Dot-coms try to cash in on government marketplace

Dozens of private sector companies are looking to the Internet to capitalize on the government market, according to a new report from BB&T Capital Markets.

The government market has seen a dramatic shift toward providing services online over the Internet in recent years, the Richmond, Va.-based research firm found. Several business models have cropped up, including business to government Web sites, which tackle services such as online procurement, and government to consumer sites, which include services such as online voting.

The Internet has "created new market participants beyond those names traditionally associated with the government IT services marketplace," said the research report, "E-Government-The Revolution is Here."

On the procurement side, companies such as Beyond.com and GovCon.com hope to take over a chunk of what is estimated to be a $580 billion market in federal, state and local online purchasing. Beyond.com sells software and other computer equipment while GovCon.com is an online community for government contractors that includes notices of government contract opportunities.

Other companies are changing the way the public interacts with the government, driven by the public's increasing demands for better service. The National Information Consortium serves as a single point on the Web for government agencies and allows citizens to conduct government transactions online. Competitors such as SimpleGov.com and ezgov.com also hope to use the Web for parking tickets, property taxes and other government transactions.

The emerging e-government arena represents a big change from what was once considered an information technology services market only, BB&T said.

"Like many other industry observers, we have tended to view this marketplace in its more traditional sense; that is, large systems integrators providing these services primarily at the federal government level to the Department of Defense and the civilian agencies," the report said.

But the adoption of commercial purchasing practices and the emergence of the digital marketplace have made e-government an attractive business model, even for companies that don't sell computers.

"It is extremely difficult to underestimate the importance of IT to both the United States in general and the government in particular. Having said that, we believe we are embarking upon a new chapter in this saga, one that we call the e-government revolution," the report said.