Federal-Sized Frustrations

Aurora Coya, area vice president for Keane, who is responsible for the Middle Atlantic region, including Washington, D.C., area offices for Keane's growing federal systems unit, acknowledges that the employee crunch might seem a bit out of touch given that many parts of the general economy are only beginning to step up hiring and that many in IT fear losing their jobs to low-cost, offshore replacements. But things in Washington are different, she notes.

"In our area, hiring people is very tough," she says. "We're headquartered in Fairfax County, Va., where unemployment is 2 percent."

There are several reasons why a staffing crunch is now occurring in the federal market. For starters, many IT projects require American workers in the federal space, where offshore outsourcing is not as viable an option as it is in the commercial space. Also, the growth in government spending, particularly at the federal level, has eclipsed that of big-business spending. While opening new doors, it's created problems for solution providers who lack certified and qualified personnel, especially regarding security clearances. That problem has been exacerbated, notes Terri Allen, senior vice president of sales with GTSI, a major government solution provider, by the overwhelming number of commercial VARs that have tried to break into the federal-government market. Their rush to get a piece of the pie has prompted many to lure qualified people from other companies, resulting in spiraling salaries.

To combat staffing problems, many solution providers are resorting to a variety of strategies. Some, for example, are exploring new alliances and subcontracting opportunities with those companies that hold prime government contracts. CyberCore Technologies, a Baltimore-area solution provider, has benefited handsomely from aligning with CSC, the giant El Segundo, Calif., systems integrator. Last December, for example, the company teamed with CSC, and gained the opportunity to provide key information management and technology solutions to the Defense Intelligence Agency.

"It's mind-boggling to me why more [companies] don't partner more," says Doug Oakley, vice president of business development at CyberCore, Timonium, Md.

Other solution providers are turning to other allies, including distributors, for help. Tech Data, for example, unveiled last fall the Prime Contractor Referral program, which helps disadvantaged and minority-owned solution providers partner with national integrators to win federal-government small-business contracts.

Solution providers also are enrolling in government-sponsored programs and getting more aggressive in securing the necessary personnel to go after federal business. Some are even picking up additional work and/or getting recognition for helping others. PEC Solutions, for one, was recently approved by the Department of Homeland Security as a mentor in its Mentor-Protg program, designed to help small business gain a foothold in the federal market. PEC, a 19-year-old IT consultancy and professional services firm, is working with Total Systems Technologies and Interactive Technologies Group, introducing the two companies to contacts and opportunities inside Washington, D.C.

For the most part, government integrators have two choices when it comes to filling open positions: They can hire someone who already has clearance, or they can bring on someone who shows promise and then shepherd them through the process.

"If the company is big enough, it can hire someone and insert them in a nonclassified billable slot until they pass clearance," explains Jim Ratliff, a vice president and technical director who oversees clearance for Spectrum Systems, a Fairfax-Va.-based government integrator that did $25.8 million in sales last year. "Once you have a person, they become a fairly valuable resource," he adds.

Of course, getting clearance to work on specific projects or with specific agencies can be tedious. One reason: lack of consistency among agencies.

With all the headaches, it's no wonder that smaller integrators with no bandwidth to park new employees while they wait for clearance don't even bother to try. Consider GovPlace, a Goleta, Calif.-based government integrator with $26 million in annual sales. It either partners with firms that have cleared workers, or contracts with guns for hire--people in the industry with clearance who float from opportunity to opportunity.

"Absolutely, there will come a point in time as we grow that we will bring employees aboard and get them cleared," says Sean Burke, GovPlace president.

Who's Worth More?
For many federal integrators, the question may come down to which type of employee is more valuable: sales representatives or engineers. James River Technical Inc. (JRTI), a government solution provider based in Glen Allen, Va., believes that sales representatives experienced in the federal-government market are more valuable, thus harder to find than their technical and consulting counterparts. Tom Mountcastle, president and COO of JRTI, says the company is focusing more on finding and hiring skilled salesmen than engineers or consultants.

"You can offer great products and solutions and market them well, but if you don't understand the federal-procurement system, then you'll waste a lot of time and money on nothing," Mountcastle says.

Jack Pooley, vice president of iGov, a federal integrator based in McLean, Va., says a market shift has occurred in recent years in the IT industry that has affected the hiring process. "There was a major migration of people over to the federal side after the dot-com bust and the overall hemorrhaging of the commercial space," Pooley says.

Another challenge for resellers are salaries; experienced salespeople with federal-government backgrounds come at a premium, even in today's market.

Federal-government solution providers aren't expecting the hiring situation to improve, either. Salaries will continue to rise on both the technical and sales sides, and the competition will continue to swell. "I don't see the job of hiring getting any easier as the economy continues to improve," Mountcastle says.