A looming federal workforce shortage and pressure from the White House and Congress to move government business online are creating the market that will give rise to the next hot federal contractors.
A looming federal workforce shortage and pressure from the White House and
Congress to move government business online are creating the market that
will give rise to the next hot federal contractors.
Although a handful of large manufacturing, software and service companies
still dominate the federal information technology market, the constantly
evolving nature of the field and incentives for innovation ensure that
each year new businesses will emerge as the important ones to watch. What
follows is a list of companies that promise to become significant players
in the federal market as identified by key integrators, resellers and
knowledgeable federal IT industry experts.If there is a common thread in this years list, it is that these companies
offer technology and services to help agencies move their operations online
and cope with the knowledge gap that will be created by the mass exodus
of retiring federal employees.
"E-government, after being really slow, now seems poised for some movement,"
said Olga Grkavac, executive vice president of the Information Technology
Association of Americas Enterprise Solutions Division. "With the elections
and the new administration, its just going to pop. The new administration,
whichever one it is, is going to want more online services. Theyre going
to be appalled at what isnt being done electronically."
E-government, of course, is much more than setting up a stand-alone
Web site to allow citizens to pay taxes. The ultimate objective is to create
an end-to-end electronic system to accept payments and federal forms, and
have those transactions automatically flow into back-end legacy systems
without any intervention from agency employees.
The old stovepiped agency systems are hidden from the public and even
from other government agencies. The next order of business is for computers
supporting e-government to be turned inside out so that they face constituents
and other agencies. Such systems will create more opportunities for sensitive
data to be exposed to the outside world, which will create markets for new
IT security products.
Web sites are just one component of the technology needed to support
e-government. New applications must tie together supporting databases and
offer a platform for electronic services. Like the call centers that have
cropped up to answer citizen inquiries in the paper-based world, "virtual
customer service" is going to become a big priority for government agencies,
At this point, federal IT experts say, its too early to make predictions
about which companies will corner the burgeoning market.
"Its risky because its really still the Wild West," Grkavac said.
"Some of the agencies are looking to do it themselves. Its not clear whos
going to make money on it."
Nevertheless, e-government possibilities are luring many companies eager
to build on their commercial successes. For example, BroadVision Inc., a
company that offers an e-commerce software platform, is building a 25,000-square-foot
government sales office in McLean, Va., and beefing up its sales force there.
The company, which is tracking 40 federal opportunities, has already snagged
two high-profile projects. The U.S. Postal Service is using BroadVisions
platform for its usps.com site, and the General Services Administration
is using BroadVision to power its GSA Advantage online ordering system.
Dennis Drinkard, business development manager for BroadVisions federal
division, said federal agencies are drawn to the companys platform because
of its proven scalability for customers such as Sears, Roebuck & Co.
and The Home Depot Inc. Also, the softwares personalization capabilities
allow users to customize a site based on their preferences and potential
interests. For example, the Postal Service can present one set of options
to small businesses that are interested in buying postage and another to
USPS employees wanting to check on benefi
Joseph Kampf, president and
chief executive officer of Anteon Corp., which provides innovative technology
solutions to clients worldwide, said BroadVisions platform is unique because
it spans various data sources to collect all the information and share it
with multiple constituent groups via one portal.
BroadVision has finalized partnerships with PricewaterhouseCoopers,
KPMG International and Computer Sciences Corp. to target the federal market.
Knowledge management is quickly moving to the forefront of many agency
IT agendas. Those that have already transitioned paper documents and information
sources to the World Wide Web are finding they need knowledge management
tools to locate and link that information.
For example, the CIA and other intelligence agencies want to use knowledge
management to improve profiling and to provide agents with comprehensive
information, said French Caldwell, research director at the Gartner Group
In addition, knowledge management will be essential to helping agencies
survive the potentially crippling effects of the dwindling federal workforce,
he said. Having computers search for and combine needed information, instead
of relying on employees for that task, will help ease the burden of a labor
"Its pretty much on the radar screen of all the agencies," Caldwell
said. "We are really on the edge of this workforce crisis in the federal
Approximately 40 percent of all agencies have a chief knowledge officer
or equivalent position in place to handle knowledge management concerns.
Arthur Andersen is poised to take advantage of this market. The company
is moving aggressively to tap both the e-government and workforce applications
of knowledge management, Caldwell said, and has finalized an agreement to
work with govWorks Inc. to provide connectivity to agencies that want to
support transactions via govWorks portals. Arthur Andersen is working
with the Health Care Financing Administration and the Department of Housing
and Urban Development to develop the knowledge base for Web applications
that will eventually be offered via the Internet.
"Were creating a Web-enabled database capability so that you will be
able to access and interact with your [Medicare] client information through
the Web," said Ira Goldstein, Arthur Andersens worldwide director for government
services. "When Im ready for Medicare, hopefully I can register and get
my information from the Arthur Andersen knowledge base."
Putting the technology in place along with the databases that have
the requisite supporting information is just the first step. Once a Web
site is up, agencies must be ready to handle citizen inquiries about online
Mark Struckman, director of e-government programs at the Center for
Digital Government in Folsom, Calif., said customer relationship management
(CRM) technology is going to be a big area of spending for the federal government
during the next 18 months.
"You could set up a single call center to handle all the calls that
come in because the data is right there in the CRM system," Struckman said.
"We could have one place where all questions are answered."
Siebel Systems Inc. has "made the most noise" in the government CRM
market because it has set up a dedicated government practice, Struckman
said. In January, Siebel also announced a partnership with American Management
Systems Inc. to target the government market.
