Air Force NetCents-2 Contract ready for takeoff

The Air Force is poised to embark on a second iteration of its Network Centric Solutions contract that will be worth $9 billion. NetCents, as its name suggests, supports network-centric operations through the acquisition of information technologies; networking equipment and services; and voice, video and data communications hardware and software.

Air Force components use the NetCents contract for networking and IT products and service requirements. The other military services and the Defense Information Systems Agency have also made acquisitions through NetCents.

The first NetCents contract, which will expire in 2009, was awarded to eight prime contractors, four of them small businesses. All the prime contractors and their teams of subcontractors were entitled to compete for task orders issued under the contract. However, the contracting strategy will change with the new contract. Eight separate contracts will be open to dozens of prime contractors.

That might create problems for contractors that do not adapt to the new regime. The Air Force expects to award the NetCents-2 contracts as early as May 2009.

The scope of the contract also will shift. Other net-centric programs, such as the Distributed Common Ground System, will likely be incorporated into NetCents. In addition, there will be an increased emphasis on acquiring the services necessary to establish and maintain serviceoriented architectures (SOAs). This shift reflects the Defense Department’s move toward SOAs as an organizing principle for military information systems and networks since the first NetCents contract was awarded.

“The requirements for NetCents-2 encompass the current requirements for net-centric products and services,” said Debra Foster, the Air Force’s NetCents-2 program manager. “NetCents-2 will also include advisory and assistance services, biometrics, as well as service-oriented architecture type services such as Web services, metadata services, and data and content delivery services.”

Another primary objective of NetCents-2 will be “to provide the Air Force with a wide range of hardware and software tools to support, interconnect and enhance the Air Force’s highly complex and critical command-and-control operations as well as its cyber mission,” Foster said. The service provisionally established the Cyber Command last year and has included cyber operations as one of its three warfighting domains.

EXPECTATIONS EXCEEDED
Meanwhile, the Air Force and its contractors consider NetCents to be a success. “The NetCents contract has been very successful in many ways,” Foster said. “Air Force and DOD customers use the NetCents vehicle due to its ease of use, as well as its ability to meet mission capability and technical standards such as interoperability, reliability and security. This contract has also far exceeded small-business goals required by the contract.”

“NetCents represented the Air Force’s effort to standardize its information technology infrastructure,” said Sharon Muzik, manager in charge of NetCents contracts at Booz Allen Hamilton, one of the NetCents prime contractors. “Each of the prime contractors put up a product catalog online, and customers could place orders based on the lowest cost.” The company’s task orders under NetCents included engineering work in support of SOAs at the Air Force and DISA.

The other NetCents prime contractors are Centech Group, General Dynamics Network Systems, Lockheed Martin, Multimax (now part of Harris), NCI Information Systems, Northrop Grumman IT and Telos.

“The contract worked out very well from my perspective,” said Steve Coughlan, NetCents program manager at General Dynamics, which has earned the most money working on the NetCents contract. “NetCents provided a fairly expeditious tool, with one contract for customers across-theboard to meet their net-centric IT requirements. They have a fairly sophisticated Web portal that allows customers to post requirements to the eight contractors who then aggressively bid on them.”

General Dynamics’ NetCents task orders include contracts to provide services related to the Air Force’s IT consolidation, establish information network operating centers at Langley and Peterson Air Force bases, set up wireless networking capabilities across the Air Force, and integrate various elements of commercial software.

“One of the things customers like about NetCents is its ease of use,” said Ralph Buona, vice president of business development at Telos. “There is one contract, eight companies get to submit proposals, and one gets the award.”

Telos has won several hundred task orders under NetCents that are worth several hundred million dollars, Buona said. Those task orders include $115 million for establishing wireless networking infrastructures at Air National Guard installations and $85 million for creating an Application Security Software Assurance Center of Excellence at Maxwell-Gunter Air Force Base in Montgomery, Ala.

However, NetCents has had some problems, Foster said. It supported decentralized local contracting activities, Buona noted, which landed NetCents in trouble with DOD’s inspector general.

A report issued in October 2007 by DOD’s IG blamed the NetCents decentralized structure for lax management controls over acquisitions. The IG also criticized the Air Force for certain aspects of NetCents’ small-business setaside program.

“Management and oversight of the contract has been our biggest challenge to date because increased management and oversight requires additional resources to properly manage,” Foster said. NetCents-2 also will likely be plagued by management challenges, absent additional resources, because its contracting strategy will be more complex than the original contract’s and will take more resources to administer.

As envisioned by Air Force acquisition officials at an industry day presentation May 29, the NetCents-2 acquisition strategy calls for eight separate procurements — two products-related contract vehicles and six services vehicles — each with multiple contract awards. Of these, four contracts will be set aside for small businesses, one for products and three for services.

“The biggest difference is that with NetCents, you had eight winners,” Buona said. “With NetCents-2, the number of prime contractors could range between 51 and 80.”

That has caused a feeding frenzy among government contractors, he said. “It’s like running the Kentucky Derby with too many horses on the track,” Buona said. “It makes for a confusing, competitive outlook, and it makes teaming more difficult because each company is competing for multiple contracts and is likely to belong to multiple teams.”

However, Foster said the proposed contracting strategy for NetCents-2 is a result of lessons learned from the current contract. “Systems integrators provide all the products and services” under the current NetCents contract, she said. “We garnered savings when compared to other government product contracts. However, we also incurred pass-through costs.”

“The Air Force arrived at the decision to separate product offerings from services after careful consideration of a variety of issues,” Foster added. “The Air Force started by seeking feedback from current customers, which included recommendations for ease of use, additional costs savings and increased competition at the task-order level.”

TEAM-BUILDING EXERCISE
The Air Force’s new contracting system was also motivated by a desire to give more work to small businesses, Muzik said. “Supporting small business is something the Air Force is extremely interested in,” she said. “That is one of the rationales for the new construct.”

Vendors will need to get acclimated to the new contracting arrangements. Task orders are likely to be more narrowly focused in NetCents-2, Muzik said. “Statements of work under NetCents were broader and focused on solutions.”

The new regime will also require companies to pursue different contracting strategies. General Dynamics’ Coughlan said he would prefer doing things the old way. “We would prefer to see a single contract rather than three or four,” he said.

“It will be more challenging, although I am not averse to it,” Muzik said. “We will be competing for prime contracts and also will likely be team members on some of the small-business contracts. As a prime contractor, you are responsible for building a team. You look at the statement of work and choose teammates that significantly enhance your capabilities to deliver on the requirements. The new contract will be a different way of delivering services. It is something we will not shy away from.”

Meanwhile, Telos’ anticipated role in NetCents-2 is still uncertain. “We don’t know where we’ll end up yet, whether as a prime or a sub,” Buona said. “The racetrack is too crowded right now. There are over 35 companies who say with authority that they will step up and bid as prime contractors on NetCents-2. That’s a lot of primes for a handful of awards.”