High-Tech 8(a) Companies Face Tougher Government Market.

High-Tech 8(a) Companies Face Tougher Government Market<@VM>8(a) & Small Businesses Top 25 Companies<@VM>How We Got the Numbers<@VM>Voices of Experience

Companies making this year's Washington Technology Top 25 8(a) companies are raking in annual revenue in the tens of millions of dollars, but the competition for government information technology contracts is becoming increasingly fierce.

Consequently, company executives view the 8(a) program as just one step ? albeit an important one ? to achieving success.

"The 8(a) program has been excellent for us," said Frank Islam, president of QSS Group Inc. of Lanham, Md., which holds the No. 1 spot on the list. "But you don't develop the business skills you need if you concentrate only on 8(a) sole-source contracts."

QSS had $91.3 million in federal revenue as a prime contractor to capture the top spot on the 2001 list. Of that revenue, $60.5 million came from 8(a) contracts, according to research conducted for Washington Technology by Federal Sources Inc., McLean, Va., and Eagle Eye Publishers Inc., Fairfax, Va.

The companies on the Top 25 8(a) list are ranked by overall IT prime contracting dollars and not by 8(a) dollars. To qualify for the list, each company must have at least $1 million in 8(a) business and not have graduated before Sept. 1.

Islam's company graduated from the 8(a) program Sept. 9, and is pursuing a two-pronged strategy of hanging on to its 8(a) work while it moves to win more work through full and open competition, he said.

Building viable, independent small businesses is a primary goal of the 8(a) program, which helps small, minority-owned businesses through preferential contracting opportunities. Companies can participate in the program for nine years, but some graduate early when they surpass size and revenue limits.

The Small Business Administration oversees the program, and during fiscal 2000 more than 6,400 companies held certifications as 8(a)s, according to SBA documents.

Several years ago, being in the 8(a) program meant easy contracts and little competition, but changes in procurement rules from laws, such as the Federal Acquisition Streamlining Act of 1994 and the Clinger-Cohen Act of 1996, have put a squeeze on small businesses.

"People say it is a lot tougher than it was 10 years ago," said Tom Caffrey, executive vice president of SMF Systems Corp., San Ramon, Calif. "But you know what? It's a lot tougher everywhere in the IT business." The company, which provides manufacturing as well IT services, is ranked No. 10 with $30.8 million in total IT dollars, of which about $4 million comes from 8(a) contracts.

In the government marketplace, the tougher environment has come in the form of governmentwide acquisition contracts and contract bundling, which is the practice of wrapping together many small contracts into a single, large contract.

 















Top Grads 1999-2001
RankCompanyPrime Contract IT RevenueTotal 8(a) RevenueGraduation Date
1World Wide Technology Inc.$100,543,000$31,146,000Feb. 24, 2001
2EER Systems Inc.$62,032,000$3,672,000Feb. 15, 2000
3NCI Systems Inc.$46,942,000$6,871,000May 22, 1999
4STG Inc.$38,668,000$29,849,000April 17, 2001
5Northern Nef Inc.$29,086,000$3,679,000Feb. 1, 2000
6Research Planning Inc.$28,482,000$15,289,000July 20, 1999
7A&T Systems Inc.$27,587,00010,735,000Sept. 17, 1999
8George G. Sharp Inc.$26,211,000$25,549,000Jan. 24, 2000
9Allied Technology Group Inc.$24,616,000$14,196,000May 14, 2000
10Computer Systems Tech. Inc.$21,416,000$2,826,000Nov. 8, 1999
Source: Federal Sources Inc. and Eagle Eye Publishing Inc.


 

These contracts are almost always won by large systems integrators, which then manage teams of contractors. But small businesses can and do bid on the large governmentwide contracts, which can have scores of winners that then compete with each other for task orders.

QSS, for example, has been selected to compete for task orders on contracts such as the General Services Administration's Millennia Lite, the Transportation Department's Information Technology Omnibus Procurement II deal and Commerce Department's Commerce Information Technology Solutions, which is only for small businesses.

