A rough ride ahead

But 2008 has bright spots for existing projects entering new phases

The federal information technology
market is facing another
tough year in fiscal 2008, as the
war on terrorism saps dollars
and the lack of new appropriations
forces agencies to delay
plans for new projects.

The General Services Administration
has awarded its
long-awaited Networx and
Alliant contracts, closing off
those lucrative opportunities to
all but the winners. Its Alliant
small-business companion vehicle
is yet to be announced.

The agency expects to award
that contract this month.

But the outlook isn't all bleak.
Agencies will issue requests for
proposals on some major contracts
in 2008. Not all will actually
be awarded during the year,
but companies should be ready
to bid on those that are suitable,
analysts say.

The year will begin with a
lame-duck president and many
agencies still operating under
continuing resolutions, the
congressional mechanism that
allows agencies to continue
ongoing activities while awaiting
new funding, said Arash
Ardalan, senior analyst of federal
research at Input Inc.

Ardalan and other Input staff
earlier this month issued a
report on the Top 20 Federal
Technology Opportunities in
2008. The top six opportunities
are with defense agencies and
the military. Of the top 20, 13 are
with the Defense Department.

"It doesn't look to be any one
common trend driving those
dollars," he said. "New dollar
spending doesn't look like it's
going to be there. It's a lot of
[operations and maintenance]
dollars. Keeping systems maintained
? you've got a lot of that."

Many of the big opportunities
Input identified are recompetes
? old contracts entering new
phases and reopening competition.
They are solid, nuts-andbolts
IT projects without a lot of
sizzle, he said.

"In past years, we've had
some real juicy opportunities in
the report," but not this year,
Ardalan said. "You've got some
larger recompetes coming out,
and big companies will be vying
for the opportunities. I feel like
competition is going to be really
tough."

The pressure is on for companies
to convince agency leaders
that they offer the best value among competitors, he said.

"You've got your options out
there for you," he said. "The
pricing obviously will be a big
factor. You're going out there
telling people you've got the
best price, you have to be able to
show people that's actually what
will happen."

Operating under continuing
resolutions has become a normal
part of the budget cycle
in recent years, said Greg
Baroni, president of the federal
systems division at Unisys Corp.
Businesses have no choice but
to adjust their cycles to match,
he said.

"It's nothing new," he said. "If
I'm looking at the '08 appropriations
cycle, it seems to be following
a path that's kind of
familiar. Not saying we appreciate
it, but it appears to be nothing
new."

Such stopgap measures
become just a normal part of
doing businesses, he said. "The
issue that it really impacts is
new awards."

Unisys will bid aggressively
on some of Input's Top 20 list,
he said. One is the Homeland
Security Department's Information
Technology and Managed
Services contract, the next
incarnation of which will be
awarded in December 2008 and
be worth as much as $1 billion,
Input said.

The contract is for the
Transportation Security Administration,
a component of
DHS, and Unisys has held it
since TSA first awarded it in
2002.

"That's one I can assure you
we are intending to go fullthrottle
at," Baroni said. "All
things considered, we are a
partner that has acted in good
faith. We've done good work for
them."

TSA is one of the company's
top priorities.

But the company sees other
appealing opportunities in the
coming months, too, including
the Education Department's
Enterprise Development Support
Services contract for development
services, a $750 million
deal that the department will
award in May, according to
Input.

Baroni said he does not
expect to see many new projects
launched in 2008. Most agencies
will leave new work until
after the November elections,
waiting for the new administration
to outline its plans.

"While some people are optimistically
saying it means we
won't see new work until 2009,
really it will be the fiscal 2010
budget that will see the new
president's priorities," he said.

Continuing resolutions don't
end new projects but do slow
them, said consultant Bob
Guerra, a partner at Guerra,
Kiviat Inc.

"I don't think continuing resolutions
dampen it, it just
delays their implementation,"
he said. "Sooner or later, the
budgets are going to be
approved, whether they go up,
down or sideways."

"I've become callous to continuing
resolutions," said Jim
Russell, vice president of the
public sector at Symantec Corp.
"You have to plan and manage
the different people that are
affected by [continuing resolutions]
vs. the agencies that are
not affected."

Contractors must invest in
the affected agencies and not
abandon them, he said.

"That investment you make
while they're in continuing resolution
will pay dividends when
the continuing resolution is
taken away," Russell said.

Associate Editor Michael Hardy
can be reached at mhardy@1105govinfo.com
.

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