Small vendors thrive on ECS

The National Institutes of Health's Electronic Computer Store (ECS) spread millions of dollars worth of first-quarter computer sales among its 17 vendors, defying—at least for now—earlier predictions that larger companies would dominate sales.

Between Jan. 3 and April 5, ECS rang up total sales of $10 million, of which 40 percent went to large corporations, 40 percent to small businesses and 20 percent to 8(a) firms.

"That's not too bad," said Manny De Vera, director of the NIH Computer Acquisition Center. "You've got to remember that large companies have national sales forces, so that split is very encouraging."

Last year, when the $97 million ECS contract was awarded to three large corporations, seven small businesses and seven 8(a) businesses, many vendors and procurement consultants feared that the large corporations would squeeze out the smaller ones because they could command lower prices from suppliers and offer better service.

"I would have thought big companies would have done much better," said Bob Dornan, senior vice president of Federal Sources Inc. He added that three months of sales is too early to clearly identify a trend, however.

Dornan said sales usually go to companies that have the best marketing strategies, not the best technology or the lowest prices. "And that's usually the larger companies," he said.

Indeed, BTG Inc., one of the large corporations on the ECS contract, has sold $7 million worth of products. That number, however, includes sales since April 5.

The total for all vendors on ECS—including sales since April 5—is $17 million, according to Tom Nixon, BTG's general manager of technology systems. BTG's sales thus represent about 40 percent of total sales on the contract.

"I think it's gone very well for us," Nixon said. "We've mostly advertised the contract to our clients whom we have done business with before."

The other two large corporations on ECS, AmeriData Federal Systems and Electronic Data Systems Corp., could not be reached.

Most small firms report they are pleased with ECS sales.

Government Technology Services Inc. has "captured a pretty good share of the market," said Betty Greene, the ECS program manager for GTSI.

Greene said companies have established niches to capture specific business. For example, GTSI has teamed with Dell Computer Corp., Apple Computer Inc. and Sun Microsystems Inc. to get preferential pricing and quick delivery times on those products.

Mike Atlee, general manager of International Computer Networks' Government Systems Division, said he is encouraged by the increase in the number of quotes ICN has issued on equipment.

However, Atlee said it is too early to determine if the company is pleased with the number of sales. "There's still an education going on at NIH," he said.

Vendors in the Small Business Administration's 8(a) program are also pleased. NorthStar Systems Inc., which operates with a staff of three at its headquarters in Virginia Beach, Va., received 27 requests for quotes in the first quarter, seven of which turned into sales.

Kathy Nolin, NIH contract sales manager, said NorthStar has aggressively negotiated with suppliers to obtain low prices. The company has emphasized quick delivery times, which average five to 10 days after an order is placed, compared with two to three weeks for other vendors, Nolin said.

Daly Computers Inc., another 8(a), also has emphasized service to increase its sales, which company officials said have been encouraging. "We've been competing with these large companies in other markets since we were founded in 1987, and we've been doing just fine," said Mike Driscoll, account executive for federal sales.

But not all ECS vendors are as upbeat. Norman Chung, vice president of complex systems at McBride and Associates, said sales have been slow. But he expects sales to pick up. But all companies are looking forward to increased sales activity. Another $15 million to $30 million in sales was pending earlier this month, De Vera said.