Virginia’s Loudoun County powers the data center market

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With 70 percent of the world’s internet traffic passing through the 10 million square feet of data centers situated in Loudoun County, it’s tempting to say that they put the Northern Virginia district on the map. But Buddy Rizer, executive director of the county’s Economic Development Department, might give AOL credit for that.

“It goes back to the late ’90s when AOL moved its corporate headquarters here,” Rizer said. “That was followed by [MCI-WorldCom]. What happened was everybody started running their fiber out to AOL, because in those days AOL was the internet and the internet was AOL for most people.”

Internet providers ultimately built an exchange point there known as MAE-East — one of four U.S. Network Access Points as designated by the National Science Foundation.

“Those traffic centers were becoming more and more congested, and they were actually owned by carriers, so there were questions about how partial they were in terms of allowing traffic to continue to grow and expand,” said Jon Lin, vice president of corporate development and strategy for the Americas at Equinix, a global data center provider that opened its first location in Loudoun in 1998 to be a neutral steward of the infrastructure aggregation points.

From there, data center growth happened organically until about 10 years ago, when the county began proactively working to attract them, Rizer said. In 2014, Loudoun’s Board of Supervisors approved the Data Center Zoning Ordinance, which added data centers as a permitted use to districts zoned as commercial light industry or planned development of an office park, research and development park, industrial park or general industry.

The county also began offering the Fast-Track Commercial Incentive Program, which speeds the time to market for data center operators by providing a dedicated project manager from the department and moving the project to the top of development review lists. It also offers sales and use tax exemptions to data centers that invest at least $150 million, hire at least 50 employees, pay at least 1.5 times the average local wage and enter into a memorandum of understanding with the Virginia Economic Development Partnership.

“The tax incentives are nice, but overall they’re just part of the package,” Lin said. “Once all the connectivity was there, all the content providers seemed to be there and now all the cloud service providers are again using all of that bandwidth and connectivity. That’s really how Loudoun became the data center hub for the U.S.”

Equinix has more than 200 centers worldwide, about 11 of them in Loudoun. When it’s looking to expand, Lin considers factors such as proximity to population centers, bandwidth, fiber routes and subsea cable landing spots — requirements Loudoun easily fills. And although the county has the largest concentration of data centers in the world, Lin isn’t worried about manmade or natural disasters affecting the area.

“From an overall geographical risk perspective, Loudoun County is also quite nice. It’s got low seismic risk; it’s pretty far away from the water [with] no real flood risk,” he said. “Our customers are expecting us to be in locations that help them solve their application latency issues and performance challenges on the applications side so that they’re getting the best end-user performance.”

For the county, the data center industry has helped grow the population from about 80,000 in those early AOL days to 400,000 now. It’s also created a job boom; the county added 10,000 jobs – mostly in tech – in the past three years, Rizer said.

But taxes benefits are the biggest reward the 520-square-mile county reaps from what Rizer dubs its “cottage industry.”

“We’ll get about a quarter of a billion dollars in local tax revenue this year alone from the data center industry,” he said. “Data centers are a really high return on investment for us. For every $1 we spend on services for data centers, we get $9.50 back.”

By comparison, it costs the county more to provide services to single-family homes than it gets back, and for every $1 it spends on commercial businesses, it gets about $1.56 back. With an estimated median household income of $134,464 in 2016, according to the U.S. Census Bureau, Loudoun is the wealthiest county in the country.

And it’s not done growing. Loudoun has another approximately 5 million square feet of data centers in planning or under development. In February, Amazon Web Services submitted a plan to build a 600,000-square-foot data center on 44 acres near Dulles International Airport.

With data centers consuming about 100 billion kilowatt-hours of electricity — 2 percent of all U.S. electricity use  in 2013, according to the Energy Department — the county has been careful to work with local utility company Dominion Energy to keep power flowing.

“We don’t see that as a limiting factor at all going forward,” Rizer said. “Land would probably be our biggest limiting factor. We expect that we’ll have organic growth through the early 2020s, but at that point, we’ll probably be out of data center land.”

As a result, his department is looking to attract other businesses – especially those that can take advantage of the tech-savvy workforce and infrastructure in place.

“Just like a business doesn’t want to be too dependent on one product line, we want a diverse economy here,” Rizer said.

Other data center hubs include London, Europe’s largest; Singapore, which is Asia Pacific’s data center capital; and Beijing, according to an August Data Center Dynamics report. It adds that determining factors include climate, local economy, proximity to consumers, availability of power and networking connections, and politics.

“I think the thing that we did better than anybody else is we worked to understand data centers and worked to create an environment where they could come and thrive,” Rizer said. “All we did was enable. We set up the table for success and the companies reacted to that…. It has worked out incredibly well for us.”

EIS telecom pact shifts focus to modernization

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Government and industry stakeholders agree: Federal agencies need to get their Enterprise Information Systems solicitations out sooner rather than later to avoid higher costs and stagnant technology.

