Getting a Piece of the Federal Pie
The number of large Hispanic high-tech firms that sell to the federal government has dropped by nearly half in the last five years.
Revenues for the 50 largest Hispanic high-tech companies in the nation totaled $2.27 billion last year, an increase of nearly 19 percent from the previous year's total of $1.91 billion. Of that total, nearly a third, or more than $738 million, came from agencies in the federal government. Sixteen companies on the HISPANIC BUSINESS High-Tech 50 currently participate in the government's 8(a) minority contracting program, down from 30 companies only five years ago.
With a new administration in Washington, what does the future hold for minority high-tech contractors? Incremental growth, answers Stephen Denlinger, CEO of the Latin American Management Association (LAMA). "The special initiative that the Clinton administration had to bridge the digital divide has already disappeared, or will come back in another incarnation. That's been the biggest casualty in the IT [information technology] field. But that doesn't change the basic need for IT in federal agencies. The market for IT will continue to expand slightly," Mr. Denlinger predicts.
But even slow, steady growth may not suit the style of the HISPANIC BUSINESS High-Tech 50. These companies have enhanced their revenues by 15.1 percent per year since 1998. The average company on the list has revenues of $45.4 million and has been in business 17 years.
One change Mr. Denlinger foresees is a small build-up in military spending. An assessment by Defense Secretary Donald Rumsfeld will point the way for a lighter, more agile military in the future, but that policy won't affect procurement decisions for several years, according to Mr. Denlinger. A more ominous trend appears in the form of industry consolidation and procurement streamlining that cut small players out of the bidding pool. In particular, Mr. Denlinger cites "bundling," in which small contracts are packaged together for administrative efficiency, and the General Services Administration schedules, which make contractors pre-set their prices and capabilities for all government agencies. "You have to be pretty big to compete for bundled contracts," concedes Mr. Denlinger. "A few [Hispanic companies] are big enough to play in that arena, and they're doing fairly well. But most will move out of prime contracting into subcontracting – a less profitable, more onerous business model."
Aside from government contractors, telecommunications suppliers dominate the directory. Brightstar Corp., this year's number 1 company, and Complas, number 2 on the list, sell telecom equipment and services. Nine companies among the 50 fall directly in the telecommunications sector, with many others involved via computer systems integration and networking, the most popular specialization on the list (see directory on next page). High-tech firms also work in the automotive, environmental, manufacturing, and architectural sectors.
Geographically, the greater Washington, D.C., metro area hosts 14 companies on the list, again pointing up the importance of the federal markets. By state, California has 12 companies on the list, Virginia nine, Texas and Florida six each, and Maryland three. Sixteen states had at least one company on the list, demonstrating the diversity and adaptability of the 2001 HISPANIC BUSINESS High-Tech 50.
To view the 2001 HISPANIC BUSINESS High-Tech 50 Directory, click here.
Written by Senior Editor Joel Russell. Research for the 2001 HISPANIC BUSINESS High-Tech 50 directory conducted by Research Supervisor Tabin Cosio and Research Associate Cynthia Marquez.
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