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GAO-03-384R 1 (2003-02-14)

handle is hein.gao/gaobaamdr0001 and id is 1 raw text is: im Accountability * Integrity * Reliability United States General Accounting Office Washington, DC 20548 February 14, 2003 The Honorable Tom Davis Chairman, Committee on Government Reform House of Representatives Subject: Contracting for Information Technology Services Dear Mr. Chairman: Federal agencies spend billions of dollars annually acquiring information technology (IT) services from thousands of contractors using a variety of contracting methods. IT services include computer and telecommunication services, as well as the testing, quality control, installation, and operation of computer equipment. You asked us to provide information on how federal spending on IT services has changed in recent years and how that spending currently is distributed among companies of various sizes. In particular, you asked that we include data on medium-size companies because some medium-size companies have expressed concern about the share of IT services spending they receive. We define medium-size companies as those with annual revenues from all sources between $21 million and $500 million.' In response to your request, we (1) identified trends in federal spending for IT services from fiscal years 1997 to 2001 and (2) determined the distribution of federal spending for IT services among small, medium-size, and large businesses in fiscal year 2001, the latest year for which such information was available. Results in Brief Federal spending on IT services almost doubled from fiscal years 1997 to 2001, increasing from $9 billion to more than $17 billion. While the Department of Defense (DOD) remained the single largest purchaser of IT services throughout the period, spending on IT services through the General Services Administration (GSA) greatly increased, mostly the result of spending by GSA's Federal Technology Service on behalf of other agencies. Spending on IT services through GSA's federal supply schedule program grew from about $405 million to $4.3 billion. The distribution of IT services spending in fiscal year 2001 was 14 percent to small businesses, 21 percent to medium-size businesses, and 62 percent to large businesses. 'There is no formal definition of medium-size business. The Small Business Administration (SBA) establishes small business size standards by type of industry. SBA considers an IT services company small if the company has average annual receipts of up to $21 million over its past 3 fiscal years. We used the $21 million limit as the starting point to define medium-size firms. Industry representatives differed widely on an upper limit. We used $500 million, which is approximately mid-point of the range of limits suggested by industry sources. GAO-03-384R Contracting for IT Services

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