The Enterprise Software Initiative (ESI) is a joint project designed to implement a software enterprise management process within the Department of Defense (DoD). The main problem identified with procuring software for DoD is that the software (including price, acquisition cost, distribution, training, maintenance, and support) costs too much. ESI objectives are to save money and improve information sharing. By pooling commercial software requirements and presenting a single negotiating position to leading software vendors, ESI provides pricing advantages not otherwise available to individual Services and Agencies. ESI's initial focus is on DoD common-use, standards-compliant software COTS software products.
CHIPS: How does ITEC-Direct and the DON IT Umbrella Program fit into the ESI program?
Mr. Clausen: The Umbrella Program fulfills the Navy's duties as ESI Executive Agent for Office Automation Tools and Enterprise Resource Planning software. The Program Manager, Barbara Johnson and her whole team, Linda Greenwade, Peggy Harpe and the ITEC-Direct group have been very supportive and proactive in pushing the ESI project. The ITEC-Direct Web site is great and the team is customer-focused. I am amazed at what they have accomplished and at what they continue to do.
CHIPS: How do you gather requirements for the IT products and services offered to DoD customers?
Mr. Clausen: We follow the money and leverage the marketplace. We continually monitor customer interest levels by collecting data to see who is purchasing, and what they are purchasing. As Service or Agency buyers purchase, or plan to acquire significant amounts of particular software products, we look into the feasibility of expanding the scope of their contracts for the benefit of all DoD buyers. Then we assign an Executive Agent, who develops an acquisition strategy and a business plan. We discuss this strategy and reach consensus within the group. The Executive Agent, through their Software Product Manager (SPM) then begins negotiations with the software publisher. What usually results is a BPA off the GSA Schedule; with substantial pricing discounts. For example, as he observed that there was substantial interest in the Navy for Merant software, Floyd Groce (Department of the Navy representative and co-chair of the ESI Working Group) brought the information to one of the bi-weekly ESI Working Group meetings. The group eventually approved the Navy's plan to move forward with an agreement, which included some up-front funding, resulting in a pre-purchased inventory for Navy customers, and a BPA for DoD-wide use priced at 21 percent off GSA Federal Supply Service (FSS).
CHIPS: Who are the ESI Working Group members?
Mr. Clausen: Our ESI Working Group includes members from: the Office of the Secretary of Defense (NII)/DoD CIO; Department of the Navy; Defense Finance and Accounting Service; Defense Logistics Agency; Office of the Secretary of Defense (CIO); Missile Defense Agency; Defense Intelligence Agency; National Imagery and Mapping Agency; Defense Information Systems Agency; Department of the Army; and the Department of the Air Force. They are truly just the "tip of the iceberg" though, because the really heavy lifting gets done by all the wonderful people in our Software Product Manager organizations, which include the Navy's IT Umbrella Program, the Army's Small Computer Program and the Air Force's Standard Systems Group. Our SPMs, in turn, are supported by a variety of superb contracting offices, including NAVICP, DITCO, and ITEC4. It's important to realize that all these folks have full-time "day jobs"; they perform their ESI functional roles in conjunction with their billeted duties.
CHIPS: Do you require IT products to be interoperable or to conform to a standard?
Mr. Clausen: We only require that products meet the JTA, the Joint Technical Architecture. By following the money, we allow the functional experts in the field to determine "best of breed." DoD PEOs (Program Executive Officers), Program Managers and field offices know their functional requirements quite well, and are also cognizant of the various interoperability and information assurance requirements. We have to assume that their purchasing decisions take all those requirements into account. It is a formula that has worked well for the past five years.
CHIPS: Do you work with the Service CIOs and other groups?
Mr. Clausen: Absolutely — DoD CIOs own this project! Priscilla Guthrie, the DoD Deputy Chief Information Officer is our champion and sponsor. The ESI Steering Group includes many of the department's CIOs and senior CIO staff within DoD, and meets as required to update our way ahead, and resolve issues. We also provide quarterly briefings to the full DoD CIO Executive Board.
Also, ESI is endorsed by the DoD Business Initiative Council (BIC), which authorized development of a DoD-wide Software Asset Management (SAM) Framework. We are beginning a process to populate the SAM Framework through the efforts of a CIO-led joint IPT (Integrated Product Team). Our current plan is to finish by 2005. Accomplishment of this task will help us track the majority of COTS software licenses in DoD. This will give us the visibility we need to create more and better ESI software agreements, and enable software transferability throughout the DoD. So, for example, if an Air Force base is closed down we could transfer their 1,000 MS 2000 Professional licenses to other DoD users. The BIC also approved extension of the project to establish a Virtual Information Technology Marketplace (VITM) for online purchasing of Information Technology. Effective working relationships with the DoD Comptroller have enabled ESI use of the Defense Working Capital Fund to provide "up-front money" for initial, wholesale software buys. This funding process assures maximum leverage of DoD's combined buying power, and results in large software discounts.
CHIPS: Can you talk about current savings to DoD?
Mr. Clausen: In the last five years the ESI has accumulated over $1 billion in cost avoidance. For the most part, this is measured as the difference between our ESI software pricing, and GSA Schedule price. We also attempt to capture the delta between our ESI software price, and a buyer's large volume spot bid quoted price, which is always lower than GSA Schedule.
CHIPS: What about potential customers who may not be aware of the ESI or Service programs like the DON IT Umbrella Program and use their local contracting agency instead?
Mr. Clausen: No problem with buyers using a local contracting agency — as long as they purchase off our ESI agreements (through our SPMs) whenever possible. If they are buying ESI software products via other means, we call that "leakage" and it is very difficult to measure. But there should not be anyone buying COTS software that is available under ESI, through means other than an ESI agreement. Contracting Officers, and other requiring officials should be aware of the DFARS change (subpart 208.74) and the Defense Acquisition System guidance (issued May 12 , 2003) regarding COTS software purchasing. The ESI vision is "Point and Click IT Shopping at the Lowest Cost." There really is no reason not to use ESI; it's a classic "win-win" for everyone involved!
CHIPS: Did you know that it is the Umbrella Program's 15th birthday?
Mr. Clausen: It has been 15 great years for the Umbrella Program and their Navy and DoD customers. Keep up the good work!