Winning a spot on as many task order contracts as possible is key to success, QSS' Islam said.

And so to compete in this environment, many 8(a) companies have been building marketing and proposal-writing capabilities.

"These vehicles can be very helpful, but you really need to go to your customers and sell your capabilities," said Brij Koolwal, president of Systems Plus Inc., Rockville, Md. The company is ranked No. 22 on the list, with $9.8 million in overall IT dollars, of which $6.5 million comes from 8(a) work.

For firms such as Indus Corp., Vienna, Va. ? No. 18 on the list with $11.9 million in total IT and $6.8 million in 8(a) ? the focus is on what the company does best: database work, geographic information systems and telecommunications.

"We don't position ourselves as the be all and end all," said Shiv Krishnan, Indus president. "We have a clear focus on the specific technologies where we have experience and expertise."

The procurement environment also has increased the competition between 8(a) companies and large businesses. "That has been difficult," Krishnan said. "But it has forced people to learn to compete."

The result has been better 8(a) companies and a better chance of survival after graduation, Islam said. "[But] a lot of 8(a)s don't have the resources or the skills," he said.

Getting on the GSA schedule also is helpful to 8(a) companies, but nearly every company doing business with the government is on the schedule. The task order contracts can be more important than the schedule, because they narrow the field of competitors, Islam said.

"You know who the players are at all times," he said. "You can figure out what their strengths and weaknesses are compared to your strengths and weaknesses."

The change in the procurement environment has raised concerns that small businesses are being unfairly hurt. Of the hundreds of billions the government spends each year, 23 percent is supposed to go to small businesses, a group which includes 8(a)s, veteran-owned businesses, women-owned businesses and businesses located in historically underused business zones, known as HUBZone businesses.

A General Accounting Office report found the percentage of contracts going to small businesses had dropped from 25 percent between fiscal 1993 and fiscal 1997 to 23 percent in 1998 and 1999.

Congress also is scrutinizing practices such as contract bundling. Richard Carter, a spokesman for the House Small Business Committee, said legislation may be proposed following hearings held Sept. 6 looking at Defense Department procurement practices.

"Small businesses just aren't getting enough of the share," he said.

The argument in favor of contract bundling is it is easier for an agency to manage one prime contractor rather than a dozen or so, but the committee, chaired by Rep. Don Manzullo, R-Ill., isn't convinced, Carter said.

"Our belief is that small businesses can be more efficient and more cost effective," he said.

Islam agreed. Bundled contracts "are not flexible, there is a lack of responsibility, and they are not cost effective," he said.

Even with congressional scrutiny, some observers see little easing of the squeeze on small businesses.

"There is a slow contraction of the marketplace for small businesses," said John Jensen, a partner in the government contracts practice at ShawPitman, a McLean, Va., law firm. "It has been going on for several years, and there doesn't seem to be an end in sight."

Part of the problem is the number of government procurement officials is dropping. "The consequence is that it is necessary to award fewer contracts for larger volumes," he said.

The large, bundled contracts have given rise to a concept called direct pay, where agencies pay small-business subcontractors directly rather than through the prime contractor, said Olga Grkavac, executive vice president of the trade group Information Technology Association of America in Arlington, Va.

The concept is part of the $6.9 billion Navy-Marine Corps Intranet contract won by Electronic Data Systems Corp. of Plano, Texas. But wider adoption is problematic, because prime contractors fear a loss of control of projects if they are not the one paying their subcontractors, she said.

Another positive for small businesses is that SBA has become more of an advocate and has been helping agencies set small-business goals, Jensen said.

For example, GSA, which worked closely with SBA, exceeded the 23 percent mandate, said E. Tracy Lewis, deputy associate administrator in GSA's Office of Enterprise Development. His office is responsible for small-business programs at GSA.

During fiscal 2000, GSA purchased more than $11 billion in goods and services, of which 40 percent went to small businesses, he said.

