A long shadow

In some ways, the fiscal 2002 buying season is much like any other: Agencies scramble to prepare last-minute orders and vendors work late hours, consuming large amounts of coffee and pizza.

Yet this year's sales cycle has a different ring. A year after last September's terrorist attacks, purchasing trends reflect an emphasis on security and business continuity. Items in demand range from hard drives equipped with fingerprint sensors to redundant networks. Ironically, few of the dollars spent thus far on security bear a visible "homeland security" stamp. Uncertainty surrounding the creation of a Homeland Security Department has put the brakes on information technology buying within some agencies.

Still, most agencies are in the midst of a typical fourth- quarter spending surge, with some vendors reporting quarter-to-quarter sales growth as high as 40 percent. What's driving this year's boost? Aside from security, the government's shopping list is long and varied. Agencies desire enterprise solutions — such as portals — that promote interoperability and information sharing within and across agencies.

The Air Force's Standard Systems Group reports interests in document management; an array of hardware devices; graphics and multimedia products; and software development tools. The purchasing summary is based on a sampling of data from AFWay — the service's Web-based system for buying commercial off-the-shelf products — from April to August 2002.

Other products of interest include IP telephony wares, wireless technology and PCs equipped with Intel Corp. Pentium 4 processors and DVD/CD-RW drives. IT services also are experiencing healthy demand via the government's numerous task-order contracts.

Security Drives Sales

But it's security that underscores this year's fourth-quarter sales peak.

"We see interest in areas that are a little different than in the past," said Bob Fortna, president of networking vendor Avaya Inc.'s Government Solutions business. Fortna said he has encountered considerable acquisition activity surrounding "continuous operations" initiatives. With that in mind, agencies are investing in network redundancy, putting in place alternative trunks and routing.

Fortna said this effort to strengthen networks points to a more deliberative brand of fourth-quarter buying. "These days, there's a lot more strategic thinking going into purchases," but in the past, agencies would spend their remaining budget on "piece parts" such as additional phone handsets, he said.

"I haven't been seeing frivolous things coming out," said Renny DiPentima, president of consulting and systems integration at SRA International Inc. In addition to network activity, agencies are springing for security-oriented software. So-called vulnerability remediation products from vendors such as Citadel Security Software Inc. are gaining momentum, according to Tom Flynn, director of partners and programs at integrator PlanetGov Inc. Citadel's Hercules product automates the remediation of weaknesses such as software bugs, back doors and misconfigurations.

"The homeland security initiative has had the effect of accelerating the exploitation of" commercial off-the-shelf software, said Peter Scalone, area manager for Computer Associates International Inc.'s (CA) Federal Systems Group. Scalone said the company's eTrust security line includes access control, antivirus and intrusion-detection products.

"Before the big program dollars come down in entry/exit [visa systems], border security and emergency response, we've already begun to see a focus on how to secure and better integrate information," said Steve Perkins, senior vice president of Oracle Corp.'s federal business.

He cited increased interest this year in Oracle's Advanced Security Option for database servers and Oracle 9i Real Application Clusters, a solution that promotes system availability.

Hardware products that lock down PCs and mobile devices also are popular this buying season. Alan Bechara, president and general manager of PC Mall Gov, reported that biometric wares are among the top sellers at his company.

PC Mall Gov, for example, carries Loqware Technologies AB's portable and desktop hard drive products, which employ fingerprint authentication technology to prevent unauthorized data access. PC Mall Gov also offers Fingerprint Identification Technology from the former Compaq Computer Corp. (now part of Hewlett-Packard Co.) and Targus Inc.'s DEFCON Authenticator.

Flynn said that Fortress Technologies wireless security products are gaining ground in the government. The company's AirFortress, which complies with the government's Federal Information Processing Standard 140-1 for cryptographs, secures wireless local-area networks, fixed wireless networks and peer-to-peer communications.

Business continuity products and services also are getting attention. CA's Scalone cites demand for the company's BrightStor Storage Resource Manager and BrightStor Enterprise Backup.

GTSI Corp. officials, meanwhile, have observed interest in disaster recovery. In August, the company hosted disaster recovery briefings in San Antonio and Denver, attracting 125 government managers.

"It was really tying into a key government initiative that's going on post-Sept. 11," said Terri Allen, GTSI's senior vice president of sales. GTSI offers disaster recovery solutions from CA and Veritas Software, for example. Dennis Lucey, federal accounts manager at integrator Vion Corp., said disaster recovery and data replication are topics that will become "more and more prominent." He said agencies are starting to explore scenarios such as the ability to restore data from a remote backup site.

Some agencies are expanding the availability of security-oriented products. NASA, for one, will soon award several new small-business contracts under its Scientific and Engineering Workstations Procurement III contracts. One set of those contracts is "geared specifically to ensuring access to high-quality security products," said Joanne Woytek, NASA's SEWP program manager.

