Navy leads surge in third-quarter federal IT spending

Massive contracts awarded by the Navy provided the impetus for a 190 percent increase in federal spending on prime information technology contracts in the third quarter of fiscal 2005 compared to the same period last year, according to a report from an IT consulting firm.

The Defense Department awarded about $61.8 billion on IT-related products and services in the third quarter, while civilian agencies awarded a combined amount of about $5.6 billion. Set-aside awards to small, minority- and veteran-owned businesses accounted for 27 percent of the awards, nearly $18 billion, driven by the Navy's $16.6 billion in such awards. This is an increase of 22 percent from the previous quarter, where $826 million was awarded in set-aside competitions.

The report, from the Reston, Va.-based IT consulting firm INPUT, examined 127 IT-related contract awards from federal agencies.

The Navy's awards could total nearly $57 billion for the quarter, with more than $54 billion stemming from its SeaPort Enhanced Rolling Admissions program, an indefinite delivery-indefinite quantity vehicle for, among other things, IT goods and services. More than 500 vendors received contracts under the program, with the Navy aiming to award one-third of task orders to small businesses.

The Navy's awards totaled nearly $57 billion for the quarter, with more than $54 billion stemming from its SeaPort Enhanced Rolling Admissions program, a multi-award contract vehicle for IT goods and services. More than 500 vendors received contracts under the program, with the Navy aiming to award one-third of task orders to small businesses.

The Air Force was second to the Navy in total awards with $3.6 billion, followed by the Energy Department with $2.3 billion (in the form of a contract with the University of California for the management of the Lawrence Berkeley National Laboratory) and the Army with $1.1 billion. NASA awarded about $700 million in IT contracts in the quarter.

The $18 billion in set-aside awards came from 16 agencies, and involved more than 70 contracts. Of the set-asides, 59 went to small businesses, eight went to minority-owned companies in the Small Business Administration's 8(a) program and four went to businesses owned by service-disabled veterans.

Megan Gamse, an INPUT analyst for Defense contracts, said she expects the number of contracts awarded to service-disabled veteran-owned businesses to increase because contracting officials now have a mechanism to issue them. Congress has mandated that 3 percent of contracts go to such businesses.

While INPUT does not expect as large an increase for the fourth quarter, it does project such spending will be 70 percent higher than in the fourth quarter of fiscal 2004.