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CHIPS Articles: It's a jungle out there — but the DON IT Umbrella Program can help!

It's a jungle out there — but the DON IT Umbrella Program can help!
Getting the most from your information technology investment
By Sharon Anderson, Linda Greenwade and Sylvia Neidig - April-June 2008
Are you one of the many who struggle through the sometimes agonizing process of defining your requirements, searching for a solution, tackling the fine print in a licensing agreement, and conducting market research, until finally exhausted, you purchase a software solution while hoping for the best?

The Department of the Navy Information Technology (DON IT) Umbrella Program and Department of Defense Enterprise Software Initiative (DoD ESI) have some tips that may make your life easier and help make the most of your IT investment.

The Umbrella Program was chartered in 1988 by the Assistant Secretary of the Navy for Financial Management as a means to ensure effective and efficient use of the Department's IT dollars.

The Umbrella team provides program management and technical expertise to support the timely and cost-effective placement of acquisition vehicles for IT hardware, software and services.

Acquisition vehicles are managed from conception to closure, which ensures that customers get best value on their purchases and exceptional customer service from the Umbrella team throughout contract life.

COTS Software

Often buyers think that because they are purchasing commercial-off-the-shelf products that little effort is required in making the purchase, but this couldn't be further from the truth. Terms and conditions vary widely, and a thorough analysis of licensing agreements and a clear definition of requirements must be conducted to ensure that you are getting the best value for your IT dollar.

Use a systematic approach to make sure that you not only meet your requirements, but have also met policy guidance and acted in the best interests of the DON and Defense Department enterprise.

The following tips can help set a course that will lead you to a successful purchase. However, be sure to work with your local procurement office for the latest policy and procedural guidance.

Software Buyers Checklist

Determine Your Requirement – Conduct a technical evaluation of what you need and the products under consideration. Determine how long you will need to use the product, short- or long-term. Do you need a name brand product or will a less expensive, less well-known product deliver the same results? Remember that competition among vendors can provide a best value solution for you.

If you still find that your requirements demand a name brand product, a sole source justification is required.

Follow the Order of Precedence – The DoD and DON are committed to good stewardship of IT funds and management of enterprise COTS IT agreements, assets and policies for the purpose of lowering total cost of ownership across the DoD, Coast Guard and Intelligence Community.

You must review the applicable federal, DoD and DON regulations to ensure your purchase meets this guidance.

• The Federal Acquisition Regulation (FAR) 8.002 and Defense Federal Acquisition Regulation Supplement (DFARS) 208.002 cite order of precedence for use of government supply sources:
– Considerations most pertinent to COTS software acquisition:
• Check “Inventory Box” at http://www.esi.mil/
• ESI and SmartBUY
– ESI specifically cited in DFARS 208.74
– SmartBUY policy memo Dec. 22, 2005
– DoDI 5000
• GSA Schedule
– Other existing contracts (TAC, ITES ...)
• Open Market

Get the Best Pricing – Adequate market research should be conducted. This also includes quotes from DoD ESI and SmartBUY vendors, if applicable. If you find that you can obtain better pricing from another contract or the open market, consult the ESI and SmartBUY software product manager (SPM) and follow the procedures specified in DFARS Procedures, Guidance and Information (PGI) 208.74.

Often, the licensing terms do not compare with those that ESI and SmartBUY offer, so you will not be getting the best value, that’s why it is so important to talk to the SPM.

Another consideration is volume pricing. Spot discounting from ESI and SmartBUY (GSA) prices is allowable and expected when buying large quantities.

Know the Terms and Conditions – Do you understand the terms and conditions? This is one area where pur¬chasers frequently make costly mistakes.

Check the End User License Agreement (EULA) and compare ESI and SmartBUY agreements to see the terms and conditions that have been addressed for comparative pricing. Check the GSA schedule for license rights (Special Item Numbers (SIN) 132-33 – Term Software License and Perpetual Software License).

Understand use rights and perpetual versus term licenses. Consider the duration of your requirement and funding constraints. Consider use rights and the scope of your requirement. Is the license for your organization, an enterprise license, parts of your organization, or a program office?

Do you understand the terms of the license which may have different use definitions for different software? For example:

– A named user license generally permits use of the software by one named individual or on a specifically identified desktop.
– A concurrent user license generally permits a fixed number of users access to the software at a given time. This is in contrast to an unlimited use license.
– A pay per processor (CPU) license provides the right to install the software on a machine for which the number of CPUs is not greater than the number of licenses purchased, as specified in the license. The number of seats that may access the program is limited only by the capacity of the licensed CPUs.

Will you need additional rights for mobile devices, such as laptops or for home use?
Does the license include restrictions such as to hardware make or model?
Are there unusual cases such as use charges tied to virtual machines?

Contractor Use – Outsourcing permits the outsourced contractor to purchase and use software in support of the government customer. But it must be specified who owns the licenses: government or contractor.

Or if not outsourced, be sure that third parties (contractors) have use rights when working on behalf of the government or when providing services to host government-owned licenses.

Audit Provisions – Retain the right to self-audit or ensure that government rights are adequately protected by re-quiring appropriate security clearances and advance notice of audit as well as removing any payment obligations.

Understand termination and rights of survival clauses. Understand the impact to software use and maintenance rights if an order is terminated without completion of expected payments to the vendor.

Given the frequency of acquisitions and mergers in industry, it is important to include retention of rights when vendors are bought by other companies or when products are repackaged under a new name.

Changes in the Defense Department are no less frequent than in industry; in the last 10 years there have been disestablishments and many organizational realignments and name changes. Will your organization retain the rights to its software after the dust settles? Make sure that the terms and conditions allow transfer rights; check for limitations on movement or transfer within or between components, organizations, programs, etc.