Anteons Kampf predicted that Siebel will extend its successful track
record in commercial CRM to the government market.
Siebels ePublic Sector product is a call center and customer service
solution designed to integrate all critical customer service functions,
including planning, assessment and program execution. The product can detail
and track citizen and other constituent profiles and problems and automatically
assign the most qualified agent to handle requests. It also features built-in
Kana Communications Inc. is also making a play for the federal CRM market.
With SRA International Inc., the company has been meeting with the Internal
Revenue Service and the Defense Department, said Michael Fox, vice president
and director of corporate development at SRA.
Because agencies are inundated with e-mail, they are searching for a
more effective response to such inquiries. Kana offers automatic routing
and automatic response to agencies e-mail messages, which saves employees
from repeatedly performing mundane tasks. For example, Fox said, if a potential
recruit visiting a Navy Web site has a routine question, he or she can send
an e-mail message to the recruiting office and the system will automatically
Essentially, Kana moves data from traditional call centers to the Web,
explained David Fowler, the companys senior vice president of worldwide
marketing. This enables organizations to learn about customers and offer
them useful information without the customers having to ask for it. For
example, a citizen could request a tax form by interacting with a "virtual
agent" on the IRS Web site. The following year, the site could automatically
send the same form to the user, along with a reminder about deadlines.
"You take something like Social Security, for example," Fowler said.
"I should be able to go online and see what my benefits will be when I retire.
[Kana technology] takes the intelligence of the agents and puts it on the
Although e-government is often viewed in terms of service to citizens,
it also has significant implications for internal agency operations. Many
agencies are eyeing online procurement technology as a way to lower the
costs of goods and services and to streamline how they conduct business.
One company that industry experts and agencies point to is FedBid.com, an
online reverse auction firm geared toward federal government buyers.
FedBid allows government credit card holders to register online to purchase
IT products. Buyers detail requirements such as price, past performance
records or other procurement details such as a desire to buy from a small
or minority-owned business. Vendors nationwide compete for the sale, bidding
their prices down to win.
"We also look for other buyers, then allow you to pool to create volume
and then send the requests to vendors," said Phillip Fuster, president and
CEO of FedBid.com. "This is instant feedback with real-time pricing, real-time
feature sets. Whoever has the best bid in the end wins."
FedBid has 15,000 federal buyers registered to use the system, which
in June closed its first auction with 34 bidders for a scanner. The system
also provides buyers with detailed records of credit card purchases that
can be automatically fed into agency accounting systems. FedBid estimates
it will have about 25,000 federal buyers and 400 vendors registered by the
end of this year.
Network security, now safely out of the shadow of the Year 2000 problem,
is likely to be high on most federal chief information officers agendas
for some time to come. Two companies that experts believe will attract a
lot of agency attention are smart-card vendor Spyrus and @stake Inc., a
newly established professional services group.
Al Jackson, senior vice president of business development at BTG Inc.,
an information systems and technical services firm, said Spyrus Rosetta
smart card earned it one of the first certifications under the governments
Federal Information Processing Standard 140-1. That certification is required
when agencies buy products that encrypt data, authenticate users identities
or manage digital signatures.
The federal government market could support as many as 1 billion smart
cards. "Now we have some requirements that are being levied from Congress
on down, saying federal employees will be issued the smart card as an identification
badge," Jackson said. "Then you use the same thing to log on to your PC
to prove you are who you say you are."
Spyrus, which has participated in a public-key infrastructure interoperability
test between the U.S. and Canadian governments, specializes in smart card-driven
PKI solutions. The company also has a product that enables government Netscape
users to secure Web transactions with software, smart card or PC card encryption
Another security firm, @stake, is forging relationships for greater
access to the federal market. The company is composed of an assortment of
high-profile executives and "gray hat" hackers who use their expertise to
advise clients on system vulnerabilities. The firm offers network security
planning and implementation services as well as incident response help and
a security subscription service.
At the helm are former executives from Compaq Computer Corp., Digital
Equipment Corp. and Forrester Research, as well as members of L0pht, a hacker
think tank. L0pht members Mudge, Dildog and Space Rogue have testified before
the Senate on security short-comings, claiming they could cripple the Internet
in 30 minutes. Its too early to gauge federal agency response to their
comments, said SRAs Fox.
He described @stake as "the best in the business," noting that SRA
and @stake have teamed up for several civilian bids, including one for NASA.
Other companies are focused on providing innovative technology to meet
more traditional government needs. For example, GTSI Corp. has been eyeing
product start-ups for remote access solutions, said Joel Lipkin, the companys
senior vice president of customer sales and support.
Lipkin said Tachyon Inc. aims to tap the government market with a system
that provides "speed to go" high-performance two-way Internet access via
satellite. The system offers access to public and private IP-based networks
at speeds of up to 2 megabits/sec. For example, when a ship ties up to shore
and needs a high-speed connection, Lipkin said, "you basically put their
systems on board the ship while its docked, and you have T-1-and-above
John Koehler, Tachyons chairman and CEO, said that with a small two-way
satellite terminal that links to a box the size of a PC, users can get "speed
anywhere." He said users are moving their functions to local-area networks
and IP from older, less efficient protocols, adding, "The fastest Ive seen
it done [linking LAN via satellite] is an hour. For locations involving
working with a building, that typically takes one person half a day."
Tachyon has teamed with GTSI to target the federal government market
and has been meeting with several DOD agencies. The company plans to announce
contracts with civilian agencies soon, Koehler said.
Harreld is a freelance writer based in Cary, N.C.
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