ITES renews small business rules questions

When the Army chose GTSI Corp. and World Wide Technology Inc. as its small-business awardees under the Information Technology Solutions Enterprise 2 Hardware contract, it reinforced the concerns of some small business advocates about the fairness of the system.

On the surface, GTSI and World Wide do not appear to be particularly small. World Wide, a systems integrator based in St. Louis, Mo., recently announced that its 2006 revenues topped $2 billion. Chantilly, Va.-based GTSI's latest annual report shows that its annual sales revenue ranged from $783 million to $1.1 billion in fiscal years 2001 through 2005.

Contracts must be assigned a North American Industry Classification System code to determine the definition of small business for the particular contract, and the Army picked 517110 ? wired telecommunications carriers ? for ITES-2H. That classification defines small businesses as those having fewer than 1,500 employees, and both GTSI and World Wide qualify under the definition.

However, some observers are scratching their heads over how that classification fits either the contract or the companies.

"Did I miss something in the contract itself?" said Highland, Md..-based consultant Mark Amtower. "I saw the word 'communication' mentioned once, communication devices. I did not see anything about carriers, or the necessity for a carrier. So why this NAICS? Because it made it easier for them to award a contract to who they awarded it to."

The choice of 517110 "doesn't make a lot of sense," said Ray Bjorklund, senior vice president and chief knowledge officer at Federal Sources Inc, McLean, Va. "There are other NAICS [categories] which on the surface might seem more appropriate."

ITES-2H, which provides hardware as a complement to ITES-2S, the software contract, is primarily for the Army to procure IT hardware, including servers, workstations, networked personal computers and printers. Joann Underwood, a contracting officer at the Information Technology, E-Commerce, and Commercial Contracting Center, or ITEC 4, said the Army chose the wired telecommunications carriers category because the overall goal of the contract is to provide networked solutions to transfer data.

"The (Federal Acquisition Regulation) provides latitude to the contracting officer," she said. "When there's a variety, you pick the one that most closely fits the work."

The definition of wired telecommunications carriers includes companies providing non-vocal communications "using their own facilities." A GTSI spokesman said that the company meets that definition by providing network technology and related services. World Wide declined to comment.