Wave of State IT Retirees Pose Threat and Opportunity for Government VARs

That's what some VARs active in California state government business fear even as a wave of IT retirements is expected to create a surge in demand for outside technology contractors.

That dilemma surfaced at the first stop on the 2007 GovernmentVAR State and Local Roadshow in Sacramento. California state CIO J. Clark Kelso told some 50 solution providers attending the CMP Technology event in Sacramento that 50 percent of current state IT employees will be eligible to retire over the next five years. And he said that 75 percent of his most senior IT managers are eligible to retire today.

"Please don't go try to hire them," Kelso joked with VARs. "But they are really talented people. In terms of staffing yourself up, there are a lot of good people in government."

He added that even as the state hires new people to replace retirees, he's going to concentrate state technology people on major IT projects, leaving a major void in system maintenance and refresh for outside contractors.

Sponsored post

Kelso said that some of the former public CIOs are forming consulting companies to work with the state and VARs might benefit by partnering with them. "That may be a way to get access when otherwise it's difficult to get access to [state] CIOs," he said, adding that he will return the phone calls of former CIOs that he knows. "Hook up with a small business of these ex-CIOs. They will have access, no question about it."

But some VARs think the relationship is too cozy. During a QA following his keynote, VARs said that current state CIOs sometimes tend to do business with their former colleagues and exclude other solution providers from the process.

"Really making sure that these [contracts] are really open is a problem," Kelso admitted. "We have to do something on all of those contracts because that's where the 9,000 to 10,000 contracts are. They are up to $250,000, $300,000, $400,000 and we have to do a better job in opening those up to competition so that [state CIOs] are willing to take on or look seriously at a new provider. But I'm confident that's not happening."

One government VAR attending the conference, who asked not to be identified, charged that state IT employees line up businesses before they retire and sometimes write specs for projects just prior to leaving. "Basically they write the bid for themselves," he said. "They know exactly what the specs are and they have subcontractors all lined up before leaving."

In a panel discussion following Kelso's keynote, Bob Nitrio, president of Ranvest Associates, an Orangevale, Calif., solution provider, said simply being registered as a small business has been of little help in gaining access to state business despite mandates guaranteeing a portion of state contracts go to small businesses. "We've won zero jobs with the state because of our small business status," he said.

Brady Flaherty, a principal in Altos Technology Group, a Sacramento solution provider focusing on Hewlett-Packard enterprise solutions, said his strategy is to partner with ISVs to gain access to state business. "We don't chase RFPs," he said. "We partner with ISVs to build the nuts and bolts of the application infrastructure that they don't want to do."


California CIO to VARs: We Need Your Help

California CIO: 5 Tips To Win State Contracts