Report: Future bright for 8(a) IT companies

The federal government has increased its reliance on small, disadvantaged businesses for information technology goods and services during the past four years, according to the market research firm Input Inc.

As a percentage of total IT expenditures, spending by the federal government with 8(a) contractors has risen from 2.3 percent of spending in fiscal 1998 to 4.8 percent in fiscal 2001, the Chantilly, Va.-based firm reported in a study released Aug. 29.

The findings are good news for smaller companies that may have felt as if changing federal IT buying patterns were giving larger companies a competitive advantage.

The spending analysis includes contracts that were won by 8(a) companies in full and open competitions as well as those that were specifically set aside for 8(a) contractors.

Erik TerHaar, manager of Input's federal-sector database services, said changes in federal buying patterns over the last several years have led many to believe that larger IT companies have been given a competitive advantage over smaller companies.

"This analysis suggests, at least with respect to 8(a) certified companies, that this is not the case," he said. "As a group, 8(a) certified firms have faired well in this market over the last several years."

Some agencies have been much more effective than others in spending their IT dollars with 8(a) companies, the study noted. The departments of Agriculture, Commerce, Interior, Labor and Veterans Affairs spent the highest percentage of IT dollars with 8(a) companies, the study said.

Conversely, the departments of Defense, Education, Housing and Urban Development, the Environmental Protection Agency and the National Aeronautics and Space Administration spent the least with 8(a) companies as a percentage of their total IT spending.

TerHaar said that smaller departments give a larger percentage of their prime contracts to 8(a) companies because their contracts tend to be smaller in scale. As a result, these departments find it easier to package their contracts for 8(a) companies, he said.

"What is important to note here is that the federal government appears to be making contract opportunities for smaller companies increasingly plentiful, which bodes well for smaller companies entering the market," he said.

About the Author

William Welsh is a freelance writer covering IT and defense technology.

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