Companies cope with tight federal budget

The proposed fiscal 2007 budget, which shows continued tightening of discretionary spending in most agencies, came as no surprise. But it is a challenge for contractors who must keep the federal dollars flowing or suffer business setbacks.

Some companies can try to take advantage of the lean years by offering products or services that help agencies accomplish more at a lower cost. President Bush’s budget proposal increases information technology spending in most civilian agencies, but only slightly in most cases. Often, those increases are earmarked for specific projects focused on improving efficiencies.

For many contractors, a tight budget means holding on until spending begins to rise again, said Mark Amtower, a consultant specializing in the federal market.

“Focus your marketing and sales strategies on the agencies that love you best,” he advised companies. “You have to focus on your home ground and make sure you don’t cede market share.”

The business environment for smaller firms trying to gain subcontracting partnerships is becoming a challenge, too, Amtower said. Large contractors are the main beneficiaries of the Defense Department’s $30.5 billion IT spending plan for fiscal 2007, and the paths to their doors are well-worn by hopeful suitors.

“It is a bleak outlook,” Amtower said. The federal government “remains the largest game in the world, but it has definitely taken a stronger turn than a lot of us would have thought as recently as two to three months ago.”

Some companies are feeling more confident, however. Merlin Technical Solutions, for example, a midsize integrator that specializes in service-oriented architecture and commercial software, expects the unrelenting focus on efficiencies to speed adoption of SOA.

“I think we are poised really well,” said John Trauth, executive vice president of federal government systems at Merlin. The company also offers information assurance and network engineering services.

Although IT would gain marginally overall in fiscal 2007, a number of specific projects have sustained serious funding cuts in recent budgets. Those cuts can be hurtful for contractors involved in those projects, said Valerie Perlowitz, founder, president and chief executive officer of Reliable Integration Services.

For example, Perlowitz expected a 20 percent cut in the fiscal 2006 budget for a contract her company holds. At the end of the process, however, that cut had swelled to 50 percent, forcing Reliable to decide what to do with security-cleared employees for whom the company no longer had enough project work.

“You don’t want to get rid of them, but if the funding is not there, it’s not allowing an opportunity to grow,” Perlowitz said.

The fiscal 2007 budget proposal includes similar funding cuts, but it also establishes a line of business for IT infrastructure. That initiative could be a boon for integrators able to offer consolidation services and similar cost-saving measures related to infrastructure, Perlowitz said.

However, the new budget proposal has forced her to rethink the company’s future, she said. “It’s taking a step back and asking where are we going to spend our efforts over the next six to 12 months,” she said. “Most of us did our business planning back in October or November. Here we are in February and we’re back at that stage again.”

Sounding a more positive note, the IT Association of America applauded the budget request for its emphasis on DOD and Homeland Security and the inclusion of important projects in the civilian sector.

“Civilian officials struggling with tightening budgets will find IT a valuable tool in conducting business more efficiently and effectively,” said ITAA President Robert Laurence in a written statement.

Homeland security market
could be tough

As the civilian agency with the largest single proposed increase in its information technology budget — $4.4 billion, 26 percent more than the $3.6 billion budgeted in 2006 — the Homeland Security Department is a tempting target for contractors.

But Larry Allen, executive vice president of the Coalition for Government Procurement, said going after obvious targets such as DHS can prove frustrating.

When DHS was created following the 2001 terrorist attacks, many companies immediately perceived it as a new market for technology, even though its component agencies had existed for decades.

As a result, Allen said, technology officials are unlikely to convince any DHS agency now that their companies offer truly novel solutions.

“By now, the path to DHS is well worn by people who have promised bigger and better widgets,” he said. “You have something of a jaded workforce there.”

— Michael Hardy

NEXT STORY: IBM has Georgia assets on its mind

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.