January 4, 2007

epipeline's Eye on 'Data Processing, Hosting, and Related Services,' NAICS 518210


As the Business Development Manager responsible for creating the business plan for your company, it can be very challenging to gain a perspective of opportunities over the several years; and from that, determine the specific opportunities to pursue.


This week we are going to look at the opportunities for 'Data Processing, Hosting, and Related Services,' (NAICS 518210). To understand this NAICS code better, epipeline has asked the following questions:


1.                  Who issues the contracts?

2.                  Who wins the contracts?


NAICS 518210 is assigned to opportunities that require a contractor to provide an infrastructure for hosting or data processing services. These firms may also provide the following services:

         Specialized hosting activities (web hosting, streaming services or application hosting),

         Application service provisioning,

         General time-share mainframe facilities to clients.


These opportunities may also include requirements for contactors to provide Data processing, where the contractor would provide complete processing and specialized reports from data supplied by the government or provide automated data processing and data entry services.


NAICS 518210 is the most recent version of the code, which was issued in 2002. These services were previously served by the 1997 version of the NAICS, under 514210. Prior to the establishment of NAICS codes, these services used a variety of Standard Industrial Classification (SIC) codes, as identified below:

         SIC code 7374: Computer Processing and Data Preparation and Processing Services

o       Application hosting

o       Application service providers (ASPs)

o       ASPs (Application Service Providers)

o       Automated data processing services

o       Computer input preparation services

o       Computer time leasing

o       Computer time rental

o       Computer time sharing services

o       Data capture imaging services

o       Data entry services

o       Data processing computer services

o       Data processing services (except payroll services, financial transaction processing

o       Electronic data processing services

o       Optical scanning services

o       Scanning services, optical

o       Web hosting

         SIC code 7379: Computer Related Services, (disk conversion services)

o       Disk and diskette conversion services

o       Disk and diskette recertification services

o       Media streaming services

         SIC code 7389: Business Services, (microfilm services)

o       Microfiche recording and imaging services

o       Microfilm recording and imaging services


The size standard associated with NAICS 518210 is $23.0 Million, which means that a company, including its affiliates, would be considered a "small business" if their average annual gross revenue does not exceed $23.0 Million for the past three years.


Total reported spending under NAICS 518210 in FY03 was almost $560 Million. FY04 saw a significant increase, to over $900 Million. (Source: epipeline's FPDS information, covering fiscal years 2003 and 2004).


Who issues the contracts?


The General Services Administration (GSA)'s Federal Technology Service (FTS) is the largest buyer of services under this NAICS in Fiscal Year 2004, with over $190 Million. The United States Army was second in contract dollars spent, with over $116 Million. The Department of Education, the United States Navy, and the Department of Interior's Minerals Management Service (MMS) round out the top five, all with under $100 Million in contract dollars for FY04.


The chart below illustrates the market share held by these top ten agencies under NAICS 518210 for FY04 - these ten departments/agencies comprise over 82% of reported contract spending during this period for this NAICS code.




Who wins the contracts?


According to the Central Contractor Registry (CCR), there are 4,706 companies registered under NAICS 518210 (source: active registrants, www.ccr.gov as of 3/17/06).  4,289 of those are small businesses. The two charts below identify the top 10 Companies, by market share, for FY04. 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 following acquisition strategies:

         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


The Electronic Data System (EDS) Corporation holds the top position on the unrestricted competition list, with almost $185 Million in contract dollars for FY04 and a whopping 20% of the market share. Computer Sciences Corporation (CSC) is a distant second, with over $78 Million. These top ten firms represent about 56% of the market share under NAICS 518210 in FY04. There were 17 companies holding contracts with at least $10 Million or more in FY04; and 90 firms with at least $1 Million or more. PLEASE NOTE: as this is a listing by Company name, rather than PARENT company, some companies may have more than one ranking, which is not reflected in the chart below.




The combined contract spending for contracts awarded under "restricted competition" totaled over $73 Million in FY04. ITS Services Inc., fourth on the "unrestricted list" tops the "restricted list," with over 15% of the market share, equating to over $11 Million in contract(s) that year. Cobro Corporation is also on both lists. 19 firms held contracts with at least $1 Million or more in FY04. PLEASE NOTE: as this is a listing by Company name, rather than PARENT company, some companies may have more than one ranking, which is not reflected in the chart below.




Acquisition strategy was not widely reported for this code, with over 68% of the market share using an unknown competition strategy. These contracts could include all types of competition, from full and open, small business set-aside, HUBZone set-aside, etc. Over $200 Million of contract spending under NAICS 518210 in FY04 were reported as using full and open competition. The breakdown of acquisition strategy for FY04 is illustrated in the pie chart below. Contracts that were set aside for small businesses comprised almost $40 Million of FY04 contract spending. Another $30 Million were sole-sourced to 8(a) firms, with another $12 Million for 8(a) firms that were competitively procured.  Historically Underutilized Business Zone (HUBZone) firms and Service Disabled Veteran Owned Small Businesses (SDVOSB) did not even register in FY04, though they could be represented within the 68% of the 'Unknown' acquisition strategy.




epipeline's application contains a number of opportunities that are identified by this NAICS code. To learn more about the NAICS 518210 opportunities or other opportunities that epipeline is tracking today; try the following search in the epipeline application:


Find "NAICS 518210, "Data Processing, Hosting, and Related Services" Opportunities


1. After logging in, select Researched Opportunities

2. NAICS Code(s) - Type 518210 (or, try using the SIC field, with 7374, 7379, and/or 7389);

3. Click Search


Find "NAICS 518210, "Data Processing, Hosting, and Related Services" Opportunities

1. After logging in, select FPDS Contract History

2. Type 518210 in the NAICS field

3. Click Search



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