Small biz snags $1.25B FAA pact

In an effort to silence criticism that it does not give more business to small and minority businesses, the Federal Aviation Administration last week awarded 14 contracts exclusively to small and disadvantaged businesses under a $1.25 billion information technology services contract.

The Broad Information Technology Services (BITS) contract is the largest contract the FAA has ever awarded to small, socially and economically disadvantaged businesses, said Jack Handrahan, contracting officer at the FAA. "The big boys don't play in this game; this is for small and disadvantaged businesses," he said. "We're aiming to get about 20 percent of the FAA's information technology business under this contract."

BITS, which is a five-year, indefinite-delivery, indefinite-quantity contract, covers a wide range of services, including Year 2000 work, help-desk support, software engineering, security certification, training and maintenance. The initial value of each contract is $25 million to $50 million, but each contract has the potential to double its worth based on each company's performance.

Twenty-six companies competed for BITS. Half of the winners also are part of the 8(a) program.

Before BITS was awarded, the FAA bought about $35 million worth of IT services off the Transportation Department's governmentwide Information Technology Omnibus Procurement. But Handrahan said the contract "was a hassle to use." Under ITOP, the FAA must decide which type of contract— for example, fixed-price or time and materials— to choose and then negotiate a rate. Vendor rates under BITS are locked in, which speeds up the procurement time, he said.

The FAA also wanted to improve its opportunities for meeting its small- and disadvantaged-business goals. Under ITOP, the FAA would not get credit for using a small-business subcontractor if the small business had signed a contract with a large-business prime, even if the small business did the work, Handrahan said. Under BITS, the FAA will get full credit for contracting with small and disadvantaged companies.

The contract is a good sign that the FAA is refocusing its attention on small businesses, said Weldon Latham, senior partner at Shaw, Pittman, Potts & Trowbridge, which represents small businesses.

"It's not only significant because it is large but also because the FAA has the freedom to contract outside of normal federal procedures," he said. "[The FAA] got criticized very harshly because when it first started doing that, minority contracting went way down. The good news is that the criticism has paid off. The FAA recognized it can get good prices and services" from small and disadvantaged businesses.

The contract is unique because large companies cannot be included, even as subcontractors, said Leonard Deerkoski, vice president of information systems at The Centech Group Inc., one of the winners on BITS. "This contract gave us an opportunity to focus on quality— not on size— in putting our team together," he said. "We are going to demonstrate that is it possible to deliver high-quality IT service without relying on the large company presence within that contract."

The companies winning the contract had to meet high standards for past performance, which was verified through reference checking, Deerkoski said. The 200-person Centech Group, which had revenue of about $20 million last year, has significant experience in client/server applications, including imaging, electronic workflow and databases, he added.

The National Federation of 8(a) Companies was "very, very gratified" that DOT and the FAA followed through on their commitment to ensure the small-business community a reasonable opportunity to do business with the FAA, said Fernando Galaviz, president and chief executive officer of the Centech Group and vice chairman of the National Federation of 8(a) Companies.

With fewer than 1,500 employees, SRA International Inc. is one of the largest firms to win a BITS pact, said Matthew Black, SRA's senior vice president for integrated business systems. SRA will team with 14 firms, including nine that have worked with the FAA. "What [the FAA is] doing here might even be a harbinger of what other agencies might do in the face of these megamergers," he said.

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