8(a) vendors' share of the IT pie is shrinking

Federal agencies are buying fewer systems products and services these days from
minority-owned and small businesses in the 8(a) program, according to Federal Procurement
Data Center figures.

Companies in the Small Business Administration's 8(a) program won about $2.1 billion
worth of prime systems contracts during fiscal 1995, according to FPDC figures reported by
Eagle Eye Publishers Inc. of Vienna, Va.

In fiscal 1997, the total fell to $1.8 billion, Eagle Eye said. Other analysts have
also noticed the trend.

"These figures represent the first decreases since we started tracking the 8(a)
program 10 years ago," said Bob Dornan, senior vice president of Federal Sources Inc.
of McLean, Va.

Dornan said 8(a) vendors do not appear to be increasing their share of subcontracting
work. Defense Department agencies recently began considering past subcontracting history
in awarding large contracts to small businesses.

Dornan attributed the decline to procurement reform. He said the FPDC figures represent
not only 8(a) set-aside business contracted through SBA but also buys of more than $25,000
from the General Services Administration Multiple-Award Schedule.

FPDC figures can vary widely, depending on the parameters and standard industry codes
used in determining a company's qualifications as an information technology vendor, the
industry analysts said.

In fiscal 1996, there were 834 8(a) IT vendors. They received 10 percent of all federal
IT contracts, which totaled $3.94 billion, according to Input of Vienna, Va.

Many 8(a) companies are scrambling to promote their GSA schedule contracts, he said,
and there are a couple of hundred companies working to set up schedule contracts.

The 8(a) program "is not going to disappear, but it's not in a growth mode,"
said consultant Mark Amtower, president of Amtower and Co. of Ashton, Md.

Like other vendors, 8(a) companies need to determine new ways of making money by
selling on the open market and boosting IMPAC credit card sales, Amtower said.

Some civilian agencies, including NASA and the Education, Health and Human Services,
and Transportation departments, have supported small-business vendors more than other
agencies, Amtower said.

He, too, suggested subcontracts as a possible inroad for 8(a) companies. "If you
have an area of expertise, they [agencies] like to see you work as a subcontractor,"
Amtower said.

Most 8(a) vendors stay in the SBA program for nine years, and over time the hot sellers

For example, three years ago the leading 8(a) vendors included Presidio Corp., Pulsar
Data Systems Inc. and Sylvest Management Systems Corp., all of Lanham, Md.; Government
Micro Resources Inc. of Manassas, Va.; and International Data Products Corp. of
Gaithersburg, Md.

Today's leading 8(a)s include Data Procurement Corp. of Rockville, Md.; Force 3 Inc. of
Crofton, Md.; Intelligent Decisions Inc. of Chantilly, Va.; and Worldwide Technology Inc.
of St. Louis.


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