Few Dollars From Homeland Security

Although the focus on homeland security influences agency purchases, the initiative itself has not produced much buying activity. Agencies are tapping existing IT budgets, rather than specific funds set aside for homeland security, vendors say.

"We've not yet seen a significant infusion of cash as a result of homeland security," Avaya's Fortna said.

"Everyone knows it is coming," said Scalone, referring to homeland security IT activity. "Nobody knows when it is going to happen, or what shape it will take. The impending creation of the Department of Homeland Security has re-prioritized short-term business and pushed some sales out to" fiscal 2003.

The Office of Management and Budget in July halted more than $1 billion in IT projects at agencies slated to be included in the proposed department. OMB is evaluating agencies' plans, hoping to eliminate redundant IT spending. The freeze applies to investments in excess of $500,000. Affected agencies include the Coast Guard, the Federal Emergency Management Agency and the Immigration and Naturalization Service. Funding, however, has started to flow for one agency bound to be absorbed by the Homeland Security Department: the Transportation Security Administration. Last month, Unisys Corp. received a task order to build the administration's information infrastructure. "The award of the TSA managed services contract to Unisys is the biggest item in terms of homeland security IT-related procurements that we've seen," said James Kane, president of Federal Sources Inc.

The Unisys project was awarded via the Transportation Department's Information Technology Omnibus Procurement. Industry executives say such task-order services vehicles are seeing a lot of buying activity. Vion's Lucey said agencies are spending money via "existing services contracts," while new contract awards have been deferred. Roger Gurner, senior vice president for business development at Anteon Corp., said he encounters 20 to 30 task order competitions a week across the integrator's 20 or so governmentwide acquisition contracts. Gurner said homeland security concerns have not put a damper on business. He added, however, that projects specifically labeled homeland security are not producing "significant dollar flow."

The pace has been similarly frantic at SRA. Jeffrey Westerhoff, the company's vice president responsible for indefinite-delivery, indefinite-quantity and governmentwide acquisition contracts, said his company is receiving three to four requests for quotes per day and cranking out 10 to 15 proposals per week. He cites a "considerable increase" in security-related business. Services in demand include information assurance, vulnerability analysis, emergency preparedness and government continuity. DiPentima said money is not going to homeland security spending "per se, but a lot of people are spending money on security."

Enterprise Action

The enterprise-oriented acquisition is another key theme in this year's buying cycle, with many deals tying back to security. Randy Lee, vice president of government sales at ASAP Software, said government customers are asking for Web "sniffer" solutions that can be deployed enterprisewide to probe for vulnerabilities. "We're seeing a lot of activity around those types of products," Lee said. Customers, he added, are "looking from an enterprise perspective at entire networks and systems."

"We are seeing more and more requests for enterprise-level solutions," said GTSI's Allen, citing demand for Web portal technology. "There's a need for interoperability and data sharing." For example, CA's CleverPath portal and business software are making inroads at agencies seeking access to legacy and new business applications, Scalone said.

In addition, Lee said enterprise-licensing programs have become a strong seller in the government market. Although agencies have been buying enterprise licenses for years, the pace appears to be quickening, industry watchers say.

The enterprise software interest leads to another area of demand: asset management. Agencies buying enterprise licenses need to know how many hardware devices they possess. "If you don't know, chances are you are going to be conservative and guess high, and the delta between the guess and what you have installed is an awful lot of money," said Rick Gunther, ASAP's senior vice president of sales.

Lee said interest is growing in the company's eSmart Internet-based asset management service, which tracks an organization's hardware devices and software licenses. The task of managing licenses isn't the only factor raising awareness, however. OMB officials are mulling an initiative that would grade agencies on how well they keep track of their IT assets.

Demand drivers such as security, enterprise solutions and asset management are keeping most vendors busy this buying season. Granted, the appearance of dollars specifically earmarked for homeland security would have made the peak period more spectacular, but vendors aren't complaining.

"In the old days, people would say the government market isn't very exciting," said Allen, who used to work in the commercial market. "But this is the space everybody wants to be involved in right now."

Moore is a freelance writer based in Syracuse, N.Y.

WHAT'S HOT

Desktops:

* Intel Corp. Pentium 4 processors

* 40G hard drives

* 256M to 512M of RAM

* DVD/CD-RW drives

* Microsoft Corp. Windows XP

* USB 2.0 and FireWire hard drives

Information technology services:

* Architecture/design

* Cabling

* Research and development

* Disaster recovery planning

Enterprise software:

* Disaster recovery solutions

* Portals

* Asset management

Security software:

* Risk management

* Web sniffers

* Wireless security

* Antivirus protection

* Intrusion detection

* Database security

Security hardware:

* Biometric tools for desktop and portable hard drives

Wireless technology:

* Ruggedized handheld scanners

* Wireless local-area network security software

* Personal digital assistants

Networking:

* Voice-over-IP solutions

* Videoconferencing

* Redundant networking

* Emergency notification systems

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