FedSources: IT contractors to benefit from stimulus

Business opportunities for federal contractors from the $787 billion economic stimulus package are likely to be much greater than the $62 billion in directly accessible federal spending for contractors in the law, according to market research firm FedSources Inc.

That includes a sizable share of opportunities for professional services and information technology contracting, although the package on the whole is weighted toward “blue-collar” contracting, Ray Bjorklund, senior vice president and chief knowledge officer at FedSources, said at a conference today at the Hilton McLean Tysons Corner in Virginia.

Only about $10 billion in the American Recovery and Reinvestment Act is addressable by traditional IT contractors, he added. That means the contractors will be able to bid for those contracts directly from federal agencies.

But health IT, broadband, smart electric grids and other IT-related programs in the stimulus are likely to have a substantial positive economic "ripple effect" on IT companies and contractors, Bjorklund said.

While the stimulus contains $19 billion for health IT and $7 billion for broadband development, that money is primarily for grants and not directly available to federal contractors. However, as the stimulus grants flow to doctors and hospitals, state and local governments, and other entities, the recipients will, in turn, spend much of the grant money on IT, causing the ripple effect.

Overall, the stimulus package presents a surge in federal spending that will accelerate spending on many existing federal programs, restore spending on several domestic priorities that had been slated for cuts, and provide new opportunities for tracking and oversight, Bjorklund said.

While IT and professional services contracting present a relatively small portion of the stimulus, the additional funding will go far in restoring equilibrium to what was recently seen as a declining market, he said.

“It was going to be a somewhat grim year with double-digit declines, but we are now seeing some course correction,” Bjorklund said.

New opportunities could involve as much as $5 billion in risk-management consulting, IT and other professional services to help federal agencies distribute, report, analyze and track the stimulus spending, Bjorklund added.

“This is a new era of oversight,” Bjorklund said. “Risk management is a great opportunity and I see a cottage industry developing to help agencies track these dollars.”

About the Author

Alice Lipowicz is a staff writer covering government 2.0, homeland security and other IT policies for Federal Computer Week.

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