MARKET OUTLOOK

Analyst: Large vendors dominate HHS IT landscape

Look no further than the Health and Human Services Department for evidence of the benefits of scale and reach on the customer and macro levels in the federal government IT market.

HHS’ top 10 IT vendors in fact made up for 40.2 percent of total revenue capture over the past four federal fiscal years, Govini Director of Analytics and Professional Services Hummer said in a presentation to industry executives Wednesday.

Speaking at Washington Technology’s recent HHS Industry Day event in Washington, D.C., Hummer said many vendors in that group are able to leverage their positions at HHS and its Centers for Medicare and Medicaid Services in particular to win similar work at other agencies.

An accompanying presentation for Hummer’s remarks shows evidence that large IT vendors can extend their reach from HHS and grow scale across other agencies.

HHS’ top 10 IT vendors represented 40.2 percent of revenue capture between federal fiscal years 2013 and 2017, according to the slides. And CMS’ top five vendors account for 26 percent of the total HHS IT market.

Hummer said many of the large vendors also “face few (other) bids on the work they won. General Dynamics and Accenture are among those examples that win work against little competition, he said.

“The top ones have access to a broad portfolio of contract vehicles (and are) finding ways to win work at other customers,” Hummer added.

One key item for industry to watch is how HHS is pushing the interoperability concept from a technical standpoint, Hummer said. And aligned with that are contracting mechanisms from HHS to closely align how highly-technical services are delivered across the agency.

“Part of it is not only a technical interoperability but also a customer interoperability, industry interoperability and procurement interoperability,” Hummer said. “All of these things will align as HHS transitions.”

A second item on the horizon, Hummer said, is how committed HHS is to using CMS’ $25 billion “SPARC” IT services contracting vehicle across the department.

Here again is where the larger businesses on SPARC have positioned themselves to win additional work through past performance, Hummer said. General Dynamics, CSRA and DXC have captured 49.6 percent of historical revenue among large business awardees for work being transitioned to SPARC, the Govini presentation says.

And SPARC awardees have won $26.8 billion over fiscal 2013-17 for work being shifted to that vehicle, according to the presentation slides.

About the Author

Ross Wilkers is a senior staff writer for Washington Technology. He can be reached at rwilkers@washingtontechnology.com. Follow him on Twitter: @rosswilkers. Also find and connect with him on LinkedIn.

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