GTSI, IBM top fiscal '95 sales charts
- By Dan Carney, John Moore, John Monroe
- Jan 07, 1996
Government Technology Services Inc. and IBM Corp. climbed to the top of the General Services Administration's multiple-award schedule program in fiscal 1995.
GTSI, which led the PC-oriented Schedule B/C, and IBM, which led the large systems-centered Schedule A program, were lifted by a rising tide of schedule sales. The GSA Schedule B/C was a bonanza for vendors last year, growing more than 40 percent to $980.7 million, compared with $691.4 million for the previous year, according to International Data Corp.'s Government Market Services. IDC recently published rankings of Schedule B/C and A vendors, augmenting data compiled by GSA.
The growth in popularity of the B/C schedule had two driving forces in 1995, according to Steve LeCompte, vice president of IDC GMS. First, GSA lifted Commerce Business Daily synopsis requirements for buys between $50,000 and the maximum ordering limitation (MOL) of $500,000.
Second, the Air Force's popular Desktop IV contract expired. "Overall, the schedule grew strongly because of changes in the rules and lesser availability on IDIQ contracts," LeCompte said.
Schedule A, meanwhile, overcame a slow first quarter to end fiscal 1995 slightly above 1994 figures.
Strong showings by GTSI, Xerox Corp. and Silicon Graphics Inc. bolstered Schedule A sales and kept the schedule from continuing what has become an annual decline, according to IDC.
But GSA schedule reform was not a major factor in the stabilization of Schedule A sales, vendors reported. LeCompte said he believes the schedule may have simply bottomed out.
"It finally fell to a core of products that are still selling," he said.
GTSI topped the B/C schedule for the 10th consecutive year, with sales of nearly $180 million. But direct-sales PC vendors Gateway 2000 and Dell Computer Corp., along with acquisition-happy BTG Inc., were the big winners in terms of sales growth. All three saw year-to-year triple-digit growth in their schedule business.
GTSI's schedule sales grew 13 percent from 1994, which the company considers a victory because of the difficulty of merging GTSI with Falcon Microsystems Inc. "In this case, two plus two made five, not four," said Alan Bechara, vice president of marketing and program management for GTSI.
GTSI's most popular products were those from Hewlett-Packard Co., Compaq Computer Corp., Panasonic and IBM Corp., Bechara said.
Federal buyers jammed Gateway's phone lines during the fiscal fourth-quarter buying season to the tune of $55 million, according to LeCompte, who recently discussed the results with Gateway officials.
The company had total 1995 schedule sales of $82 million, a whopping 549 percent increase over Gateway's sales in its GSA schedule debut in fiscal 1994.
Dell's $76.4 million tally was nearly as large as Gateway's sales total, but because the company was more successful in 1994 than Gateway, Dell's annual growth was lower, but still strong, at 186 percent.
"During the closure of Desktop IV, the government buyers were able to get their hands on the latest and greatest technology from the schedule," said Theresa Garza, vice president of government sales for Dell.
Dell also benefited from the higher MOL, taking five times as many orders of $50,000 or more as the year earlier. "It doesn't take many $50,000 orders to add up," Garza said.
AmeriData Federal Systems boosted its sales by 23 percent compared with 1994, totalling almost $59 million. That was good for fourth place overall and second among resellers, so the company is pleased, said Gilbert Gautereaux, vice president of marketing for AmeriData.
"We planned to be No. 2 [among resellers] in 1995, and that is where we are," he said.
He attributed the company's sales to the new GSA policies and the strength of its product offering. IBM, Compaq, HP, Toshiba America Inc. and Tektronix Inc. are AmeriData's best-selling vendors, he said.
A 185 percent increase in sales vaulted BTG into fifth place on IDC's list, with nearly $50 million in business on the GSA schedule B/C. The company attributes its spectacular growth to expanding product offerings and streamlined buying rules on the schedule.
