Larry Besterman


History's lessons blaze a path toward growth

For every challenge there are opportunities, but planning should start now

In the last 20 years, the federal contractor community has faced substantial challenges during significant periods of change in the technology landscape.  These challenges have been catalysts for the substantial growth the industry has witnessed over the last two decades.

Though there have been many legislative and federal mandates that directly affected the successes in the federal technology market, in my view there were three major events that led to the exponential growth of the federal technology contracting industry – the “dot com” boom of the 90s, Y2K and 9/11.  These events initiated the emergence of market and technology trends that still drive federal technology decisions today.

The dot com boom of the 1990s ignited the need for federal technology contractors.  As companies tirelessly registered domains and determined how to automate business applications via IP-tools, there was a correlated increase of outsourced work to contractors in the federal government.  Agencies were quick to adopt networking capabilities that allowed them to bring in off-site help to meet the mission and accelerate delivery to their customers and citizens by hiring unprecedented numbers of technology contractors.

As the dot com bubble was beginning to wind down, government agencies and critical private sector partners braced for Y2K, also known as the Millennium Bug.  I remember the ongoing news coverage of people scrambling to save everything as time moved inevitably closer to the anticipated catastrophic crash of all computer systems.  Due to the incredible risk of losing mission-critical systems and information, the government again increased its partnership with technology contractors to brace for the thankfully averted, or some think unfounded, Y2K risk. I personally like to think all of our collected effort averted Y2K chaos.

Shortly after we moved into the 21st Century, the dot com bubble burst, and many of the small startup companies were unable to weather the changes.  As the tech industry faced this setback, the 9/11 terrorist attacks fundamentally changed many aspects of technology in government – most notably the creation of the Homeland Security Department  and  a new  phase of growth in the need for security-cleared technologists at government facilities.

 Due to such significant procedural changes in a very short timeframe, the clearance process was inevitably bogged down with delays and challenges.  This led to intense competition among agencies and federal contracting companies, to hire cleared personnel.  As the competition and demand for cleared individuals increased, so did salaries and the number of employers who needed the clearances to bid and fulfill their contracts.  This dynamic has pushed the greater DC-metro area in particular to have an incredibly competitive market for cleared technology staff.

The dot com boom, Y2K scare and 9/11 all influenced the federal contractor community in ways that were unforeseen.  For individual companies, they all contributed to an unexpected growth in revenue and company size.  On a larger scale, they brought new companies into the business increasing healthy competition and many new jobs. Government agencies also began to grow their own technology staff, which further increased the competition for cleared individuals.

As a result, each of these major events contributed to bubbles in the cost to hire and retain cleared staff – the cost of which is ultimately borne by the taxpayers. 

I believe we are now at a point where industry and the government must take more vigorous action to collaborate and cooperate and look more holistically at managing and planning for future technology requirements to avoid unanticipated increases in future costs. 

Who knows what other major events may be in our future, e.g. fiscal cliff, sequestration, government shutdown over raising the debt ceiling, but whatever they may be, we should be thinking now about how to manage those events in a way that will bring even more expansion to our industry and better service to the federal government and its customers – the American people.

About the Author

Larry Besterman is the president and CEO of TWD & Associates, an Arlington, Va.-based systems integrator.

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