Circling the Statehouse

For example, about 225 people attended market research firm FedSources Inc.'s annual conference on the state and local market at the Hilton McLean Tysons Corner in June, an increase of about 25 percent from when the conference was held two years ago, according to Ray Bjorklund, FSI's senior vice president.

Of the large defense contractors, Northrop Grumman Corp.'s push for the state and local market has been among the most extensive. Northrop has doubled its revenue in the sector over the past four years, to more than $600 million. In 2004, Northrop established a Herndon-based state and local business group. The group's workforce has since risen from 2,700 to 4,100 employees. It is aiming for 10 percent annual revenue growth, company executives said.

"Spending is higher than I have seen it in five years. It is a very active time in the state and local market," said Cheryl L. Janey, vice president of Northrop Grumman's business development strategy for state and local governments.

Northrop has focused on the largest customers, pursing business in 15 to 20 states and a few major municipalities, company executives said. "The state and local market is a relationship-driven market. You can have good technology, but if you are not a known supplier it will be difficult," Janey said. "Building up those relationships over time is very important."

So far, it's paid off, Janey said. Last year, Northrop won a $2 billion contract with Virginia to overhaul the state's information-technology infrastructure, and a seven-year, $667 million contract to manage San Diego County's IT and telecommunications systems.

Among the state competitions attracting the most attention this year is one run by the Texas Information Resources Department to consolidate 31 computer data centers, a potential $500 million, seven-year deal.

While most deals are far smaller than that, they can help a company build momentum, said Todd S. Ramsey, a general manager at International Business Machines Corp. "We will go after small deals to go after large deals. It's hard to win in a deal in California if you don't have a track record in other states," he said.

Companies employ a variety of tactics to break into the market. Lockheed is angling for large statewide programs, particularly those funded by the Homeland Security Department, said Robert H. Trice, the company's vice president of strategic relations. General Dynamics Corp., based in Falls Church, limits its focus to projects in which the company can leverage its military experience, such as building law enforcement training centers and wireless communications systems. Electronic Data Systems Corp. has emphasized the importance of managing medical records electronically to reduce health-care costs.

"There's an increasing focus, even more than last year, on the rising cost of health care," said Barbara Anderson, vice president of EDS's state and local business. "We're seeing a significant trending toward new systems."

At Silicon Valley-based technology firm Cisco Systems Inc., which has 600 employees in the Washington area, company salespeople have focused on getting their message out to political candidates this fall so that officials who take office in 2007 will consider major upgrades.

To the public, Cisco says, the upgrades could mean fewer problems when filing taxes or applying for benefits. To politicians, they could mean a happier electorate when reelection time comes around.

"I can live anywhere. So as a public official, you have to make it attractive and put the proper infrastructure in place so that I want to live in your jurisdiction," said John Goggin, who heads a group at Cisco that's focused on state and local customers. "If a governor is slow to catch on to that, they're going to start losing businesses and people."

The city of Dublin, Ohio, is already sold on the idea. It paid Cisco to help install a citywide wireless-Internet network. Dublin, an affluent suburb of Columbus, budgeted a million dollars for the program, so its police officers will have access to high-speed data from their cars and building inspectors can file reports from the field. Even the snowplow drivers will use the network to alert dispatchers to which streets are clean, and which they are about to clear.

"Snow is something our citizens care deeply about. Whenever we get a storm, Dublin is famous for being the first city to get it plowed," said City Manager Jane S. Brautigam. "Our community has high expectations for us."