IT Associations Fight Federal Government Spending Proposal

A pair of IT-related nonprofit organizations that share an office and several member companies say they’re joining forces to combat what they call the increased flow of counterfeit equipment into the nation’s supply chain.

 

According to the Delray Beach, Florida-based Association of Service and Computer Dealers, International and the North American Association of Telecommunications Dealers, more and more counterfeit equipment is making its way into the computer resale industry. Earlier this year, the groups joined the FBI in an effort to fight the trend.

 

Federal officials now are considering a new rule that would require government agencies only to accept bids from manufacturers or their authorized agents, according to the ASCDI and NATD, whose member companies include Cisco Systems Inc. The rule would shut out thousands of secondary market resellers, creating a major shift in the federal government’s acquisition practice.

 

The federal government itself is a fertile market for IT businesses.

 

As TMCnet reported, despite a faltering economy, the federal government in the United States is expected to spend $98.5 billion per year on IT goods and services by 2012, according to a new study from a Scottsdale, Arizona-based research analytics and consulting firm.

 

Officials at Compass Intelligence say that the government’s spending this year on telecom, applications, outsourcing, services and support, network hardware, computer hardware and IT personnel will reach about $80.6 billion. The figure includes civilian programs and defense spending.

 

According to Stephanie Atkinson, a managing partner at the firm, major trends and opportunities revolve around replacement of legacy hardware, focus on mobile workforce, maturity of E-government, growth in a high-tech military, greater emphasis on cyber-security and a focus on green technology initiatives.

 

“Federal government IT spending is expected to remain rather steady, despite economic conditions,” Atkinson said. “State and local governments are expected to feel more of the pain from this current recession.”

 

The IT growth rate in government last year was 6.5 percent, Compass reports, compared to only 5.3 percent in 2008. Next year is expected to see slightly better growth rates, at 5.5 percent, according to the firm.

 

At a public hearing on the proposed new rule, presentations were made by the National Aeronautics and Space Administration, Society of Automotive Engineers, Department of Defense, Department of Commerce, World Data Products and a joint presentation from the ASCDI and NATD.

 

Joseph Marion represented the last two agencies, and said that the secondary IT market is a $312 billion market consisting of thousands of legitimate businesses and an estimated 100,000 citizens.

 

According to Marion, sales to the federal government account for as much as 15 percent of secondary market industry revenues. Marion spoke out against the proposed rule, saying that sole sourcing governmental acquisition –  which he said eliminates competition and is guaranteed to maximize price and reduce quality – is not the best solution to the avoidance of counterfeit products.

 

Instead, the federal government should to require, as a condition to bid, all manufacturers to offer a maintenance agreement qualification inspection upon request.

 

“Mandating such an inspection will allow secondary markets to compete for government acquisition contracts and afford the government the salutary benefits of competition while avoiding counterfeit products,” Marion said.