Comark surges to $50 million milestone

Acquisitions, mergers and up-and-coming companies are causing a shift in the federal reseller market. One company making itself known is Comark Federal Systems, which this year is expected to pass the major milestone of $50 million in sales.

Comark's sales have ballooned from $19.7 million in 1996 and $19.6 million in 1997 to an estimated $51 million this year, said Comark Federal vice president and chief operating officer Alan Bechara. "For the past couple of years we've been quietly delivering on promises," Bechara said.

Many of those promises could be met because of the link with parent company Comark Inc., a reseller with 21 years of experience and more than $1.2 billion in sales last year. The discounts Comark Federal Systems can obtain as part of the larger company, in addition to its distribution infrastructure, have been a key reason for Comark Federal's sales increase.

There also are advantages to being separate from the larger organization, especially in the federal market, which requires specific knowledge and expertise, Bechara said. "This division is focused solely on the federal market, and the management team we've got has collectively more than 65 years of experience dealing with the federal government," he said.

The federal market has been changing as well. Almost a quarter of Comark's sales this past year were to agencies leasing products off Comark Federal's General Services Administration schedule. Because an increasing number of federal users are buying commercial products to replace customized systems, companies offering products from Hewlett-Packard Co., Toshiba America Information Systems Inc. and IBM Corp.— as Comark Federal does— will do well.

"We brought the HP growth [up] from roughly $1.4 million in 1997...to close to $14 million by the end of the year," Bechara said. The three vendors supply about 80 percent of Comark Federal's business.

Several companies have experienced the same growth, especially with the popularity of the GSA schedule, analysts said. "But it's difficult to sustain triple-digit growth for long periods," said Payton Smith, an analyst with Federal Sources Inc., McLean, Va.

Bechara realizes that the 159 percent growth rate Comark Federal experienced this year will not continue. But despite the federal IT budget forecast to increase 3 percent to 4 percent a year, he believes Comark Federal has plenty of opportunities to expand. "I look for at least 50 percent growth in our schedule business," he said. "There's a lot of money out there to be had."

Despite the growth in the GSA schedule, it represents only a part of the federal government's information technology business. Agency indefinite-delivery, indefinite-quantity and governmentwide acquisition contracts still take up a good portion of the federal IT dollar, and companies that intend to stay in the market must realize that, analysts said.

"Sooner or later you've got to get yourself into larger deals," said Bob Guerra, president of Guerra & Associates, Fairfax, Va. "You've got to move past just [commercial off-the-shelf] offerings and get into tailored products, integration."

Getting to the $50 million mark is important, Guerra said, but "the infrastructure costs to get past that are significant." Moving more into bid contracts means putting together bid teams and establishing program managers, all of which takes money.

Comark Federal began to pursue that business in 1996 when it won the Census Bureau's laptop contract, which has an estimated value of $10 million a year for five years. Bechara plans to continue pursuing such customer-specific contracts but still focus on Comark's GSA business.

Next year Comark Federal will start bringing in professional services offerings from Comark Inc. and "start placing the focus on low-level services and maintenance," Bechara said.