The Department of the Navy is targeting new contracts with 15 of the largest software companies. The goal is to take advantage of the service’s size to obtain cheaper prices.
“This is all about efficiency and saving money, and like any business if you come to the table with more money you can generally get a better price. And that is what this is all about,” said Terry Halvorsen, the Department of the Navy’s chief information officer in an interview with Federal News Radio. “Bringing what we are already buying in terms of licenses, bundling that up and being able to go to the vendors representing a bigger customer, and generally bigger customers get better prices.”
Halvorsen; Gladys Commons, the assistant secretary of the Navy for financial management and comptroller; and Sean Stackley, the Navy’s assistant secretary for research, development and acquisition, issued a memo Feb. 22 making it mandatory for the Navy and Marines Corps to buy software, some hardware and some services through enterprisewide licenses. Halvorsen said integrated product teams are setting up the licenses with Microsoft being among the first ones.
Halvorsen said the DoN is trying to build on the enterprise license the Marines Corps put in place just over a year ago with Microsoft.
“Obviously, when you bring the Navy into the Marine Corps, the scope gets much, much broader and the money gets much, much larger,” Halvorsen said. “These are things both the Navy and Marine Corps spend a fair amount of money on today. When you put it together, it gives you a fair amount of money that hopefully the DoN can generate big savings for both the Marine Corps and Navy by doing these combined buys.”
The Navy has a few enterprise deals of its own in place, but most are fairly small.
Navy expects to save big
In all, the Department of the Navy, which also includes the Marines Corps, wants to create deals with many of the major commercial providers, including Cisco, Symantec, Adobe, IBM, Hewlett-Packard, Oracle, VMWare and many others.
Halvorsen couldn’t comment specifically on timing of these enterprise deals, but said he would like to get them in place as soon as possible to start realizing savings. He said the DoN estimates about $100 million in savings over five years. The Navy is trying to save 25 percent of its IT budget over the next five years.
“We look at what enterprise licenses are available at the DoD level,” he said. “If there is an enterprise license that’s currently available, we look at the size of the contract. Is it truly everyone at DoD? Does it represent a big base? If it does, we will look at using that. The list of candidates here, there are not big DoD licenses on that so we are proceeding with DoN licenses.”
He added the Navy also is talking to the other services about the deals as well, and they could be expanded to include the Army, Air Force and the DoD agencies.
The Office of Management and Budget and the General Services Administration set up the SmartBuy initiative in 2004 to create governmentwide enterprise licenses. DoD joined GSA on a handful of deals, but use has been limited over the last eight years. There are 38 different contracts under SmartBuy.
Halvorsen said the Department of the Navy looked at SmartBuy and decided it didn’t meet all of its needs.
“SmartBuy does some things, but what we are trying to do is take everything we do with a company, so Oracle is a good example, we spend money on services, we spend on money on software and we spend money for hardware. So what we’d like to do is get a single enterprise agreement with Oracle that says these are the prices you will be charged for every piece of what you buy through Oracle,” he said. “What SmartBuy has is there is a SmartBuy for some pieces of the software, for some pieces of the hardware. We are trying to bring all of that together so we negotiate with the biggest amount of money presenting the biggest company face to the company that we can.”
Disorganized software buying happening now
Currently, Navy commands and organizations buy software on their own. The enterprise license mandate will put an end to that disorganized effort.
Halvorsen said the memo builds on a new requirement for his office to approve all technology spending above $500,000.
“No matter whatever command you will do this at, the team will be your CIO, your comptroller and your contracting authority,” he said. “What we have done is put a memo from the top people who control that out to all of the commands in the Marines Corps and Navy and said here are the rule sets. Contracting officers must follow these rules. Comptrollers must check to see these rules are followed. CIOs must present their buys. We are capturing all the people that are involved and making sure that all of them understand the rule sets.”
The memo includes a waiver process for commands to buy from another contracting vehicle. Halvorsen, the deputy CIO for the Navy Vice Adm. Kendall Card, and the Marines Corps CIO Brig. Gen. Kevin Nally all must approve the waiver request, but the memo stated waivers would be granted sparingly.
While the DoN is setting up the enterprise deals, Halvorsen said commands or offices can buy the needed software from existing contracts, but any renewals would be through the enterprise license.
“As we get more aggressive for looking at savings in the current financial environment, it’s driving more of this good behavior,” he said.