Like many of the small-business owners, Lewis said he believes the marketplace has changed, but not necessarily for the worse. "Small businesses are more sophisticated today," he said. "For those who are prepared, the opportunities are greater than ever."

Part of that preparation is to use the 8(a) program, but not overly rely on it, executives said.

"You can't build your business just as an 8(a)," said Systems Plus' Koolwal. "That's the wrong way to build a business."

The program can be a good entry to new customers, but performance is the key, SMF's Caffrey said.

The attitude has to be: "Give me a try, if I don't perform, don't use me again," he said.1. QSS Group
Lanham, Md.
http://www.qssgroupinc.com
Prime Contract IT Revenue:
$91,270,000
8(a) Revenue:$60,479,000
President: Frank Islam
Founded: 1994
Employees: 800
Graduation: Sept. 9, 2001
Business: A provider of enterprise network management, scientific mission, instrumentation and aerospace engineering support, and financial management and business systems development and maintenance.

2. RS Information Systems Inc.
McLean, Va.
http://www.rsis.com
Prime Contract IT Revenue:
$76,265,000
8(a) Revenue: $16,935,000
President and CEO: Rodney P. Hunt
Founded: 1992
Employees: 1,000
Graduation: Jan. 27, 2003
Business: A provider of advanced technical and business solutions in information technology, science, engineering and management consulting.

3. Information Systems Support Inc.
Bethesda, Md.
http://www.iss-md.com
Prime Contract IT Revenue:
$66,056,000
8(a) Revenue: 13,901,000
President and CEO: Young Y. Lee
Founded: 1988
Employees: More than 800
Graduation: April 5, 2002
Business: A provider of information technology and computer services.

4. Premier Technology Group Inc.
Springfield, Va.
http://www.ptginc.net
Prime Contract IT Revenue:
$56,731,000
8(a) Revenue: $2,346,000
CEO: Rajiv Bajwa
Founded: 1990
Employees: 350
Graduation: Jan. 12, 2004
Business: A provider of professional services support in information technology, logistics systems engineering, training technology, program management, and intelligence analysis and investigative services.

5. Force 3 Inc.
Crofton, Md.
http://www.force3.com

Prime Contract IT Revenue:
$44,952,000
8(a) Revenue: $1,732,000
CEO: Rocky Cintron
Founded: 1991
Employees: 140
Graduation: Sept. 7, 2003
Business: Networking solutions including custom network design, hardware procurement, system installation, remote network management and project management.

6. ITS Services Inc.
Springfield, Va.
http://www.itssinc.com
Prime Contract IT Revenue:
$41,244,000
8(a) Revenue: $7,204,000
President: Angela Mason
Founded: 1991
Employees: 400
Graduation: Jan. 27, 2003
Business: A professional services company providing information technology solutions and managed services.

7. Dataline Inc.
Norfolk, Va.
http://www.data-line.com
Prime Contract IT Revenue:
$36,088,000
8(a) Revenue: $15,993,000
President: Denise Robinson
Founded: 1990
Employees: 260
Graduation: May 20, 2003
Business: The firm designs and implements computing infrastructure that provides the most highly available resources to support mission-critical applications.

8. High Technology Solutions Inc.
San Diego
http://www.htshq.com
Prime Contract IT Revenue:
$33,735,000
8(a) Revenue: $15,375,000
Chairman and CEO: Allan J. Camaisa
Founded: 1990
Employees: 500
Graduation: Sept. 17, 2001
Business: A provider of information technology and technical services to the federal government, various state and local governments, and private industry customers.

9. Computer & Hi-Tech Management Inc.
Virginia Beach, Va.
http://www.chm.net
Prime Contract IT Revenue:
$33,640,000
8(a) Revenue: $18,092,000
President and CEO: James Cheng
Founded: 1985
Employees: 475
Graduation: March 31, 2004
Business: A diversified computer services firm.

