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NAICS NewsletterDecember 11, 2008

NAICS 541511

Custom Computer Programming Services

Government Contract and Procurement Analysis Report

Report Summary

This report, offered by epipeline, contains a brief analysis of the Federal government's procurement practices with regards to purchasing Custom Computer Programming Services.

You will find information on the top federal government agencies that purchase these services, as well as their procurement strategy (i.e. full and open competition, set-asides and more). Finally, there is a review of the top companies that are awarded federal government contracts for Custom Computer Programming Services.

To get a more comprehensive analysis and learn more about how epipeline can help you identify current and future bid opportunities, register for a live Demo.

This report takes an in-depth look at the 'Custom Computer Programming Services' industry, NAICS 541511. To understand the future, one must study the past. epipeline's Contract History Plus* provides you with a broad context and several perspectives that enables you to develop the best positioning and strategy for your company to more effectively compete for government contracts. The following graph illustrates one such perspective: the top Government departments/agencies buying these services over the last four fiscal years.

Top 10 Federal Agencies by % of Total Market FY04 - Q2FY08 for NAICS 541511

WHAT IS NAICS 541511?

NAICS 541511 is the primary code when projects require writing, modifying, testing, and supporting software to meet the needs of a particular customer.

It was previously represented by Standard Industrial Classification (SIC) code: 7371. SIC 7371 covered the following topics:

  • Applications software programming services, custom computer
  • Computer program or software development, custom
  • Computer programming services, custom
  • Computer software analysis and design services, custom
  • Computer software programming services, custom
  • Computer software support services, custom
  • Programming services, custom computer
  • Software analysis and design services, custom computer
  • Software programming services, custom computer
  • Web (i.e., internet) page design services, custom

The size standard associated with NAICS 541511 is $25.0 Million (effective August 22, 2008), which means that a company, including its affiliates, would be considered a "small business" if their average annual gross receipts does not exceed $25.0 Million for the past three years. If a company has not been in business for three years, the average weekly revenue for the number of weeks the company has been in business is multiplied by 52 to determine the average annual receipts.

Total reported spending under NAICS 541511 for the period of Fiscal Year 2004 (FY04) through the second quarter (Q2) of Fiscal Year 2008 (FY08 aka Q2FY08) was over $10.8 Billion. With two quarters reported, FY08 reported spending of $373 Million for services under NAICS 541511. The chart below illustrates the reported** spending by year for FY04 through Q2FY08.

Reported Contact Spending FY04 - Q2FY08 for NAICS 541511 Source: epipeline's Contract History Plus*
** Note: it is possible that some Defense spending for the more recent fiscal years (FY05 to present) is not as widely reported as earlier years. These numbers will likely increase as more departments and agencies report their contract spending.

WHO ISSUES THE CONTRACTS?

The United States Army is the largest buyer of services under NAICS 541511, commanding over 23% of the market share for the last four fiscal years (FY04 through Q2FY08), with over $2.5 Billion in contract spending - over $1 Billion more then the United States Air Force, which holds the second spot. The United States Navy also tops the $1 Billion mark, with over $1.1 Billion in contract spending for that period. The General Services Administration (GSA)'s Federal Technology Service (FTS) and the Defense Information Systems Agency (DISA) round out the top five.

Top 10 Federal Agencies by % of Total Market FY04 - Q2FY08 for NAICS 541511 Source: epipeline's Contract History Plus*

WHO WINS THE CONTRACTS?

According to the Central Contractor Registry (CCR), there are 21,407 companies registered under NAICS 541511 (source: active registrants, www.ccr.gov as of 11/26/2008). Of this number, 18,120 qualify as small businesses, which includes the following breakout by socioeconomic categories (some companies may qualify under more than one category):

  • 698 SBA Certified HUBZone contractors; and
  • 2,098 SBA Certified 8(a) contractors;
  • 1,767 Service Disabled Veteran Owned Small Businesses (SDVOSB).

NOTE, the CCR website states, "As of the July 30, 2008 release (4.08.2), CCR-registered vendors may elect not to display their registration in the CCR/FedReg Public Search." This could mean that there are more active contractors registered with the CCR then the resulting totals above represent.

The two charts below identify the top 10 Companies, by market share, for the period of FY04 through Q2FY08. The first chart represents the top 10 companies that were awarded their contracts under ANY type of competition, whether it was full and open, small business set-aside, sole-sourced, etc. This list primarily consists of large businesses. The second chart, however, lists the top 10 companies that won their contracts under RESTRICTED competition. Specifically, epipeline limited this to those contracts awarded under the acquisition strategies listed below. The contract dollars represented on this second chart may not include all contract dollars for the individual contractor.

