The Digital Government and Shared Services Model
As agency missions continue to evolve, the Federal Government increasingly seeks new technologies to deliver better service at a lower cost. In particular, focus has shifted toward shared services models to expedite transition into a “Digital Government” and emphasize enterprise-wide perspectives, or Common Operating Environments (“COE”). Shared services as a comprehensive delivery model is an attractive alternative given the day-to-day challenges faced by the Federal Government, including, flat to declining budgets, duplicative IT operations across agencies, and a lack of integration between legacy applications and newer web-based systems.
Given these dynamics, agencies are embracing technology in order to continue innovating with fewer resources. For example, the General Services Administration’s (“GSA”) Network Services 2020 (“NS2020”) strategy envisions a converged IP environment with common, core security standards through an array of modern telecommunications and IT service offerings, which will be achieved through a Government-wide marketplace for data and commodity services. The Department of Veteran’s Affairs (“VA”) also recently announced a restructuring plan, in which the Secretary of the VA identified a shared services plan as one of the top four changes to be implemented. Cloud solutions are also at the forefront of the shared services initiatives, with the Intelligence Community Information Technology Enterprise (“IC-ITE”) focusing on establishing a common desktop platform that provides a centralized avenue for operational capabilities. The IC currently has more than 9,000 users on the common desktop with a menu of over 450 different applications, and efforts are already underway to scale the remainder of the IC to this COE.
Development of shared services models require new, innovative ideas and solutions – such as cloud and big data – that can be scaled, easily integrated, and combined to fulfill larger requirements. Whether it is from a teaming or M&A perspective, companies possessing unique capabilities to support these initiatives are expected to be in high demand. Well-positioned companies have the opportunity to serve as a critical teaming partner to one of the larger Government Technology Solutions prime contractors on shared services opportunities. While, from an M&A standpoint, approximately 20% of Government Technology Solutions deals, since the start of 2013, have had a cloud or big data component, exemplifying the fact that acquiring these unique capabilities serves as a viable alternative to organically developing such expertise. This trend was demonstrated by one of our recent transactions whereby Novetta acquired Digital Results Group given its ability to fuse multi-INT data into a common operating picture and exploitation tool set. As such, aligning with the COE movement and continuing to develop relationships with large partners can help accelerate companies’ success in the “Digital Government’s” shared service environment.