“Just do it,” said Diana Gowen, MetTel’s general manager and senior vice president for federal, urging agencies to get their fair opportunity solicitations for the contract out even though they may not be letter perfect.

In remarks at FCW’s Oct. 10 Modernization Summit, Gowen said agencies should take a lesson from the Social Security Administration, which pushed out the first EIS solicitation this past spring. “Amendments and questions followed,” she said, but “they’re well ahead” of the deadline.

Bill Zielinski, the General Services Administration’s EIS lead who also spoke at the FCW event, similarly urged agencies to move ahead with an EIS fair opportunity solicitation.

Aging “TDM and plain old telephone service will be more expensive” by the time EIS comes online, said Zielinsky, who is deputy assistant commissioner of the Office of Information Category in GSA’s Federal Acquisition Service. By delaying, he said, agencies also risk be missing out on an opportunity to get more flexible, less expensive alternatives to those old services under EIS.

The number of fair opportunity solicitations for EIS is growing, said Dave Young, senior vice president at EIS vendor CenturyLink.

In an interview with FCW, Young said his company has seen 20 of the announcements from various agencies so far, including the SSA, Department of Justice and the National Oceanic and Atmospheric Administration. He said he expects over 100 more in the coming weeks.

“Just do it,” said Diana Gowen, MetTel’s general manager and senior vice president for federal, urging agencies to get their fair opportunity solicitations for the contract out even though they may not be letter perfect.

“Agencies are beginning the process,” he said.

However, Gowen said the “bad news” about EIS is that some agencies remain reluctant to release solicitations because of the complexity of modernizing their IT systems.

A key reason some agencies have been slow, according to Zielinski, is a shift in IT policy. What began as a “transition” to EIS under the Obama administration has grown into a primary tool for IT overhaul under the Trump administration’s larger push towards IT modernization. Federal CIO Suzette Kent, who also spoke at the Oct. 10 event, said EIS is critical to helping agencies “take advantage of governmentwide capabilities to move more quickly.”

While some contractors have pushed for an extension of the 2020 deadline, GSA has so far demurred. GSA officials, however, have suggested that agencies that show they’re trying to leverage EIS to modernize their networks and not do a simple “like for like” replacement of services could have more time to work.

Zielinski acknowledged he was aware of the tension, and said his agency offers a number of programs, best practices and services to help agencies move ahead.

As agencies decide when to issue their solicitations, EIS vendors are moving quickly to complete their due diligence and testing to officially respond to them.

All nine EIS contractors have completed testing of their back office support systems. Three are in the home stretch to get their official authorities to operate. GSA accepted Safety and Security Plans from AT&T, Level Three/CenturyLink and Verizon in late September.

How powerful is diversity in the government market?

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Back in the olden days when Washington Technology was a print magazine published 24 times a year, our art department had an expression for the photos that accompanied our articles: MAWGs.

It was an acronym for “Middle Aged White Guys” because so many of the photos were of, well, middle-aged white men. We saw the same thing at our events – a sea of men wearing dark suits.

It is an exaggeration to say that there are only old white guys (myself included) in the federal market. We can all think of exceptions. But it is an exaggeration that speaks a certain truth. I think nearly any woman, racial minority or member of the LGBT community can tell stories of where they were the only member of their group in the room. And I’m sure the stories will include many times when their voices were ignored and not heard and the extra effort that had to be made to make the MAWGs in the room listen.

Of course, we have seen improvement. In fact two, and soon three, of the largest defense contractors in the country, if not the world, are led by women.

And there is a lot of research that says that companies with more than two women on their boards of directors perform better than companies with no women.

But what about below that level where solutions are being created to solve problems?

Adam Galinsky is the chair of the management division at Columbia Business School and his research has shown a link between increased creativity and forming significant connections with people from other cultures. The deeper the connection, the greater the increase in creativity.

Galinsky also was featured this summer on the NPR podcast, the Hidden Brain, in an episode called the Edge Effect.

Today’s government customers demand innovation and companies are constantly looking for ways to differentiate themselves from competitors by touting their innovations.

So I’m curious, is anyone looking at the composition of the teams tackling these tough customer challenges facing their customers?

Has anyone noticed differences in creativity between a team of white male software developers and a team that also includes women and other minorities or cultural background?

There also are potential differences beyond gender and race. If your customer is the Army, do you build a team with just people with Army experience or do you include people who have worked on solutions for other organizations?

I’m also curious if any companies make a conscious effort to make their teams more diverse beyond believing it is the moral thing to do? Are you doing it because you believe diverse teams build better solutions?

I’m inviting you to share your stories with me. I would love to find three or four solid examples of success tied to diversity. I’m not sure yet how I’ll present them, but let’s find them first and we’ll figure the presentation part out later.

So that is your assignment: Tell me stories about the power of diversity.

Posted by Nick Wakeman on Oct 08, 2018 at 5:58 AM