In its first year the Pentagon's Network-Centric Solutions program has brought $429.7 million in contracts to the eight prime contractors selected to bid on the work, and almost half has gone to four companies that are much smaller than their competitors.
The Defense Department awarded NetCents in September 2004 as a five-year, $9 billion contract to provide the Air Force and other agencies with information technology products and services.
The four large systems integrators on the contract -- Northrop Grumman Corp., Lockheed Martin Corp., General Dynamics Corp. and Booz Allen Hamilton Inc. -- together have won $223.4 million. The four companies designated as "small business" prime contractors have held their own against these industry giants, earning $206.3 million, or 48 percent of the value of projects awarded.
Centech Group Inc. of Arlington, Multimax Inc. of Upper Marlboro, NCI Information Systems Inc. of Reston and Telos Corp. of Ashburn have won 617 of the 989 orders issued under the contract, according to Cyndi Crews, NetCents contracting officer. The smaller businesses also have done well as subcontractors under the contract, pulling in $44.7 million more in work, she said.
"I think it shows that, given the opportunity, small businesses do very well in the government sector," Crews said. "And that's probably true outside the government sector as well."
None of the small businesses are mom-and-pop operations. For example, NCI, which went public last month, has 1,400 employees and had $171.3 million in revenue last year.
"The four companies that did win have very powerful proposal machines that can almost rival the machines of the very big integrators," said Ralph Buona, vice president of business development for Telos. "And we're not novices to competing with those big companies; we do it outside of NetCents."
Small businesses that have contracts that are being moved to NetCents will come to one of the small prime contractors to strike a deal to stay involved with the project, instead of losing the work when it gets re-bid, he said.
"Frankly, they're a little bit scared that the big guys are going to try to cut into work that has been traditionally theirs," Buona said. "So more often than not, they come to us first to try to work with one of us small businesses."
Centech has even created a Web site where potential partners can register work that they think is headed to NetCents, said Jim Tindell, senior vice president of Air Force operations at the company. "Once they register it, then we can start marketing those customers ahead of time, so that helps us a lot," he said.
Major Air Force commands have been the driving force behind nearly two-thirds of the dollars spent under NetCents, Buona of Telos said, and that's where his company has focused much of its promotion.
Telos officials have traveled to each of the Air Force's major command headquarters and tailored their pitches to work that is known to be on the horizon. "If we wait for them to come out [with proposals], we're already too late to win the deal," he said.
Being small has other advantages, said Ray Bjorklund of market research firm Federal Sources Inc. of McLean. "Small businesses frequently have lower overhead costs and are more agile in responding to customer needs," he said.
So far, about 70 percent of all NetCents contracts have been for products, and 30 percent have been for services or networking solutions, although that mix is starting to change.
Telos is tracking two major opportunities, for a telecommunications management system and a system to track and repair vulnerabilities in information systems. Both would be implemented throughout the Air Force. Buona said the vulnerability project is worth tens of millions of dollars, if not much more, depending on requirements that have yet to be defined.
Ethan Butterfield is a staff writer with Washington Technology. For more information on this and other contracts go to www.washingtontechnology.com.