Multiyear contract awards for Federal IT spending has been growing steadily from $50 billion in 2003 to close to $70 billion in 2010.(1) This would represent at least 70% of IT funding.
Contracts under $100,000 are automatically set aside for small business, contracts from $100,000 to $500,000 can be automatically set aside for small business provided there are sufficient bidders. Contracts of $500,000 must have a subcontracting plan for small business. Close to 23% of prime contracts have in the past been awarded to small businesses.
In addition to the allocations to small businesses, the Federal acquisition regulations also a require awards to HUB Zones, that offer contracts to small businesses located in high unemployment, low-income areas as well as to 8(a) firms owned by socially or economically disadvantaged people or by women-owned. In addition, contract set-asides are made for Service Disabled Veteran Owned, Veteran Owned, Small Disadvantaged Business Owned and Native American small firms.
The total amount of IT contracts set aside for small business is not known but could be as high as 30%. What matters is the large constituency of local firms that depend on Federal funds. That number could exceed as many as 10,000 of enterprises that are closely connected to Congressional sources.
Data center consolidations and application consolidations will have to take into consideration the obstacles in overcoming what are the existing multi-year contracts for a multitude of firms.