Integrator, 8(a) Partnerships Prosper Under Reform

Integrator, 8(a) Partnerships Prosper Under Reform

By Nick Wakeman

Despite the political controversy swirling around the 8(a) program and changes in procurement law, large systems integrators still see small businesses playing vital roles as partners.

Government Spending on 8(a)s

Fiscal 1993 - $5.1 billion
Fiscal 1994 - $5.3 billion
Fiscal 1995 - $6.4 billion
Fiscal 1996* - $6.5 billion
* 1996 figures are not finalized.
Source: Small Business Administration.
Figures represent spending on all 8(a)s,
not just infotech companies.
"There was all this hubbub around the program but we haven't seen anything change," said Mark Matheson, manager of small business development programs for Science Applications International Corp., San Diego.

Opportunities abound for 8(a)s that can fill a niche for large integrators such as SAIC, company officials said.

"A lot of 8(a)s have specialized expertise that is difficult for larger firms to bring to bear, especially when you are talking systems integration," said Matt Oleksiak, director of the business development group for KPMG Peat Marwick, Washington.

Some of the procurement changes that came out of the Clinger-Cohen Act, which lessened the General Services Administration's oversight of the procurement process, will benefit 8(a)s, executives said.

"The atmosphere that has been created is more conducive for large integrators and 8(a)s to become partners," said Bill Smoot, small business liaison officer for Electronic Data Systems Corp., Plano, Texas.

William Davis, president of Pulsar Data Systems, an 8(a) in Lanham, Md., said more larger firms are approaching his company for work because it can now put services on the GSA schedule.

"We can offer everything from systems engineering to programming to high-end consulting" on the schedule, he said.

Government oversight that dictated more strictly the use of 8(a)s may have decreased, Davis said, but there is still support for small businesses in the government.

"I think the changes will help us," he said. "But some 8(a)s will be affected negatively because they don't have much to bring to the table."

Humberto Pujals, CEO of Government Micro Resources, an 8(a) in Manassas, Va., said changes such as lifting the maximum purchase on the GSA schedule will increase pressure on small companies. The days of simply providing commodity products with no value added are over, he said. Many 8(a)s will suffer, he noted.

"I really believe if you don't enter different markets with cutting-edge technologies, you are doomed," he said. "It is all about differentiating yourself .... How am I different from the other guy?"

Larger firms are looking for partners that can bring niche expertise and something a little extra such as insight to a particular agency, officials said.

The ability to look to the longer term is a plus, said Kim Lockhart, small business administrator for Booz-Allen & Hamilton, McLean, Va.

"The key seems to be building relationships," she said. "If our program staff finds someone they like, they will keep working with them .... It becomes a trust sort of thing."

Some company officials are still waiting for the fallout from the sweeping procurement reform legislation enacted by Congress last year. "I think the shifts will be incremental," Oleksiak said. "But I don't know what the ultimate effect will be."

Criticism of the 8(a) program is misplaced, said Gary Hobbs, president of external information systems and technical services for Northrop Grumman's Data Systems & Services Division in Herndon, Va.

"If you look at it overall, the government has gotten a lot of value out of 8(a) companies," he said.

However, the program has come under fire from lobbying groups and Republican lawmakers who say the program unfairly benefits certain affluent minority-owned businesses.

Traits of successful 8(a)s in the past will continue to help them as changes occur, Hobbs said. "You have to sell your expertise and you have to perform," he added. "And to some degree you have to try harder."

A key to attracting and keeping a large integrator as a partner is learning the customer base, Smoot said.

"Those that tend to be the most successful look at their own customers and the customers that the primes go after," he said.

Kim Lockhart, a small business administrator for Booz-Allen & Hamilton, says the key for 8(a) companies "seems to be building relationships."

Regardless of procurement reform, Mark Matheson of SAIC says he hasn't seen any change in the way his company deals with 8(a)s.
Northrop often exceeds the minimum requirements for 8(a)s on its federal contracts, Hobbs said. "Whether 8(a)s continue [as a program], I intend to use small businesses," he said. "I am going to seek them as partners."

Being relatively small - hundreds of employees rather than the thousands large integrators have - is often a virtue. "They lack the bureaucracy [of large companies]," Lockhart noted.

No large integrators are seeing less support for small businesses from Congress or any of the agencies.

"The general intent of small business programs [won't] go away," Matheson said. "If anything, it [will] increase, but what it is called and how it is handled might change."

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