Agencies prepare for merged Dell-Perot Systems

The companies plan to use each other's strengths to increase federal market share

Perot Systems and Dell are major players in the federal market, and their merger could potentially change the way agencies buy their products. When such acquisitions occur, questions arise about continued availability and support for some product lines, especially if the acquiring company has rival products that it could force customers to adopt.

However, some of Perot's biggest government customers say they're not worried. 

“We expect Perot Systems to continue to deliver its services as outlined within the contract,” said Laura Williams, communications director for Coast Guard Acquisition Directorate. The Coast Guard is Perot Systems biggest government buyer so far in fiscal 2009, with orders reaching $59.3 million, according to USASpending.gov.

Dell is acquiring Perot Systems for $3.9 billion, the companies announced last week. They say the acquisition is “a compelling combination of two iconic information technology brands,” and experts say the merger will create a company better geared for the federal marketplace.

Another major Perot Systems buyer, the Centers for Disease Control and Prevention, said it was too soon to tell how things would change as the companies integrate.

As the merger moves forward, representatives from the companies have probably already reached out to their customers, reassuring them about the move, said Alan Chvotkin, executive vice president and counsel at the Professional Services Council.

Perot Systems Government Service expects to become a larger player in federal contracting with Dell’s resources, said Ross Perot Jr., chairman of Perot Systems. Perot and Michael Dell, chairman and chief executive officer of Dell, held a conference call last week to discuss the merger with reporters.

“So for us, [government is] going to be a big, big target,” Perot said.

Meanwhile, to Dell’s advantage, Perot Systems has a larger immediate presence than Dell in Washington, D.C. Larry Allen, president of the Coalition for Government Procurement, said Round Rock, Texas-based Dell can use Perot’s presence to show itself as more than a hardware dealer.

When offering services to an agency, it’s best to have person-to-person relationships with the customer, experts say.

Dell is the largest seller on the General Services Administration’s Schedule 70, which features IT products and services. Through August, Dell has more than $888 million in sales in fiscal 2009, outpacing the next largest vendor, IBM, by more than $361 million, according to figures from GSA. In fiscal 2008, Dell had more than $1.2 billion in overall federal sales, according to USASpending.gov.

“We consider Perot Systems to be a premium asset with great people that enhances our opportunities for immediate and long-term growth,” Dell said.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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