IT contractors split on likely effects of Obama policies

A new survey of federal information technology contractors finds them divided over the impact of Obama administration policies, with smaller firms expecting more competition on procurements and larger firms expressing concern about proposals aimed at reducing the role of contractors in government.

The survey, by Chantilly, Va.-based research firm Market Connections, questioned more than 220 IT managers from firms doing business with the government about their expectations of the new administration. Nearly 60 percent of the respondents said dealing with changes in agency strategies and Obama initiatives would be their top challenge during the next 12 months, while 44 percent said achieving growth in the sluggish economy was their biggest concern.

One-third of respondents identified attracting and retaining employees as a major challenge; the issue was the number one concern when Market Connections performed a similar survey in 2006.

Recruitment "has been superseded by some of the other factors," including the presidential transition and economy, said Market Connections President Lisa Dezzutti.

Respondents were split on whether the Obama administration would create more opportunities for contractors (46 percent), or set up more obstacles (40 percent).

"Interestingly, those with lower contract win rates were more likely to anticipate opportunities, while those with higher rates were more likely to perceive more obstacles," Dezzutti said. She attributed the split to a sense of optimism among smaller firms, due in part to the Obama administration's planned contracting changes, including a reduction in the use of sole-source and cost-plus contracts.

"There is a distinct sense that there is going to be a leveling of the playing field. Smaller firms who couldn't compete for large contracts in the past now feel more optimistic about the future chances for success," she said.

Contractors identified information sharing and cybersecurity as the top business opportunities in the government, with health care IT and enterprise architecture close behind. Most respondents said they were beefing up their marketing plans to try to capture some of the funds in the recently passed $787 billion economic stimulus package, though the increased transparency requirements for stimulus projects present challenges.

"Language in the stimulus bill requires free access to all data and personnel for contracts," said Lee Cooper, vice president of business development for Raytheon Technical Services of Waltham, Mass., during a discussion of the survey's results. "The anticipated impact on government contractors -- though we still need further direction from oversight agencies -- is higher costs for staffing and HR, increased data management and cybersecurity systems, and travel and legal fees."

Dezzutti said she was most surprised that 36 percent of respondents reported their companies win less than half the time when their contracts come up for re-competition. That indicates, she said, that federal IT firms should conduct regular customer satisfaction surveys.

"It's critical to know what your customers are going to say about you in your past performance reviews," said Tricia Iveson, vice president of business development at Reston, Va.-based consulting firm Vistronix. "Don't be caught off guard. That's where a third-party satisfaction survey can really help."