CompTIA Praises New SBA Rule on IT Value Added Resellers.

Business Editors/High-Tech Writers

OAKBROOK TERRACE, Ill.--(BUSINESS WIRE)--Jan. 19, 2004

Trade Association Says Small Resellers Will Benefit from Better Access

to Federal Contract Opportunities and Business Assistance Programs

A federal rule scheduled to take effect this month promises to open up new opportunities for small value added resellers in the information technology (IT) industry to compete for federal contracts, according to CompTIA, the Computing Technology Industry Association.

The United States Small Business Administration (SBA) has established a new industry category for Information Technology Value Added Resellers (ITVARs), and set the size standard for this category at 150 employees. The SBA estimates that approximately 1,737 small businesses could receive assistance as a result of the new rule, which takes effect January 28.

"This rule will level the playing field for small resellers, who will be able to pursue federal contracts without the fear of larger firms with substantially more resources unfairly competing for the business," said John Venator, president and chief executive officer, CompTIA.

"We commend the Small Business Administration for establishing more reasonable eligibility requirements and size standards for federal IT contracts," Venator added. "The adopted changes will better assist small IT VARs in obtaining their share of federal contracts."

The SBA estimates that approximately $10 million to $25 million in additional federal contracts could be awarded annually to smaller small businesses under the new rule.

The SBA originally proposed a 500-employee size standard for ITVARs. CompTIA, the world's leading trade association representing the interests of the IT industry, was among the organizations and individuals advocating a smaller employee size standard.

"Businesses with up to 500 employees are not small business in this industry," Venator explained. "The average size of an ITVAR is 15 employees; and 88 percent of these businesses have 100 or fewer employees. Although these smaller resellers can be competitive in terms of quality and service, the margins in the industry often make it very difficult for them to compete with larger resellers."

According to SBA data, in fiscal years 2001 and 2002, federal contracts totaling $925.7 million were awarded for IT equipment purchases and related services. Small businesses received about 30 percent of these contracts, approximately $281.4 million. By comparison, small resellers accounted for 45.5 percent of total industry sales during the same period. This discrepancy suggests that small businesses as a group are less competitive in the federal ITVAR market than in the private sector.

The new SBA rule also provides small technology resellers with access to federal small business financial assistance programs.

CompTIA's work with the SBA in defining the new size standard for ITVARs is the latest example of the association's work to advance development and growth across the IT industry, including areas such as convergent technologies, e-commerce, IT training, software services, certification, public policy, and workforce development.

About CompTIA

CompTIA is a global trade association representing the business interests of the information technology industry. For more than 22 years CompTIA has provided research, networking and partnering opportunities to its more than 19,000 members in 89 countries. The association is involved in developing standards and best practices, and influencing the political, economic and educational arenas that impact IT worldwide. More information is at www.comptia.org.