud Players
Amazon Web Services emerged as an early trailblazer in cloud solutions and has maintained its status as a leading provider since 2006. Not only is the firm rumored to hit $1 billion in revenue next year, but an analyst with the 451 Group remarked in February that in terms of market share, “Amazon is Coke, and there isn’t yet a Pepsi.”

Before AWS, organizations would take on the massive capital investment of building their own infrastructure or contract with a vendor for a fixed amount of data center capacity that they might or might not use, said Teresa Carlson, vice president of the global public sector at AWS.

“This choice either meant paying for wasted capacity or having to worry that the amount of capacity they forecasted was insufficient to keep pace with their growth,” she said. “U.S. federal agencies spend too much time and money managing their own data centers or co-location facilities, which means time not spent on their core mission.”

Government adoption of AWS has grown quite fast, she noted, and as the agencies vary, so do their uses of AWS. While the Recovery Accountability and Transparency Board chose AWS to migrate Recovery.gov to a cloud environment, the Jet Propulsion Laboratory at NASA is working on porting physics algorithms to AWS so it can rapidly crunch the data and start working on global-warming solutions quicker, Carlson said.

When the U.S. Department of Agriculture in December 2010 moved its on-premises email and productivity applications to Microsoft’s cloud infrastructure,
it became the first cabinet-level federal agency to embrace the cloud. Today, Microsoft’s government customers include the Defense Information Systems Agency, NASA and numerous states and municipalities, said Eric Meister, Microsoft’s public sector cloud practice manager.

“We are still in the early stages of the next generation of IT, which leverages cloud computing to provide more efficient, more agile, better-performing solutions that allow our customers to focus more on their mission and less on IT,” he said. “We see tremendous opportunities to provide improvements in people, process and technology to make the solutions more scalable, more agile and more efficient.”

Private Clouds Become Big Business
Investing in cloud computing, particularly private clouds, has been a top priority for IT organizations this year, according to polls conducted by Unisys Corporation. Melvin Greer, cloud strategist and senior fellow at Lockheed Martin Information Systems & Global Solutions, said his firm supports several virtual private clouds and classified cloud projects on its secure network of cloud computing centers.

In 2009, Lockheed Martin rolled out an internal private cloud to one of its civil agency customers that reduced its overall data center footprint and sought to cut its overall operating costs while improving its flexibility, Greer said.

“Currently, Lockheed Martin is delivering Infrastructure-as-a-Service to this customer, with 190 terabytes of monthly storage and 256 CPUs of virtual servers for storage, which satisfies the federal government’s challenge to reduce infrastructure and capital investment for our customer,” he added.

But as private clouds become more widespread and expand into new domains, security becomes even more crucial, especially among agencies that deal with sensitive data. TASC, Inc., whose customers include the intelligence community and the Defense Department, understands this aspect well.

“Our government customers are always very concerned about cybersecurity in the cloud, especially in today’s highly dynamic threat landscape,” said Al Pisani, senior vice president of intelligence operations at TASC. Maintaining continuity of cloud services in a hostile environment requires a defined and agile level of cybersecurity and assurance, he noted, and TASC’s cloud implementations have earned key government certifications and accreditations.

For AT&T, securing the cloud for its federal customers is also a top priority. The firm takes a cloud-based approach to cybersecurity, minimizing risk to federal agencies by using the cloud to proactively detect and diffuse security threats before they reach the agencies, said Michael Heath, AT&T Government Solutions’ vice president of federal sales.

“As the first General Services Administration Networx contract holder to receive Authority to Operate to implement Managed Trusted IP Services, AT&T can help agencies protect their network with the advance notice and information necessary to make the right decisions to counter the threats,” he said.

Currently, AT&T is pursuing cloud computing opportunities with various federal agencies and has received numerous awards for its cloud-based MTIPS cybersecurity solution from an array of federal agencies.

“The cloud computing conversation is still nascent and evolving as federal agencies begin to move services to the cloud,” he said. “In the next few years, economic drivers, balanced with security requirements, will drive this conversation.”

Looking ahead
“In many ways, the cloud computing debate is over,” said Dan Burton, senior vice president of the global public sector at Salesforce.com. “While government has taken a bit longer to embrace the cloud, many agencies at the local, state and federal levels are taking note of successful cloud deployments within the private market and are seeking to adopt this technology to reduce waste, improve efficiency and increase interoperability among departments.”

Since its inception in 1999, Salesforce has served hundreds of government organizations, including the U.S. Securities and Exchange Commission, GSA and the departments of Health and Human Services, Commerce and State who all have deployed the firm’s cloud computing technologies, Burton said.

