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NAICS NewsletterNovember 7, 2008

NAICS 541512

Computer Systems Design 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 the services of Computer Systems Design 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 Computer Systems Design 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 'Computer Systems Design Services' industry, NAICS 541512. 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 541512

WHAT IS NAICS 541512?

NAICS 541512 is used when the contract requires contractor-provided planning and designing computer systems that integrate computer hardware, software, and communication technologies. The hardware and software components of the system may be provided by this establishment or company as part of integrated services or may be provided by third parties or vendors. These establishments often install the system and train and support users of the system.

This NAICS was previously represented by two different Standard Industrial Classification (SIC) codes, as they pertained to the following requirements:

SIC 7373: Computer Integrated Systems Design

  • CAD (computer-aided design) systems integration design services
  • CAE (computer-aided engineering) systems integration design services
  • CAM (computer-aided manufacturing) systems integration design services
  • Computer systems integration analysis and design services
  • Computer systems integrator services
  • Computer-aided design (CAD) systems integration design services
  • Computer-aided engineering (CAE) systems integration design services
  • Computer-aided manufacturing (CAM) systems integration design services
  • Information management computer systems integration design services
  • Local area network (LAN) computer systems integration design services
  • Network systems integration design services, computer
  • Office automation computer systems integration design services
  • Systems integration design consulting services, computer
  • Systems integration design services, computer

SIC 7379: Computer Related Services

  • Computer hardware consulting services or consultants
  • Computer software consulting services or consultants
  • Computer systems integration design consulting services

The size standard associated with NAICS 541512 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 $25.5 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 541512 for the period of Fiscal Year 2004 (FY04) through the second quarter (Q2) of Fiscal Year 2008 (FY08 aka Q2FY08) was over $14.7 Billion. With two quarters reported, FY08 reported spending of $270 Million for services under NAICS 541512. The chart below illustrates the reported** spending by year for FY04 through Q2FY08.

Reported Contact Spending FY04 - Q1FY08 for NAICS 541512 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 541512, commanding over 40% of the market share for the last four fiscal years (FY05 through Q1FY09+), with over $1.13 Billion in contract spending. The United States Navy, the United States Air Force, and the United States Coast Guard (USCG) all topped the $100 Million mark. The remaining agencies in the top ten, along with another four agencies, all reported spending above $10 Million.

Top 10 Federal Agencies by % of Total Market FY05 - Q2FY09 for NAICS 541512 Source: epipeline's Contract History Plus*

WHO WINS THE CONTRACTS?

According to the Central Contractor Registry (CCR), there are 20,646 companies registered under NAICS 541512 (source: active registrants, www.ccr.gov as of 09/25/2008). Of this number, 17,438 qualify as small businesses, which includes the following breakout by socioeconomic categories (some companies may qualify under more than one category):

  • 2,144 SBA Certified 8(a) contractors;
  • 759 SBA Certified HUBZone contractors; and
  • 2,059 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

Booz Allen and Hamilton holds the top spot on the unrestricted competition list, with $925 Million in contract dollars for FY04-Q2FY08 and over 7.4% of the market share. Lockheed Martin Corporation, General Dynamics Network Systems, Systems Research and Applications, and Computer Sciences Corporation (CSC) round out the top five and all hold in the 4% market share range, with at least $500 Million. The remaining companies in the top ten, along with 21 other firms all reported spending above $100 Million for the FY04 to Q2FY08 period.

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 541512 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 $1.1 Billion for FY04 through Q2FY08. SenCom had the highest reported spending with over $82 Million, or 7.3% of the market share. Advanced Systems Development and Tyonek Manufacturing LLC both held contracts with total reported spending for that period above $70 Million each and QSS Group Inc. was the only other company to exceed the $50 Million mark, with $58.3 Million. The remaining firms in the top ten, along with 9 other businesses exceeded $10 Million in reported spending under NAICS 541512.

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 541512 Contractors by % of Total Market for FY04 - Q2FY08 - RESTRICTED Competition

HOW ARE THESE CONTRACTS PROCURED?

Over 61% of the contract dollars spend during the FY04 through Q2FY08 timeframe were awarded using full and open competition. This represented over $9.0 Billion for NAICS 541512. Over 30% 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 $4.4 Billion in contract dollars. Contracts sole sourced to 8(a) firms held 3.6% of the market share (over $537 Million). Competitive 8(a) contracts was less then half that amount, at $244 Million.

All other acquisition strategies combined were only 0.36% of the market share. The strategy with the highest reported contract spending was partial small business set-aside acquisitions, with over $21 Million.

Acquisition Breakout under NAICS 541512 - FY04 through Q2FY08 Source: epipeline's Contract History Plus*

WHERE ARE THESE CONTRACTS PERFORMED?

The contracts awarded under NAICS 541512 often allow the work to be performed at the contract awardee's location, as opposed to on-site contracts such as work on a specific military installation. This is evident in the distribution of work across the United States. A high concentration - over 55% 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 32.7% of the market share, equating to over $4.8 Billion. Spending in Maryland was less than half that number, with $2.2 Billion, and Washington, DC about $1 Billion less, at $1.1 Billion. California was the only other state to exceed $1.0 Billion. Seventeen other states all reported contract spending for the FY04 through Q2FY08 period above $100 Million.

Contract Place of Performance under NAICS 541512 (FY04-Q2FY08) Source: epipeline's Contract History Plus*
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