10. SMF Systems Corp.
San Ramon, Calif.
http://www.smfsystems.com
Prime Contract IT Revenue:
$30,839,000
8(a) Revenue: $3,963,000
President: Ruby L. Caffrey
Founded: 1982
Employees: More than 150
Graduation: June 13, 2003
Business: A provider of technical solutions, from equipment sales and service to comprehensive development and support.

11. KKP Corp.
Nashua, N.H.
http://www.kkpcorp.com

Prime Contract IT Revenue:
$23,542,000
8(a) Revenue: $9,039,000
President: Chutachai (Gary) Khanijao
Founded: Early 1990s
Employees: Unavailable
Graduation: Aug. 7, 2006
Business: Networking, training, systems engineering and management consulting services.

12. Madison Research Corp.
Huntsville, Ala.
http://www.madisonresearch.com
Prime Contract IT Revenue:
$22,054,000
8(a) Revenue: $17,875,000
President and CEO: John Stallworth
Founded: 1986
Employees: 500
Graduation: Nov. 12, 2001
Business: A provider of engineering and information technology services to government and commercial clients.

13. Native American Systems Inc.
Englewood, Colo.
http://www.nasfed.com
Prime Contract IT Revenue:
$21,253,000
8(a) Revenue: $2,580,000
President and Chairman: Robert Rutherford
Founded: 1993
Employees: 64
Graduation: May 23, 2004
Business: A data and voice systems integrator and value-added reseller specializing in local and wide area networking for campus and enterprise environments.

14. Choctaw Management/Services Enterprise
Durant, Okla.
http://www.cmsesatx.com
Prime Contract IT Revenue:
$18,499,000
8(a) Revenue: $16,668,000
Managing officer: Matthew Novick
Founded: 1997
Employees: 1,100
Graduation: March 14, 2006
Business: A provider of staffing services, management of records and other administrative functions.

15. JIL Information Systems Inc.
Vienna, Va.
http://www.jil.com
Prime Contract IT Revenue:
$14,165,000
8(a) Revenue: $4,750,000
CEO: J. Calvin Glover
Founded: 1985
Employees: 250
Graduation: June 7, 2002
Business: A provider of products and services for training, information systems, Internet services, business and engineering services for commercial, education and government customers.

16. Jardon & Howard Technologies Inc.
Winter Park, Fla.
http://www.jht.com
Prime Contract IT Revenue:
$12,501,000
8(a) Revenue: $6,965,000
CEO: James E. Jardon II
Founded: 1990
Employees: 573
Graduation: Feb. 23, 2005
Business: Design and development of custom CD-ROMs, video productions and Web-based products for training and marketing purposes.

17. AHTNA Development Corp.
Anchorage, Alaska
http://www.ahtnadevelopment.com
Prime Contract IT Revenue:
$12,111,000
8(a) Revenue: $12,111,000
CEO: Herb Smelcer
Founded: 1975
Employees: 160
Graduation: Aug. 24, 2003
Business: Operations and maintenance

18. Indus Corp.
Vienna, Va.
http://www.induscorp.com
Prime Contract IT Revenue:
$11,852,000
8(a) Revenue: $6,817,000
President and CEO: Shiv Krishnan
Founded: 1993
Employees: 200
Graduation: April 29, 2003
Business: A company that Web-enables clients' information resources and provides e-government solutions.

19. Noesis Inc.
Manassas, Va.
http://www.noesis-inc.com
Prime Contract IT Revenue:
$11,384,000
8(a) Revenue: $6,686,000

CEO: Richard J. Martin
Founded: 1994
Employees: 120
Graduation: March 26, 2005
Business: A small business assisting customers in government, industry and academia in creating solutions to manage high-technology programs.

20. Bay State Computers Inc.
Lanham, Md.
http://www.bayst.com
Prime Contract IT Revenue:
$11,052,000
8(a) Revenue: $7,053,000
President: Robert Hill
Founded: 1988
Employees: 50
Graduation: July 19, 2002
Business: A provider of computer and information technology services.