“As government technology becomes more and more outdated and irrelevant in today’s increasingly fast-paced environment, state and local governments aiming to balance their budgets and reduce waste are taking advantage of the cloud. And now, the federal government is following suit,” he added.

Drawing from her firm’s work with the federal sector and agencies worldwide, Carlson predicted the cloud computing market “is going to evolve at a very rapid rate as government customers become more experienced and comfortable with this new way of IT.”

Greer said for the next year to 18 months, agencies will be evaluating, experimenting and investigating cloud computing to see how it can help them meet their affordability goals and improve mission capabilities.

“From two to five years out, we believe cloud computing will become a core element of the overall portfolio of computing options that the government considers for their entire IT environment,” he said. “More core mission capabilities will be operationalized by cloud computing, and you’ll see increasingly more integration between the enterprise and multiple clouds as domain specific capabilities in the cloud become more prevalent.”

4 Mobility
THE REVOLUTION ROLLING THROUGH FEDERAL IT has expanded citizen access to government data, and agencies are deploying mobile websites and applications to serve as searchable dispensaries.

Federal employees are reaping rewards beyond this “democratization of information,” as former federal CIO Vivek Kundra calls it.

The Senate, for example, is evaluating progress of the Telework Enhancement Act of 2010, which requires federal agencies to promote teleworking with measurable benchmarks for compliance.

In October, Veterans Affairs Department employees will begin using popular wireless devices on the department’s network, and the Army has begun working on an app store and is conducting field tests to see if the iPhone can support tactical applications for combat situations.

Although the public sector has not yet fulfilled Kundra’s May prediction that government will soon act “as a platform” on which mobile devices and fast-evolving applications integrate, progress has been made — thanks to the work within the private sector.

An Ecosystem of Hardware, Software and Networks Principal mobile devices such as smartphones and tablets usually connect to commercial networks, but establishing ad-hoc networks in military theaters requires mobile devices or other hardware to supply bandwidth and act as routers.

Radios also serve important military and field functions, and the Justice Department is integrating the FBI, U.S. Marshals Service, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Drug Enforcement Administration on one radio network.

Smartphones and tablets run on operating systems such as Apple’s iOS, Google’s Android and Microsoft’s Windows Mobile that support applications, such as GPS mapping. Most agencies still favor the Blackberry OS’ secure messaging system and allow only its use.

While smartphones are the most portable devices, tablets and laptops can carry more processing power and their larger screens are more user friendly. None is particularly durable, so companies, such as Dell, produce ruggedized models for military, border control and other federal customers. Customers will often demand customized devices, such as tactical radios, that are specialized to their mission.

Mobile Workforces Generate Value for Citizens Federal enterprise mobile adoption increases returns to taxpayers by expanding operational potential and reducing reliance on legacy infrastructure and hardware, according to INDUS research.

“Mobility is changing the way federal agencies and their workforces serve citizens and accomplish the charge of their agency,” explained Thomas Harvey, senior vice president of AT&T Government Solutions. “Mobile and computing solutions allow agency workforces to be productive outside the office … for real-time decision-making.”

Employees are more productive when they can manipulate and analyze critical information such as medical records and building plans from the field. Government is more responsive when agencies network through voice and video communication channels; it is more effective when it can pool resources and overlap data on common applications.

“There’s really a push to take advantage of [mobile] technology, especially where we can show them where it saves costs because it improves their service to the citizen,” said Verizon Federal Group President Susan Zeleniak.

The benefits might be most significant for warfighters, for whom situational awareness and widespread connectivity can be the difference between life and death.

Contractors See Challenges, Not Roadblocks
In a finite wireless spectrum, federal mobile employees need access to fast and robust networks, including alternates in case of emergency or dropped service.

U.S. warfighters fight increasingly spread-out engagements in remote locations whose geography requires complicated full-cycle mobile solutions. This scenario could pose a problem, said Kaul Sandeep, vice president of business development and technology of DRS Technologies, as “the more our warfighters are spread out in areas where traditional communication means are limited, the more critical it becomes to provide mobile solutions.”

Then, there is interoperability, which is essential to unlocking mobile potential but requires standardizing communications across competing platforms. And every facet of mobile solutions represents an entry point for hackers and information leakage, meaning encryption and security processes need to be top notch and not interfere with multilayered electronic interaction.

The strength of full-cycle security is of upmost importance, said David Krebs, director of mobile and wireless at VDC Research, and “wireless security concerns represent the primary mobile solution barrier in the federal sector.”