  • 8(a) Competed
  • 8(a) Small Disadvantaged (SDB) set-aside
  • 8(a) sole-source
  • SDB set-aside
  • SDB, 8(a) with HUBZone
  • Combination HUBZone and 8(a)
  • HUBZone set-aside
  • HUBZone sole-source
  • Service Disabled Veteran-Owned Small Business (SDVOSB) set-aside
  • SDVOSB sole-source
  • Emerging Small Business set-aside
  • Very Small Business set-aside
  • Reserved for Small Businesses ($2501 to $100,000)
  • Total Small Business set-aside

TRW holds the top spot on the unrestricted competition list with over $488 Million in contract dollars for FY04-Q2FY08 and over 6.1% of the market share. The second company on the list, GeoVizcom Inc., had over 4.6% of the market share with $372 Million in reported contract spending. Litton Systems Inc., Sverdrup Technology and Lockheed Martin Government Services round out the top five.

Lockheed Martin is actually listed twice on this top ten list, once as Government Services and once as Lockheed Martin Corporation. Other sectors of Lockheed Martin outside of the top ten, reporting contract spending under NAICS 541511 include Lockheed Martin Integrated Systems, Lockheed Martin Services, Lockheed Martin Technology Services, and Lockheed Martin Simulation Training Support. The combined reported spending is over $600 Million.

PLEASE NOTE: as this is a listing by Company name, rather than PARENT company, some companies may have more than one ranking, which may not reflected in the chart below.

Top 10 NAICS 541511 Contractors by % of Total Market for FY04 - Q2FY08 - All Acquisition Strategies Source: epipeline's Contract History Plus*

The combined contract spending for contracts awarded under "restricted competition," as outlined above, totaled over $1.0 Billion for FY04 through Q2FY08. QSS Group Inc. had the highest reported spending with over $44 Million, or 4.32% of the market share. Systalex Corporation and SecuriMetrics Inc. both reported spending above $30 Million (with $36 Million and $34 Million, respectively). The remaining top ten firms, along with one other firm (InnovaSystems International LLC) all reported spending above $20 Million. Another 11 companies reported spending above $10 Million for NAICS 541511 between FY04 and Q2FY08.

PLEASE NOTE: as this is a listing by Company name, rather than PARENT company, some companies may have more than one ranking, which may not reflected in the chart below.

Top 10 NAICS 541511 Contractors by % of Total Market for FY04 - Q2FY08 - RESTRICTED Competition

HOW ARE THESE CONTRACTS PROCURED?

Over 54% of the contract dollars spend during the FY04 through Q2FY08 timeframe were awarded using full and open competition. This represented over $5.8 Billion for NAICS 541511. Almost 35% of contracts during this period did not report their acquisition strategy. These contracts could include those awarded using full and open competition, small business set-aside, or any manner of restriction. This accounted for over $3.7 Billion in contract dollars. Contracts competitively awarded to 8(a) firms and those sole sourced to 8(a) firms reported similar levels of spending, with each just over $400 Million for the FY04 to Q2FY08 period. Contracts set-aside for HUBZone or SDVOSB companies represented a significantly smaller market share, with combined sole source and competitive HUBZone contracts totaling over $8.7 Million and SDVOSB competitive and sole sources contracts combined to over $11.2 Million.

Acquisition Breakout under NAICS 541511 - FY04 through Q2FY08 Source: epipeline's Contract History Plus*

WHERE ARE THESE CONTRACTS PERFORMED?

These contracts are being performed across the continental United States and abroad. The 50 states plus Washington, DC have reported spending of $10.3 Billion and contracts for locations outside the United States total over $523 Million.

A high concentration - over 50% of work is performed within the Washington, DC Metropolitan area. This geographical area is home to many federal contractors, who are sometimes called "Beltway Bandits" due to their proximity to the headquarters of the Federal Government. Virginia reported the highest contract spending by a significant margin, with 29.9% of the market share, equating to over $3.2 Billion. Spending in Washington, DC and Maryland was significantly less (but still much more than other states), at just over $1 Billion apiece.

California was the only other state above $500 Million, with $631 Million in reported spending for the FY04 through Q2FY08 period. The remaining states in the top ten, along with nine other states all reported contract spending above $100 Million.

Contract Place of Performance under NAICS 541511 (FY04-Q2FY08)

Source: epipeline's Contract History Plus*

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