Changes to Air Force IT contract could benefit new vendors

Master Sgt. Pete Norris tracks mission system compliance at Peterson Air Force Base, Colo. Master Sgt. Pete Norris tracks mission system compliance at Peterson Air Force Base, Colo. Air Force
Proposed changes to the Air Force's marquee contract vehicle could prove to be a financial boon for a handful of product and solutions providers, according to a pair of industry reports.

The Air Force plans to split the second version of its $9-billion Network Centric Solutions contract into three parts: services, products and services-small businesses. The original NETCENTS contract, awarded to eight prime contractors in 2004, wrapped all three pieces into one.

The NETCENTS 2 contract will provide network-centric information technology, networking, telephone equipment and security; voice, video and data communications products; and systems hardware and software.

INPUT, a Reston, Va.-based market research firm, said the scope and expanding focus of the new contract could alter the competitive landscape of the program, strengthening the hand of companies that specialize in network-centric products and solutions.

"Vendors, particularly product vendors, interested in being a player in the Air Force market, need to position themselves to secure a spot on NETCENTS 2," the firm concluded in a report released late last week.

The prime contractors that won a place on the original NETCENTS included industry giants Lockheed Martin Corp., Northrop Grumman Corp., General Dynamics Corp. and Booz Allen Hamilton. Several of those firms have indicated interest in competing for the new contracts.

The new five-year, multiple-awards contracts will replace the original NETCENTS contract. According to the Air Force, eight prime contractors will be selected under NETCENTS 2, and the contract will include four small business set-asides. The contract is mandatory for the Air Force, and will be available to all federal agencies for a fee.

The new contract will for the first time encompass the Defense Department's Information Technology Services blanket purchase agreement. INPUT said that combining NETCENTS and ITS makes sense because the vehicles share many of the same prime contractors.

Three years into the original contract, spending on NETCENTS has been consistent but has yet to reach its full potential. The eight firms have currently earned contracts in excess of $2.74 billion -- less than 30 percent of the $9 billion ceiling.

More than 42 percent of the spending has gone to Northrop Grumman or General Dynamics, but the new vehicle should lend itself to more balanced spending, INPUT said.

The bulk of the purchasing -- 84 percent -- has come from products rather than services. But most of the product vendors have been relegated to a subcontracting role, INPUT said. That could change with NETCENTS 2.

"By creating a contract exclusively for products, the Air Force is giving product vendors who choose to be a prime a great opportunity to be in the driver's seat for this critical network-centric contract vehicle," said Michelle Miller, a senior analyst with INPUT.

Solutions providers may also play a bigger role in the new contract, according to Deniece Peterson, senior analyst for INPUT Executive Program, an affiliated group. Vendors that develop solutions to support long-term technology needs could have a distinct advantage over their competitors, according to an IEP report .

"Only 10 percent of task-order spending to date has been spent on product and service solutions," the report stated. "We expect this to change with NETCENTS 2 because the Air Force is moving toward a more strategic and integrated IT approach."

Despite the new opportunities, Peterson predicted that the Air Force will take its time embracing a purchasing strategy geared toward solutions. "This will not turn on a dime," the analyst said in an interview. "It will take some time."

NETCENTS contracting officials and program mangers did not respond to requests for comment.

The Air Force released requests for information on the new contract last July and will put out a draft request for proposals in December. INPUT expects the Air Force to release its final RFPs next August and award the contract in June 2009. The existing NETCENTS contract expires in September 2009.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Forecasting Cloud's Future

    Conversations with Federal, State, and Local Technology Leaders on Cloud-Driven Digital Transformation

    Download
  • The Big Data Campaign Trail

    With everyone so focused on security following recent breaches at federal, state and local government and education institutions, there has been little emphasis on the need for better operations. This report breaks down some of the biggest operational challenges in IT management and provides insight into how agencies and leaders can successfully solve some of the biggest lingering government IT issues.

    Download
  • Communicating Innovation in Federal Government

    Federal Government spending on ‘obsolete technology’ continues to increase. Supporting the twin pillars of improved digital service delivery for citizens on the one hand, and the increasingly optimized and flexible working practices for federal employees on the other, are neither easy nor inexpensive tasks. This whitepaper explores how federal agencies can leverage the value of existing agency technology assets while offering IT leaders the ability to implement the kind of employee productivity, citizen service improvements and security demanded by federal oversight.

    Download
  • IT Transformation Trends: Flash Storage as a Strategic IT Asset

    MIT Technology Review: Flash Storage As a Strategic IT Asset For the first time in decades, IT leaders now consider all-flash storage as a strategic IT asset. IT has become a new operating model that enables self-service with high performance, density and resiliency. It also offers the self-service agility of the public cloud combined with the security, performance, and cost-effectiveness of a private cloud. Download this MIT Technology Review paper to learn more about how all-flash storage is transforming the data center.

    Download
  • Ongoing Efforts in Veterans Health Care Modernization

    This report discusses the current state of veterans health care

    Download

When you download a report, your information may be shared with the underwriters of that document.