The report was a detailed investigation into the government’s IT services spending patterns between 1997 and 2001, during which time its expenditure increased from $9bn to $17.1bn. It showed that a big chunk of this amount fell into the hands of a small group of large suppliers.

The biggest beneficiary was Fairfax, Virginia-based American Management Systems Inc, which accounted for 9.7% of Federal IT services deals awarded in 2001 by contract value, followed by Lockheed Martin Services (6.7%), Science Applications International Corp (5.8%), and Computer Sciences Corp (3.7%). Interestingly, IBM Global Services, the largest IT services provider in the US, did not make the top 10 list, and main rival Electronic Data Systems Corp was ranked seventh with a 2.5% share.

Some 14% of Federal IT services spending went to small businesses (average annual revenue of less than $21m over last three years), 21% to medium-sized businesses (average annual revenue of less than $500m over last three years), and 62% to large businesses.

The Department of Defense remained the largest federal investor in IT services throughout the five-year period, and purchased about $5bn of IT services projects in 2001. But the fastest-growing spender was the General Services Administration whose spending increased from $405m in 1997 to $4.3bn in 2001. The GSA is the body that negotiates and oversees contracts with multiple vendors on behalf of government agencies including, increasingly, the Department of Defense. The GSA accounted for 28% of federal IT services spending in 2001, compared to 7% in 1997.

There are signs that the government is keen to encourage smaller businesses to pitch for IT services projects. The GSA currently operates a contract vehicle called Millenia Lite, first awarded in 2000, under which small and medium-sized vendors can bid for some $20bn of business. In January, RS Information Systems Inc, a McLean, Virginia-based mid-size services contractor beat off competition from EDS, DynCorp and Verizon Communications to win a five-year, $405m contract with the US Department of Energy.

Source: Computerwire