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The road through the government channel is paved with greenbacks. Consider this: The 2006 VARBusiness 500--the top solution providers, resellers and integrators for the commercial and public sectors--generated a little more than $350 billion in revenue. By comparison, this year's GovernmentVAR 100 generated $107 billion in top-line sales, growing 11 percent over 2005.
The gross revenue and double-digit growth are impressive, especially since federal IT budgets grew less than 2 percent in 2006 and state spending was relatively shallow compared to expectations. Add to the challenge of achieving success in the government channel the long sales cycles, different contracting requirements and razor-thin margins and you've got a recipe for low, slow growth. Quite to the contrary, though, government solution providers are knocking the cover off the ball.
The GovernmentVAR 100, now in its fourth year, is the definitive list of the top federal, state, local and education solution providers and integrators. The ranking is by gross government revenue for IT products and services.
Solution providers on the GovernmentVAR 100 are averaging revenue of $1.1 billion annually, up from last year's adjusted average of $964 million. The billion-dollar club gained six new members with the addition of two new companies earning 10-figure incomes. And an astonishing 51 of the 100 earn from $100 million to $1 billion.
The bulk of this year's list-makers recorded positive growth, with three companies posting triple-digit revenue increases and 41 solution providers reporting double-digit growth. Only 20 companies on the list declared losses, and only a fraction had double-digit losses.
The majority of solution providers on this year's GovernmentVAR 100 list are truly dedicated to the public-sector channel. Thirty-two companies derive 100 percent of their revenue from public-sector sales, and another 24 earn more than 50 percent of their income from government customers.
While the Government 100 grew 11 percent, the top 10 didn't shift much. Defense and integration conglomerate Northrop Grumman remains king of the hill with $11 billion in revenue, fueled by its various federal contracts. Nipping at Northrop's heels was second-place finisher Lockheed Martin, which grew 10 percent with revenue of $10.9 billion. Third place was locked down by General Dynamics, whose revenue jumped 16 percent to $9 billion.
One of the most surprising to make the top 10 is the government services division L-3 Titan Group (No. 9), Reston, Va., whose revenue shot up 75 percent to $3.8 billion, allowing the company to place ninth, and forcing EDS into the No. 10 spot.
"We look forward to another strong year for 2007. The company is well-positioned in its core business areas," said Michael T. Strianese, L-3's president and CEO, in the company's quarterly financial statement. "We will continue to grow organically and generate significant cash flows that will be used to increase returns for our shareholders through share repurchases, dividends and continued acquisition growth."
NEXT: Integrators that are burning up the charts.
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