Understand notice requirements either by your organization or the vendor. If you fail to follow your contract notice obligations, you may jeopardize the right to transfer licenses.

Address delivery options and media distribution will you require hard copy media, duplication rights, electronic distribution, central distribution, user access?

What does the warranty offer?

Is an escrow agreement needed? A software escrow account is the deposit of the software’s source code into an account held by a third party escrow agent. Escrow is typically requested by a party licensing software (the “licensee”) to ensure maintenance of the software. The software source code is released to the licensee if the licensor files for bankruptcy or otherwise fails to maintain and update the software as promised in the software license agreement.

Are there terms defined for “Times of Conflict”? Some of the ESI agreements contain this provision. In general, this provision may allow software use during “Temporary Expeditionary De¬ployments” (“TEDS”), that is, deployments away from in-garrison (permanent locations) to locations where troops or civilian government personnel deploy in support of war games, exercises, real-world contingencies, and emergency situations similar to the terrorist attacks of 9/11 where temporary duty stations were needed due to the destruction of government offices.

Don’t forget Maintenance – Find out what is included in maintenance and the terms – one year, two or is it prorated to a specific date? Some vendors prefer to have their mainte¬nance agreements expire on a certain date because it makes it easier for them to manage the large number of agreements they receive.

Is there an “all or none” provision? Is maintenance priced as a percentage of list price or GSA schedule vice purchase price? Can maintenance escalation be capped for a number of years? What is the maintenance cost ratio to product price?

Check to ensure all rights are clearly defined, quantifiable and predictable!

Finally, follow the guidance of your local contracting office. The Umbrella team is available if your local contracting office or you may need assistance.

As you can see there are many items to consider, even with a COTS software purchase, but by using the DON IT Umbrella program BPAs and agreements under the ESI, and following the software buyer’s checklist, you can ensure a successful purchase and assist the DoD and DON enterprise in making the most of scarce IT dollars.

Sharon Anderson is the CHIPS senior editor.
Linda Greenwade is the DON IT Umbrella program manager.
Sylvia Neidig is a contract specialist at the Naval Inventory Control Point Me¬chanicsburg. She supports the DON IT Umbrella and ESI programs.

The Umbrella Team
Consolidates the Department's IT requirements when better prices and/or quality can be obtained;
Collects and analyzes customer requirements, prepares life cycle management (LCM) documents, develops Requests for Proposal/Requests for Quote (RFP/RFQ), and manages and assists with the selection process;
Provides post award customer service;
Provides order management and technical and contracting support;
Manages ITEC Direct, the Department's e-commerce site;
Ensures offerings comply with DON and DoD policy;
Member of DON Enterprise Licensing Team and Software Product Manager for DON assignments under the DoD Enterprise Software Initiative (ESI), including support to the SmartBUY initiative;
Represents the Navy in joint source contracts and source selection;
Sponsors CHIPS, the Department of the Navy IT magazine, published quarterly.

Comply with Regulations and Policies
– Applicable FAR/DFARS policies: DFARS 208.74 provides policy regarding consideration of ESI agreements, if one exists. – DoD SmartBUY policy memo of December 22, 2005, provides guidance on the use of SmartBUY vehicles and states that SmartBUY in DoD is implemented through the ESI.
– DoDI 5000.2 section E4.2.7 states “When the use of commercial IT is considered viable, maximum leverage of and coordination with the DoD ESI shall be made.”
– DON Applications and Database Management System (DADMS)/Functional Area Manager (FAM) approval.
– Navy Marine Corps Intranet (NMCI)
– Section 508 of the Rehabilitation Act. Products must meet the applicable accessibility standards of 36 CFR Part 1194 as required by FAR Case 1999-607. General information regarding the Section 508 Act can be found at www.section508.gov. Links to software publishers’ Web sites can be found at www.itec-direct.navy.mil/.
– DoD IT Standards Repository (DISR). The DISR is maintained by the DoD Executive Agent for IT Standards. The DoD IT standards management tool, DISRonline is available for use by CAC-equipped authorized parties and can be ac¬cessed for account requests at https://disronline.disa.mil/.
– Common Security Configuration. The Office of Management and Budget (OMB) issued policy memorandum M-07-11, “Implementation of Commonly Accepted Security Configurations for Windows Operating Systems,” which states that “agencies with these operating systems [Windows XP and VISTA] and/or plans to upgrade to these operating systems must adopt these standard security configurations by Feb. 1, 2008.”
– OMB memo M-07-18, “Ensuring New Acquisitions Include Common Security Configurations,” provides recommended language for agencies to use in solicitations to ensure new acquisitions include these common security configurations and IT providers certify that their products operate effectively using these configurations.
– For more information go to www.csrc.nist.gov/itsec.
– Internet Protocol version 6 (IPv6). OMB required that agencies enable their core networks to handle IPv6 traffic by the end of June 2008. As a part of this process agencies must procure IPv6 compatible products.
– Net-centricity. The DoD is transforming the way information is managed to accelerate decision-making, improve joint warfighting and to create intelligence advantages. To reach this net-centricity, DoD must exploit advancing technologies that move the enterprise from an application-centric to a data-centric paradigm. ASD(NII)/DoD CIO net-centric checklist, located at www.defenselink.mil/cio-nii/docs/NetCentric_Checklist_v2-1-3_.pdf, provides information on the net-centric posture of IT products and services.
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CHIPS is an official U.S. Navy website sponsored by the Department of the Navy (DON) Chief Information Officer, the Department of Defense Enterprise Software Initiative (ESI) and the DON's ESI Software Product Manager Team at Space and Naval Warfare Systems Center Pacific.

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