"We have a very good stable of products and vendors," said Tom Nixon, vice president and general manager of BTG Technology Systems. BTG sells Netscape Communications Corp., Cisco Systems Inc., Cabletron Systems Inc. and 3Com networking products, Informix Software Inc., Digital Equipment Corp. workstations and its own PCs.
Zenith Data Systems finished in sixth place, with $41.4 million in sales. Its 69 percent growth outpaced the schedule's 40 percent.
Compaq was close behind, with $38.9 million in sales and 53 percent growth. The company also enjoyed many sales through resellers, which, when combined with its own schedule sales, would total about the same amount as rivals Dell and Gateway, said Gary Newgaard, federal sales manager at Compaq. To build on this success, Compaq has signed up two more resellers, BTG and I-NET Inc., to carry its products in 1996.
I-NET had $26.3 million in sales and grew at 35 percent. A specific focus on networking and investment in training are what contributed to I-NET's growth in sales, said Lee Watenpaugh, director of networking products at I-NET.
Toshiba, like Compaq, moved many of its machines through resellers, according to Jan O'HARA, federal sales manager for Toshiba. In fact, the company expected not to increase its GSA schedule sales at all because of resellers' sales, she said. So the $26 million total and 9 percent growth were a bonus for the company.
"We made a real conscious effort this year to move some of our business to other companies' letters of supply from our own schedule," O'HARA said. That trend will continue in 1996, as Toshiba expands its reseller list from four to seven, she said.
Information Handling Services, a CD-ROM vendor, rounded out the list with $25.2 million in sales, a 20 percent increase over 1994.
IBM led Schedule A sales on the strength of its traditional mainframe business, LeCompte said. IBM had $151.5 million in schedule sales, down slightly from fiscal 1994. IBM officials could not be reached for comment. Digital followed IBM with sales of $52 million.
Third-place GTSI's Schedule A sales nearly doubled between 1994 and 1995, ending last year at more than $40 million. Its top-selling products included Sun Microsystems Inc.'s Internet solutions and database servers.
HP was fifth in Schedule A sales but saw most of its growth on large indefinite-delivery, indefinite-quantity (IDIQ) contracts, said Bill Dwyer, a manager at HP's Federal Computer Operations. "We really have not focused very much on GSA over the last several years," he said. "Between the low [MOL] cap and the difficulty for customers to use GSA, it's just not a good vehicle," he said.
However, with GSA's attempts to reform the schedules program, the company would "closely monitor" the program, Dwyer said.
Oracle Corp., which sees the GSA schedule as an important vehicle for its database software and other products, anticipated that future reform will make the schedule even more valuable, said Kevin Fitzpatrick, vice president of sales at Oracle Government Systems, Bethesda, Md.
"It's always going to be a very key contract for us, and we are optimistic that, with the changes that will be implemented in the [GSA's] Advantage program, it will be a growth contract for us in the years to come," Fitzpatrick said.
But unlike Schedule B/C business, Schedule A business continues to be cannibalized by other government contracts, industry vendors said.
For example, Oracle's schedule business remained flat between 1994 and 1995, even though its federal business improved significantly.
"It's a statement that more and more of the IT products, both hardware and software, were purchased from requirements contracts rather than off the GSA schedule," Fitzpatrick said.
Computer Associates International Inc.'s federal office has seen a similar trend, according to Mike Miller, vice president of sales at CA's federal office in Reston, Va. Although the MOL has been raised, the schedule still does not permit the kind of flexible payment plans that many of CA's customers are interested in, Miller said.
CA's schedule business usually declines about 10 percent a year, even while its overall federal business grows, Miller said. However, this year CA's business actually grew an estimated 25 percent, bolstered in part by the acquisitions of Legent Corp.
But Alex Barenblitt, GSA Schedule A program manager for Digital's federal government region, said the schedule reform may reverse the IDIQ trend. "We are going to see a lot of business that was going to IDIQ go back to GSA."