DHS tech spending — where the money and the challenges will be in 2015

The Department of Homeland Security is facing a perfect storm of obstacles when it comes to modernizing and upgrading its legacy IT systems — a slew of senior management vacancies, a dangerous level of mission-creep and a Republican-controlled Congress that has chosen to hold the DHS budget hostage in an effort to force the White House to reverse its unilateral actions on immigration reform.

But none of those challenges mean there isn’t plenty of opportunity for growth in DHS IT.

“Where there are challenges for government, there are opportunities for industry,” said Tomas O’Keefe, a market intelligence consultant with ImmixGroup, during a webinar Friday that focused on the major IT sales opportunities in DHS during 2015.

DHS’ fiscal year 2015 discretionary budget comes in at $44.6 billion, with $5.8 billion earmarked for IT. But the agency is operating under a continuing resolution and is awaiting congressional action on an appropriations bill. The continuing resolution runs through the end of February.

“And that usually means fewer new program starts and fewer contracts until this budget situation is sorted out,” O’Keefe said.

But to win a DHS contract in 2015 will require understanding not only what some of the most pressing mission needs are throughout the massive agency but also the challenges DHS faces in managing these projects and getting them awarded on time.

There are management and leadership challenges throughout the department, according to O’Keefe. For example, the undersecretary of management position remains vacant, as do the top slots at the Secret Service and the Transportation Security Administration as well as several key program divisions.

But it is the undersecretary of management job that poses the most significant challenge for DHS IT programs because it is the one “leadership vacuum” that could have an impact on the Office of the Chief Information Officer, led by Luke McCormack. “I wouldn’t anticipate it affecting the release of some of the major RFPs that we’ve been waiting on, [such as] the Enterprise Computing Services or the [Security Operations Center] and the [Network Operations Center] contracts, but it could have an effect on the timetable of some of the awards of those larger contracts,” O’Keefe said.

Credit: immixGroup

There are several other challenges at DHS that pose major risks to the long-term success of the agency that, surprisingly, also offers some of the biggest agencywide IT contracting opportunities for the private sector, O’Keefe said.

Among the areas facing the biggest challenges are acquisition management, financial management, IT management and privacy, infrastructure protection, cybersecurity, and the insider threat.

Although DHS created the Program Accountability and Risk Management office to oversee acquisitions, it has yet to have a significant impact. “PARM hasn’t been able to regularly meet with all of the acquisition review boards like it should to make sure that acquisitions are being run smoothly and competed fairly and cost effectively,” O’Keefe said.

Likewise, DHS launched the Financial Systems Modernization effort, which is primarily a big data initiative designed to address internal control weaknesses in its financial management systems by expanding the use of business intelligence. But DHS is suffering from mission-creep in a way that could become increasingly detrimental to the activities of the department.

“DHS is being asked to do more and more while seeing reductions in their budget,” O’Keefe said. “Poor data collection is actually inhibiting the department’s ability to evaluate its operations. DHS lacks a way to make sense of the data it generates across the enterprise as it conducts its diverse sets of missions. So big data is a big need.”

Borders, immigration and data

Border security and immigration reform may be politically charged topics in Washington, D.C., but they also hold some of the biggest opportunities in DHS IT contracting, according to O’Keefe.

Despite spending more than $85 billion since 2006, there are still places where the border isn’t effectively monitored. In addition, recent studies have shown that Customs and Border Protection’s drone program isn’t cost effective and hasn’t proved its overall value to border security.

“One way that they could demonstrate value is through analytics tools that can start to make sense of the data that’s generated by these operations,” O’Keefe said.

If President Barack Obama’s executive action on immigration is allowed to move forward, it could require significant work on the IT systems supporting the U.S. Immigration and Customs Enforcement, particularly to reprioritize removals and focus on law enforcement operations. The agency has a total budget of nearly $6 billion, supporting almost 20,000 employees.

One such growth area would be the Student and Exchange Visitor Program. ICE has trouble ensuring that participants in the program leave when their time expires, and an even greater concern is ensuring that criminals and terrorists are not able to use these programs to gain access to the U.S.

“You’re going to find opportunities for case management and data monitoring tools,” O’Keefe said. And as far as IT operations for fiscal 2015, most of the focus will be on identity, credentialing and access management.

ICE is likely to pursue an agile development approach to modernize existing systems rather than attempt larger acquisitions, he said.

One example is the Investigative Case Management Modernization program, which is focused on providing improved case management functionality to more than 6,700 ICE agents who work on investigating a range of domestic and international activities.

ICE is adopting an agile development model with quarterly releases of new functionality, and has set aside $27.3 million in 2015 for development, modernization and enhancement. In addition, planning for a Comprehensive Case Management system is set to begin this year in a joint effort with Customs and Border Protection, which has earmarked an additional $50 million for its part of the project.

But like DHS overall, ICE suffers from vacancies in key positions within its IT shop: It still has an acting CIO, and critical posts within solutions delivery and IT plans and policy divisions remain unfilled.

Believe it or not, paper is still an issue for some DHS components, particularly the U.S. Citizenship and Immigration Services. The USCIS transformation initiative is designed to update and modernize USCIS business practices and to move immigration forms from a paper-based to paperless application system.

Transformation is rolling out new iterations of the system every four to six months under an agile development model. And according to O’Keefe, the agency currently plans to spend more than $175 million for 2015. “But the overall transformation program is estimated to require upwards of $3.5 billion,” he said.

“Some USCIS systems are made up of 30 commercial components, and as a result, some of these systems are so clunky and unwieldy that offices are actually going back to working through applications and immigration benefits on paper because it’s faster,” he said.