Full-cycle Solutions
While they have yet to catalyze a paradigm shift toward widespread mobile adoption, government contractors have made significant strides in addressing network, interoperability and security issues. Bernard McMonagle, Verizon’s associate director of federal government data solutions, said the company has developed multiplexing techniques to squeeze more data into its wireless spectrum, proliferating a 4G network that transfers data 10 times faster than current ubiquitous connections.

Federal agencies can have equally powerful results when commercial service is unavailable, said Oceus Networks Chief Technology Officer Todd Pressley. The company produces a rugged “network in a box” that can provide 4G LTE bandwidth capability “anytime, anywhere… at speeds we get on our most advanced smartphones in a major U.S. city,” Pressley said.

For deployed troops, General Dynamics produces a networking body radio, said Bill Rau, director of communications systems for General Dynamics C4 Systems, that “is actually a networking node to [soldiers] around them, so as these radios come together, they form their own network amongst themselves.”

The radios provide “a secure transport layer” for the GD300 tablet, which serves as platform for tactical mission applications and mapping. The combination allows soldiers to “see where they are, see where their buddies are, where the threats are and even the mission plans,” said Gary Eppley, senior staff engineering – warrior systems, for General Dynamics C4 Systems. HP offers an enterprise IT architecture and platform that unifies messaging, web, video and data sharing between the workplace and employees’ devices of their choosing, according to the company’s website.

Unisys provides some interoperable data overlap with its Clearpath MCP software, which enables smartphone users to get a view of data from devices patched into its enterprise database server.

PV Puvvada, Unisys’ Federal Systems’ vice president and managing partner for civilian justice, finance and administration, said his company’s managed solutions can identify mobile users and “protect enterprise data that resides on mobile devices and data that is sent to those devices.” VA agreed and will allow its employees using iPhones to use Unisys’ security suite on its network.

Smartronix has a portfolio of applications, which leverages cloud computing, business analytics and geospatial maps. The Forest Service uses such applications to enable firefighters and command stations to map emergency strategy in real time.

“One of our differentiators is our ability to bring cross-functional expertise to the table,” Smartronix Executive Vice President of Emerging Technologies Joe Gerczak said.

An Individual-driven Market
VDC predicts the federal mobile market will grow by more than 25 percent by 2014, and it’s particularly viable for contractors as “commercial technology is a resource that [agencies] can’t afford to ignore, especially in an environment of reduced budgets and fiscal austerity,” Pressley said.

More than ever, mobile users want to “become the hotspot,” McMonagle said. That means they work in systems where information flows to them and they have the tools to “do my job better wherever I am,” he said.

Rau echoed that “where the market stands . . . certainly, the emphasis is on networking the soldier.”

Pressley added that workers have “a pent-up need for information for situational awareness” as Krebs said operational emphasis is shifting to dismounted applications that comprehensively represent multiple data inputs. Gerczak said these kinds of solutions will help drive Smartronix’s growth as it continues “to innovate in this space with augmented reality applications.”

In providing interoperable solutions, contractors can’t forget that “cloud supports mobility and mobility makes cloud all the more important,” Zeleniak said. “We’ve had more conversations with agencies about this kind of migration in the last six months than we’ve had in the last three years,” she added.

5 Rule of Law
NATION BUILDING. RULE OF LAW. Governance. Development. Often, these terms mean different things to different people. However, in the growing opportunity that rule of law or nation building represents for government contractors, there are some key areas of overlap.

While often a politically volatile term to describe massive military efforts to democratize a failed state, nation building, in its purest sense, refers to a series of efforts and programs to bolster political and civil institutions, train police and security officers.

These efforts often take the form of counter-drug and corruption-fighting programs. The goal of nation building is not necessarily to build physical structures, but to build institutions. It’s not so much the building of roads, but the training of police to guard the streets.

Enter the contractors who make that happen.

Market Players
DynCorp International is one of the major players in private security and one of the largest recipients of State Department contracting dollars. Its capabilities and business areas touch many parts of the broad spectrum of rule of law — from a country’s court system to its executive branch, said Steven F. Gaffney, chairman and CEO.

The firm has recently supported efforts to strengthen law enforcement capabilities in places such as Afghanistan, Iraq and Haiti. In June, DynCorp won a task order worth $17 million from the State Department’s Bureau of African Affairs Africa Peacekeeping program awarded to provide basic leadership training to the military of the Democratic Republic of the Congo.

“Rule of law is at the heart of effective governance and, ultimately, stability and development – operations in Iraq and Afghanistan have highlighted the importance of early integration of rule of law promotion activities into stability operations,” Gaffney said.