21. Karta Technologies Inc.
San Antonio
http://www.karta.com
Prime Contract IT Revenue:
$10,620,000
8(a) Revenue: $4,063,000
President: G.P. Singh
Founded: 1985
Employees: 218
Graduation: June 28, 2002
Business: A high-technology systems engineering, and research and development company.

22. Systems Plus Inc.
Rockville, Md.
http://www.sysplus.com
Prime Contract IT Revenue:
$9,811,000
8(a) Revenue: $6,475,000
President and CEO: Brij Koolwal
Founded: 1991
Employees: 135
Graduation: March 20, 2002
Business: A provider of electronic government, ERP implementations, network management, information assurance and emerging technologies such as e-mail management.

23. Logistics, Engineering & Environmental Support Services Inc.
Huntsville, Ala.
http://www.lesco-logistics.com
Prime Contract IT Revenue:
$9,394,000
8(a) Revenue: $3,802,000
CEO: Anita Williams
Founded: 1992
Employees: 397
Graduation: Jan. 12, 2004
Business: A provider of systems and design capabilities.

24. Avila Government Services Inc.
Alexandria, Va.
http://www.avilainc.com
Prime Contract IT Revenue:
$9,093,000
8(a) Revenue: $8,998,000
CEO: Suzanne M. Burke
Founded: 1995
Employees: 20
Graduation: Jan. 24, 2006
Business: A firm specializing in military facilities and infrastructure planning.

25. Altech Services Inc.
Midwest City, Okla.
http://www.altechsvcs.com
Prime Contract IT Revenue:
$9,084,000
8(a) Revenue: $5,447,000
President: Daniel R. Prado
Founded: 1992
Employees: 75
Graduation: Dec. 16, 2007
Business: A provider of professional services in engineering, manufacturing and computer-related technologies to government and commercial clients.The Top 25 8(a) list is compiled using data from the Federal Procurement Data Center. The market research firms Federal Sources Inc., McLean, Va., and Eagle Eye Publishers Inc., Fairfax, Va., analyzed the data using 66 product service codes that represent information technology, systems integration and telecommunications work.

Agencies report contract obligations worth more than $25,000 to prime contractors. FSI and Eagle Eye used the product service codes to analyze this data and rank the companies.

The companies were ranked according to their total IT prime contracting dollars and not just 8(a) dollars. Washington Technology and the analysts at FSI and Eagle Eye believe this is the best way to judge the progress and success of 8(a) companies, because the goal of the program is to help create companies that remain viable after graduating from the program.

The procurement center only collects reports on spending with prime contractors, so the list does not reflect subcontracting revenue. Also, spending by intelligence agencies, the U.S. Postal Service, congressional agencies and judicial branch agencies are not reported to the center, so the list does not reflect those expenditures.Advice from executives who have built successful 8(a) companies:

• Stick to specific technologies.

• Don't market your company strictly as an 8(a).

• Use the 8(a) program to gain entry to a new customer.

• After winning work, concentrate on performance and customer
satisfaction.

• Develop close relationships with core customers and larger business partners.

• Build marketing and proposal writing infrastructures.

• Get on as many governmentwide task order contracts as possible.

• Focus on employee satisfaction.

Reader Comments

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

What is your e-mail address?

My e-mail address is:

Do you have a password?

Forgot your password? Click here
close

Trending

  • Dive into our Contract Award database

    In an exclusive for WT Insider members, we are collecting all of the contract awards we cover into a database that you can sort by contractor, agency, value and other parameters. You can also download it into a spreadsheet. Our databases track awards back to 2013. Read More

  • Navigating the trends and issues of 2016 Nick Wakeman

    In our latest WT Insider Report, we pull together our best advice, insights and reporting on the trends and issues that will shape the market in 2016 and beyond. Read More

contracts DB

Washington Technology Daily

Sign up for our newsletter.

Terms and Privacy Policy consent

I agree to this site's Privacy Policy.