Small VARs Press Texas CIO On Access To State Contracts

Some 40 solution providers attended the second of GovernmentVAR's three-city roadshow. The next event will be held Nov. 6 in Oak Brook, Ill. The first stop was Oct. 11 in Sacramento, Calif.

"As an old IT practitioner, I believe that commoditization and standardization are good things," said Brian Rawson, CIO and CTO for the State of Texas.

For example, Rawson told solution providers attending the roadshow that the state is taking 31 data centers and consolidating them down to two. "We are moving from an environment of multiple contracts across multiple agencies that literally numbered in the thousands of contracts down to a single contract," he said.

Rawson added that the state's Department of Information Resources (DIR) has 381 outstanding contracts for IT hardware, software and related services from which state and local agencies as well as K-12 and higher education can buy IT products and services.

"These contracts are competitively bid, competitively evaluated and competitively awarded," he said. "We have 266 named resellers that are part of those 381 master contracts. [The resellers] are additional avenues for purchasing on top of those prime contracts."

He said that 53 percent of the nearly $1 billion in annual purchasing through the supply chain contracts goes through K-12 and higher ed, 23 percent is purchased by local governments and 24 percent by state agencies.

But solution providers were concerned that consolidating state contracts meant small VARs were being squeezed out of opportunities for state contracts.

"Most of us here are small to midsize integrators," said Mark Rizzo, vice president of RX Technology, a San Antonio, Tex. solution provider. "I was looking for opportunities to do more business with the state, but it sounded like today you said you are going to consolidate, which means that the larger vendors are the ones that are going to get the deals."

Rizzo said that as a result, he was losing customers because local schools and government were being forced to buy off DIR contracts instead of from local integrators. "How do you encourage small and midsize Texas businesses to work with the state?" he asked Rawson.

Rawson responded that small contractors are alive and well in the state. "While we are about consolidation, we are also about choice," he said.

Still, VARs attending the conference worried that the structure of the state's IT department put it in direct competition with small solution providers.

The Texas DIR is self-funding and gets no state money, Rawson said. "We eat what we kill," he said, noting that the state receives .77 percent or about three quarters of a cent fee from vendors for every dollar of product sold through state IT contracts.

Still, Rawson encouraged solution providers to understand department by department what specific IT strategies state agencies are pursuing and to develop relationships with state CIOs. He pointed solution providers to the state's DIR website www.dir.state.tx.us/store/cci as a good place to start.

"Bring us solutions, not just commodities," he said. "We are moving away from components and more into solutions. We believe in commoditization and standardization, but we want to hear from you about what solutions you have to offer. We want you to expose us to your innovations and successes."