In a shutdown, essential services could have an advantage in the cloud

Agencies using public cloud services might fare better than those depending on government data centers during a federal government shutdown – at least for a while, industry observers said.

The impact on agencies and cloud services providers ultimately would be determined by the length and resolution of any shutdown,  if a shutdown happens at all.

Republicans and Democrats in Congress agree this week to a plan that would cut $4 billion in spending and move a potential shutdown from March 4 to 18. However, the measure only delays the possible shutdown. If Congress can't agree on a longer-term funding bill or another stopgap, the spectre will return.

“If [agencies] were using public cloud services, those would be the only services that would be funded – at least for awhile,” said David Linthicum, CTO of Blue Mountain Labs, an IT consulting firm.

Agencies using the public cloud providers pay for those services out of an operating fund rather than money appropriated by Congress. Just like telephone, water, power and other utility services, they are going to keep going for some time after the offices are shut down, Linthicum noted.

“However, government-owned data centers won't be able to keep going without money,” Linthicum said.

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Shutdown could be on the shelf, for now

A government shutdown is never a total shutdown -- there are specific agencies that will continue to operate; the Defense and Homeland Security Departments and the U.S Postal Service, for example, said Kevin Paschuck, vice president of public sector with RightNow Technologies, which provides software-as-a-service solutions to defense and civilian agencies via the company’s secure government cloud.

“For those agencies that do get shut down, and have a cloud computing delivery model currently in place, it is actually quite advantageous,” Paschuck said, “because services continue without interruption since they are being managed by the cloud provider.”

In contrast, services operated in government-owned data centers could be left with no one to operate them if the administrators are sent home.

The majority of RightNow's government clients are organizations that would continue to operate even in the event of a shutdown, Paschuck said.

Several scenarios

“I believe we have several scenarios to consider,” said Robert Otto, executive vice president of advisory services with Agilex, an IT consulting firm.

The key factor is if the contract is defined by the availability of a service or the consumption of a service. Availability-based contracts will likely have recourse for collecting payments while consumption-driven agreements will not, Otto noted.

For example, one has to take into consideration if the agency is involved in fixed-price, annualized contracts to provide a specific service – for example, a software-as-a-service application or website hosting.

Technically, the government would probably have an exemption from paying under the "availability of funds" clause in most contracts, said Otto, former CIO of the Postal Service. However, most providers would also have some type of early cancellation fee that would outweigh the cost of a short-term shutdown.

“From a vendor perspective, total costs are typically amortized over a year so there is little value or cost savings from discontinuing the service temporarily,” Otto said. Both parties are likely to agree that the cost of continued services is less than invoking the early termination fee, he said.

In the case of more elastic or on-demand services, such as Amazon Web Services, agencies would mostly likely be prevented from incurring new costs, Otto said. Unlike the fixed-priced, annualized contracts situation, the service provider is unlikely to have any recourse for collecting these funds, he said.

Agencies receiving services from government cloud providers would be able to maintain critical and essential services but would be expected to discontinue non-critical ones, Otto said.

“As such, if you are depending on another agency to provide a service, you could be out of luck,” he said. Of course, if the service is deemed critical and essential, it will probably be exempt from these restrictions.

Generally, the government has not shut down for more than a week or so at a time, Paschuck said. However, an extended shut down would have a tremendous economic impact on government contracts and systems integrators.

“In terms of acquisition costs, the government doesn't pay for anything it hasn't received,” Paschuck said. So contractors who work within agency walls on a daily basis would also be sent home -- unless their work is under a services contract, he noted.

Additionally, contracts up for renewal that happen to expire at the time of a shutdown could present a potential problem, “but currently we don't have any contracts that fit that description,” Paschuck said.

“In the end, I think that the government will seek pragmatic solutions versus being fully constrained by the letter of the law or contract,” Otto said.