Red Tape Delays IT Spending By New Agency

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In the post-Sept. 11 world, the number of IT projects generated by the creation of the Department of Homeland Security was expected to exceed even generous estimates.

Yet some solution providers with longtime ties to the feds say they're beating their heads against the wall trying to discuss homeland security IT proposals with their government customers. "People are very reluctant to give any information," said Kyle Yost, vice president of sales at En-Net Services, a solution provider in Frederick, Md.

Sales to two longtime En-Net customers,the FBI and the U.S. Coast Guard, which is slated to become part of the Department of Homeland Security (DHS),have "come to a halt," he said. "We'd been doing quite a bit of business with them."

On the other hand, Yost said En-Net, which resells Sony and Fujitsu hardware and other products, made several sales in one day last week to non-DHS government customers.

In a report released last week, the General Accounting Office (GAO) estimated that $1.7 billion would be targeted for the DHS' IT needs in fiscal 2003. That figure, which the GAO said in the report may be too low, is earmarked for the homeland security IT needs of 22 federal agencies that will be melded into the DHS.

Some federal solution providers wonder where that money is, even as they acknowledge January is typically a slow month. Some are relying on innovation to spark new business. "We get asked about some weird things, like do we want to do a security analysis for a local firing range," said Gordon Hunter, civilian national account manager at solution provider, McLean, Va.

Brad Mack, iGov's vice president of sales, said for smaller resellers, building close relationships with heavy-hitting systems integrators such as Northrop Grumman will be key to winning DHS IT work.

Also key will be relationships with the agencies that will make up DHS. "Market to your installed base like there will be no change, and you will likely retain market share," said Mark Amtower, a partner at consultancy Amtower & Co., Ashton, Md. "Operating under the impression that the [DHS'] new CIO will drive major IT changes is wrong."

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