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Massive Request for Proposal Defines NGEN Race

June 2012
By Robert K. Ackerman, SIGNAL Magazine
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U.S. Navy sailors learn cryptologic elements in a Joint Cyber Analysis Course at the Center for Information Dominance. The Navy’s multibillion-dollar Next Generation Enterprise Network (NGEN) program is a major step in the service’s drive toward information dominance.

The competition begins as the long-awaited RFP beckons information technology bidders.

Prospective bidders for the U.S. Navy’s Next Generation Enterprise Network are facing several balancing acts as they weigh multiple criteria to vie for the multibillion-dollar contract. Issues such as technology refresh, service integration and savings sharing loom large in what ultimately will be the Navy’s primary information network.

The Navy released a 1,100-page request for proposal (RFP) for the Next Generation Enterprise Network (NGEN) last month after posting several drafts and soliciting thousands of comments from government and industry. The low-price technically acceptable (LPTA) RFP aims to lay the groundwork for the replacement for the Navy-Marine Corps Intranet, or NMCI (SIGNAL Magazine, December 2011, page 18). While several criteria will be used to determine the winning NGEN bid, low price will be the most important.

In charge of the NGEN effort is Capt. Shawn P. Hendricks, USN, the program manager for PMW-205 Naval Enterprise Networks. The captain allows that he has been involved in large and complex acquisitions before becoming NGEN program manager, including two national space systems. But, “I’ve never seen anything as hard as this—not even close,” he says, continuing, “because of the vast number of stakeholders that you have, the value that the thing on your desk has for everyone—when it doesn’t work, you don’t work. We used to live in a world where people would say, ‘If I’m not connected, it’s OK; I’ll do offline work.’ Nobody does that anymore.”

The NGEN RFP’s size is what makes it stand out among other RFPs, Capt. Hendricks declares. “It’s enormous, and they [bidders] will have to eat it one bite at a time. Yet, at the end of the day, it all has to work together,” he states.

The captain emphasizes that the program office sought to address comments from industry to ensure robust competition and a level playing field. In addition to more than 1,000 industry comments, the RFP generated a large amount of input from the Defense Department—the office of its chief information officer, from the Navy’s Fleet Cyber Command (CYBERCOM) and Network Warfare Command (NETWARCOM), among several defense sources that provided more than 2,000 comments.

Not all of the comments were incorporated, of course. Some were contradictory, and others were too self-serving for their industry source to be included. The captain relates that the program office staff endeavored to “critically think through” each comment while not dismissing suggestions just because they ran afoul of existing proposal elements. “We wanted to have rationale for why we didn’t do something—or why we did something,” the captain attests.

The office received 80 comments after a January release seeking comments on sections L and M. Most of the improvements that ensued involved administrative points—“making things more clear,” the captain says. Another 170 comments were contributed after a March draft RFP release. Capt. Hendricks points out that, while that draft could have been released as a final RFP, those 170 comments would have come back as bidders’ questions within days of the release.

One point the program office learned from this draft process is that the RFP did not have many gaping holes, he continues. “Given that we had made changes in [sections] L and M, given that we had a significant number of questions, given that they [industry] hadn’t seen it put back together since the original draft RFP in September, I think that the approach we took by releasing a full draft was warranted and prudent,” Capt. Hendricks states.

While the 1,100-page RFP defines the NGEN effort’s size, the program’s complexity may be defined by its data room. Capt. Hendricks notes that this data room contains 450,000 items. These include drawings, development documents, information papers, PowerPoint presentations, printer manuals and server manuals, to name a few. Some of these items are 10 years old and have no relevance now, the captain points out, while others are up-to-date documents. These items are not fully organized, so the program office created the data room because it could not organize its overwhelming cache of materials while hoping to release the RFP in a timely manner.

“We took what I call the Wikipedia approach,” he says. “With an infinite number of people looking at it, eventually it will become accurate over time because it self-corrects.” The program office has added a Google-type tool that allows offerers to search the data room. Capt. Hendricks adds that this tool has been a big help for offerers by allowing them to team and build search directories. The bidding teams, as well as the Navy, will help “separate the wheat from the chaff,” he says.

Ultimately, winning the bid will require a balance between being aggressive in price yet ensuring that the successful bidder can meet requirements, Capt. Hendricks allows. “It’s a hard problem: sizing the help desk for the call volume that we receive; projecting into the future for the technology refresh and saying, ‘yes, this will work and here is the work force we need’—because at the end of the day it is a fixed-price contract,” he says in citing two examples. “They [bidders] have to deliver performance at the price they propose, but they want to deliver an aggressive price so they can win.”

The captain notes that an LPTA approach is not a price-technical trade. Price is the main element in this LPTA RFP, and it works well because it helps level the playing field. The superior knowledge of the incumbent is not necessarily valuable, he says.

“If [NGEN] were a development effort, it wouldn’t make much sense,” the captain observes. A less-expensive solution also might feature less-mature technology that never would work in the system.

“What does the Navy value right now? Price,” he emphasizes.

Several areas may vex industry in its efforts to meet the RFP. Technology refresh will be difficult, the captain allows. Bidders must project ahead with solutions that are feasible today.

Part of this challenge is that the top cost element on the network is personnel. About two-thirds of the cost of the network is full-time equivalents, Capt. Hendricks notes. Whether these people are running a help desk or service desk, or maintaining data centers, they constitute most of the contract costs. Accordingly, only about one-third of the contract will be divided among hardware and software. “You’re not going to run the price tag way down by cutting back [on hardware and software],” he observes. “You have to figure out, in your technology refresh plan, how do drive the manpower down in a technically acceptable way.

“So, hiring Santa Claus is probably not going to cut it,” the captain analogizes. “Even though he and his elves—his small business subcontractors at the North Pole—may be available six months out of the year, you have to show me how you’re going to do this. That will be a challenge.”

Another challenge will be integrating services together but pricing them individually. “All of the services must operate together, but I want to know what each one costs so that I can make business trades as I move forward,” Capt. Hendricks declares.

The RFP’s H-10 clause also may be cause for concern. Formerly the H-14 clause—before four other clauses were deleted from the RFP—this section focuses on shared savings. Known in other circumstances as a value engineering change proposal, it addresses the concept of a contractor introducing a good idea that reduces the cost of delivering a service. The Navy and the contractor would split the savings where applicable under the H-10, but having this option can complicate a bid. The bidder would have to determine where to designate an H-10 clause that covers a sharing agreement—one in which the contractor would see some profit from the realized savings—or where to simply pass all of the savings back to the Navy for a lower price and a more attractive bid.

Capt. Hendricks compares NGEN’s complexity to that of the New York City subway system. Just as the New York subway was built in segments over many decades out to the suburbs, NGEN will be networking diverse Navy assets worldwide. However, where the subway lacked a build-to-print model, the Navy is trying to establish an NGEN blueprint through the contracting process.

Yet, it will not be a simple linear process. “It’s going to be a bumpy road,” the captain warns.

WEB RESOURCES
NGEN RFP: http://bit.ly/IOzgY4
SPAWAR NGEN: http://www.public.navy.mil/spawar/PEOEIS/NEN/NGEN/Pages/default.aspx