PAE Group (formerly owned by Lockheed Martin) applies a governmentwide approach to its rule-of-law operations — from helping develop civic institutions, training law enforcement and bolstering peacekeeping operations. Through its Governance & Institutional Development line of business, the firm deploys personnel to train and mentor, observe and facilitate the advancement and implementation of rule of law principles worldwide.

PAE was one of five firms awarded a $10 billion IDIQ contract from the State Department’s Bureau of International Narcotics and Law Enforcement Affairs. For PAE, the opportunity involves training civilian police and criminal justice officials around the world.

As the challenges to global security become more complex and ever present, the U.S. has to take a different approach to neutralize turmoil, PAE President Michael Dignam said.

“The U.S. understands that today’s wars cannot be fought with military force alone, but require tools of diplomacy and development, which are often more effective in addressing the root causes of violence and civil disorder,” he said. “We have seen firsthand how rule of law is critical to stability and development, and we believe that the U.S. and other countries will continue to recognize this through their support of these initiatives.”

Training and technical services firm Mission Essential Personnel’s offerings include translators as well as nation-building services. MEP employs more than 5,200 locals in support of USG reconstruction programs in Afghanistan, which provides significant economic inputs into the Afghan economy and supports the livelihood of thousands of Afghan families, said CEO Chris Taylor.

Seeing the increased need for services to support the development of these sectors and the shortfall in meeting these needs with quality support, MEP formed a joint venture company, Justice Services International, designed to build the capacity of local criminal justice institutions through mentoring and training of local professionals, Taylor said.

“MEP understands the value of building the capacity of local law enforcement, criminal justice, and rule of law systems in post-conflict/developing nations,” sectors that are critical for long-term stability and recovery, he said.

Shifting from DoD to State
On the surface, the rosy predictions of market opportunities for development contractors look to be less than convincing. After all, core funding for the State Department and the U.S. Agency for International Development is slated to increase only about 1 percent, to $47 billion.

But for the first time, “Overseas Contingency Operations” in Iraq and Afghanistan have been pulled out as a separate account item. When these funds for the frontline are accounted for, totaling some $8.7 billion, the State Department and USAID budgets are due for an 8 percent increase to about $55.7 billion.
State Department funding for activities in Iraq are due for the biggest increases. After combat troops redeploy out of the country, the department will take over responsibility for some 400 activities the military currently does, according to the department’s budget request.

The State Department’s increased role relies heavily on the help of private security contractors.

In Afghanistan, the State Department is looking to boost the number of civilian employees. In 2009, there were 320 State employees on the ground; the 2012 budget request plans for 1,500.

In addition to contingency operations on the frontline, the State Department’s budget is also set to increase funding for development work around the world. “In an interconnected world, conflict, even in distant countries has become a far greater threat to the United States than ever before,” the request reads.

The department’s budget includes $4 billion for programs in “fragile states” to fund stabilization efforts and rebuilding projects and to provide resources for democracy and governance programs, particularly throughout Africa.

Ray Bjorklund, chief knowledge officer of market intelligence services firm Deltek, said the State Department’s 2012 budget request represents proof positive of the area’s growing opportunities, although acknowledging the lack of technology and buzz currently surrounding these endeavors compared to other emerging markets.

In terms of the contractor-addressable market, Bjorklund estimated nation building, along with other international assistance and diplomatic support to be about $8 billion.

“I think it will grow by a few percentage points … And in the bigger scheme of things, that is very sizable,” he said.

Taylor said he foresees rule of law and reconstruction efforts will continue to be a critical need in Iraq and Afghanistan for years to come, and the programming for contracts will depend on U.S. budgets and level of commitment by the federal government.

While funding for Iraq and Afghanistan will decrease at an undetermined pace, the areas of growth will be likely be in two key areas: bolstering rule of law and reconstruction in Arab Spring countries, and strengthening the capacity of governments to diminish the power of drug traffickers and cartels in their borders.

“Future U.S. efforts will likely focus on Mexico and Latin America, but also through transit routes in Africa and Asia,” he added.

Bob Kipps, managing director at investment bank KippsDeSanto & Co, said he predicts future contractors will turn to the State Department for opportunities, not the Pentagon, as times shift and funds are increasingly prioritized differently.

“Department of State is becoming the Pentagon over the next 10 years,” he said, adding that the work done in Iraq and Afghanistan is “a lot more diplomatic activity versus bullets and bombs.”

“The fact is, the State Department is the name of the game for anyone — all of the security and rebuilding and coalition force type support contractors,” Kipps said. “They’re all courting the State Department big time.”