How the Air Force is bending the IT cost curve to save half a billion dollars

Over the last two years, the Air Force has come close to achieving the secretary’s aggressive goal to bend the cost curve for technology by 20 percent.

The service has reduced its IT budget of over $3.9 billion by about 17 percent — or by about $565 million in real or potential savings — over the last two years.

The Air Force is saving hundreds of millions of dollars on technology using a pretty simple premise: Understand what it is buying and who it is buying IT from at a much more granular level.

Butch Luckie, the Air Force’s chief of IT business analytics, said to reach this cost savings goal, the service is overcoming one of its biggest challenges.

“There is no single database that can tell you what the Air Force spent on IT. So when we started looking at the Federal Procurement Data System (FPDS-NG), we were pulling data exactly the same way the Office of Management and Budget was pulling data and that was by product service code (PSC). But we ran into a little bit of problem with that just because just the way PSCs are entered into contract systems,” Luckie said during an interview on Ask the CIO. “For example, you can purchase one-too-many items within a contract, and they each can have their own product service code. So what gets rolled up to the top level? Probably just the first one on the contract.”

Butch Luckie is the Air Force’s chief of IT Business Analytics.

Luckie said the Air Force started researching IT contract vehicles across the government, including those from the General Services Administration, NASA and the Army. He said the service is monitoring about 1,100 contract vehicles from which it buys IT products and services.

“How we get our data from FPDS-NG is we pull the data by the contract numbers. So every quarter, we will pull that data down. Then we will work to categorize it down to the spend by running a series of scripts against it once we load it out to our SQL server,” he said. “That’s the way we track the Air Force spend overall.”

Luckie said the Air Force had to develop its own approach to gathering data because it doesn’t have — and desperately needs — a software and hardware asset management capability.

“We lack the cradle-to-grave tracking of our IT assets and software with the financial component plugged into it,” he said. “We have been exploring some possibilities. How do we get an IT asset management solution that can track your hardware, that can track your software, but more importantly not just track the software, but track the usage of the software? Is the software that I bought actually being used, and if so, how much? Then I can use that information when it comes time to renegotiate with a vendor to make a better-informed decision and maybe even negotiate a better price.”

On a small scale, the Air Force already is seeing the power of data.

Luckie said over the last few months, the service used data to implement a joint enterprise license agreement for Cisco maintenance.

“Prior to that [agreement], we were using over 2,200 contract actions to acquire that service. Now we have just one. We also were able to increase our maintenance coverage to 100 percent. We are going to save about $109 million over the next three years,” he said. “It was somewhat low-hanging fruit, when you start to peel the data back a bit and you are looking at how the Air Force is spending its money. A couple of other things we found by looking at the data was just the volume, or the amount of assets that were sitting in the warehouse that could be put into service instead of buying new.”

He said a 2015 memo from Air Force leaders told commands not to buy new technology until they reviewed what was already in the warehouse.

“Now in a short period of time after the memo went out and we were able to track that in the business analytics office, we found that spending went down by $133 million on those particular assets,” Luckie said. “When you start exposing the data like we have been able to do, that has never been seen before, and because there isn’t really one place out there in today’s environment or a source you can go and find out exactly how much you are spending on IT,  we have been able to do that and category management has helped tremendously zero in on what we are buying, when we are buying it, how we are buying it and who is buying it. When you share that information across the enterprise, it starts to bring to light the fact some folks didn’t realize or understand that there is a better way to procure that than the way we are doing it today.”

Luckie said this category management effort is still in the early stages. The Air Force has obtained the data for IT hardware spending, which was a little easier because of Air Force Equipment Management Systems Asset Inventory Management systems, which is the repository for sensitive IT assets.

Luckie said software categorization has been much more difficult because they don’t have that authoritative database, and have to work through the FPDS-NG portal.

“We’ve done hardware and software but have four more subcategories of IT to go,” he said. “We just started looking into the services spend, which is by far the largest spend for the Air Force. It was $2 billion in fiscal 2016. We need to fully define all six subcategories of IT and put the spend in each one of those buckets, and then see who is buying it, how we are buying it, when we are buying t and are we buying it at the best value possible?”