Meet the new face of federal IT contractors

A few weeks ago I wrote about the Department of Homeland Security's Flexible Agile Support for the Homeland procurement -- a $1.5 billion IDIQ for agile software development services. DHS attracted about 100 vendors to participate in a "tech demo," where each came in to work on an actual project for half a day, which replaced proposal writing. The FLASH award was protested by some of the losers, and DHS eventually decided some of the criticisms had merit -- though they represented honest mistakes -- and cancelled the procurement.

What followed, however was an unusual event. This may have happened before, but I had never seen it: Eight of the 11 winners signed a joint letter to DHS chief procurement officer Soraya Correa.

"When the news of cancellation broke, we were shocked and disappointed," the winners wrote, calling DHS' decision a "punch in the gut."

"But, this is not a letter to blame, second-guess, or complain," they continued. "This letter is to say ‘Thank you' to DHS. Thank you for taking a risk in the arena of government procurement that encourages risk-aversion. Thank you for aggressively seeking a new path, instead of resigning to working within the status-quo. Thank you for providing a forum to display our skills. Thank you for the hard work delivering the logistical miracle of conducting 100+ technical challenges. Lastly, thank you for being open regarding the successes, challenges, and missteps as we all seek to learn from this grand experiment."

After the cancellation, the letter explained, "the winning vendors reached out to each other, and ultimately decided to meet up informally. The firms, once prospective competitors, became united in moving the industry discussion forward. We offer whatever help we can in sharing our perspective and advancing agile procurement practices."

The letter itself shows a new group of IT contractors making their voices heard. (I am guessing this is the first time the slightly hip expression "meet up" has been used in a document presented to the government.) None of the signatories that I was able to contact has more than 300 employees; most have far fewer.

These are not your grandfather's IT contractors. They represent a very different world from the large legacy IT contractors, four of five of whom are the IT divisions of defense contractors.

I contacted some of the winners to learn more about this new face of federal IT contractors.

One of the winners I spoke with is a firm called Navitas Business Consulting, which has 100 employees and entered the federal marketplace only in mid-2014. CEO Srini Bayireddy, now 43, was born in India and came to the US after graduating from university there, in 1998 on an H1-B visa. (After college, he had started a computer training company in India, which he sold to leave for the U.S.)

Bayireddy started working for IBM, but left them for a number of years at Hitachi so he could get a green card. When he finally did get one, he started Navitas to do IT modernization consulting, as a subcontractor mostly to IBM but also to a few other IT consultants. (The name of the company means Energy in Latin – and was selected by his wife and co-founder Sandy.)

Navitas initially did only commercial work, counting among its clients Volkswagon and a number of banks. Bayireddy moved into the federal marketplace via his earlier association with IBM, which knew Navitas' commercial work and needed help with an IT modernization task order at USCIS.

Bayireddy said that an attraction of the federal marketplace for him was that engagements were relatively long, providing a more secure cash flow for a small business like his. (I am frankly surprised that this point doesn't get mentioned more often in discussions of attracting firms into the federal marketplace.) Half the company's business is still commercial.

Bayireddy said three things distinguish his company from traditional federal IT contractors. The first is its commercial market presence. Working for commercial companies gives Navitas employees access to the latest commercial innovations both in terms of technology and process management that they believe traditional IT contractors often don't have.

"This is our biggest advantage," he said. "We know the latest and greatest in technology."

I asked Bayireddy whether the company's commercial business helped it make government sales (because of more knowledge) or hurt (because of suspicion Navitas didn't understand the government well enough. On balance, he said, he felt it helped. "They are sometimes hesitant about adopting the very newest technology, before it's had a chance to prove itself," Bayireddy said. "But that can happen in the private sector as well."

Agencies value Navitas' commercial experience, he said, "but not to the extent that they buy in completely. … I think the commercial experience gives us a head start to talk, they think these guys can bring some experience we don't have. But they want to feel comfortable that we know how to implement in a government environment."

The second thing Bayireddy said distinguishes the company is its philosophy of "do, not just say." Navitas wants to get business by demonstrating before award that the team already knows how to do important things the government is asking for. The philosophy is constant learning and prototyping, so the firm has a development lab that works on data analytics and DevOps.

"Showing what we can do before we get the work is a shift from the norm," he said. This is also why the tech demo approach DHS used for FLASH was attractive for Navitas -- a sentiment shared by every FLASH winner I spoke with, who all said they prefer this kind of solicitation.

Traditional IT contractor competitors, Bayireddy said, seldom do development before getting business. "They mostly don't have the resources with the implementation knowledge to undertake the task of setting up the labs," he said, and "it costs lots of upfront investments in terms of infrastructure and [subject-matter expert] dedicated time." The traditional IT contractor model, he said, is to put together a great proposal and then, if the firm wins, hire the specific skills needed as subs.

This relates to a third difference in Bayireddy's view. The traditional contractors do have some software developer talent, he said, but it's not deep enough, since so much of the actual development work goes to subs. Contractor personnel are more expert in program and project management than in building software, and this tends to be another reason they are not current on the latest in software development methods.

He said the smart and innovative contractor managers -- like smart, innovative government managers -- are open to learning from new commercial practice. But often the traditional contractors, especially if their own subs come out of other government contractors, stay mired in outdated practices.

Bayireddy said he'd always believed that eventually the firm must graduate from being strictly a sub. In the last year, Navitas has won its first prime contracts, the 8-A STARS program and an IDIQ at the Department of Health and Human Services, as well as getting onto the General Services Administration's Schedule 70.

"We initially hired some companies who claimed they are experts in drafting a winning proposal," Bayireddy said, "but we had no success. Later on, after working on several responses, we felt comfortable preparing it ourselves. We now have a small but great proposal response team managing the effort." They still have not won any work as a prime, however.

Meanwhile, I am overjoyed that the government is getting the advantage of new players such as Navitas. The letter to DHS and the firms behind it are a sharp – though friendly – jolt for the system. May many more follow them!