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Why it Pays off to Get Involved with IT Government Contracts

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Oscar Waterworth
Oscar is a writer and a senior editor over at Bizzmarkblog.com. He enjoys reading and writing about marketing, technology, and business.
Read about why it is more lucrative for an IT company to participate in government projects.

While a lot of IT companies focus on the private sector to provide them with work, it might be much more lucrative to start hunting for a government contract. According to numerous studies, it turns out that although the government has the resources to start dealing with these IT issues internally, they still prefer to outsource them. To them, this means giving out contracts worth billions, but for companies, this is outsourced to, it poses a lucrative opportunity. With this in mind, here are few situations in which it might be more than worth your while to get involved with IT government contracts.


The Computer Engineer Salary

According to a Project on Government Oversight study that was released in 2011, computer engineers working for the government received about $136, 456 per year. Although this roughly matches what these same engineers would make working in a public sector ($131,415), if employed by the government as a contractor they would receive around $268,653 yearly. As you can see, the price is almost two times as big as what their counterparts employed directly by the federal government would receive.


IT Management Services

When it comes to the IT management services, the wage gap is not as significant, but it still goes in the favor of contractors. For example, any government employed IT managers can hope to earn $124,663 on average which is somewhat more than what their counterparts in the private sector are earning at around $114,818. However, once these private sector companies get in service of a federal government as contractors, their wages suddenly skyrocket to the incredible $198,411 annually.


Why Is This So?

There is one thing you need to keep in mind, the IT is not the most extreme case of how expensive the outsourcing can be for a government. It is estimated that some of these contracts cost five times as much as what would it cost for a government to deal with these issues internally. The reason why this happens in the first place is because there is a deeply rooted belief that specialized IT companies offer a far superior service than any government-run department (which is partially true).


It also goes to show that when it comes to the digitization and modernization, the federal government always puts quality over the price. But bear in mind that you will need to buy surety bonds as a warranty that you will finish the job that is expected of you. For example, if you are located in Texas, you will need to buy surety bonds in Texas, as every state has different requirements.


What About the Future?

Even though this practice may work great at the moment, some would argue that this makes government agencies much less flexible and much more dependent on these IT power-players. Even though their efforts to catch up may not have the desired effect (with government funding even this is questionable), in the future this might result in an even greater rise in IT services costs.


Furthermore, seeing how all of their services would be entrusted to the IT companies, the government would lose all the leverage in potential negotiations and would have to agree to any terms set by their partners. Still, this is probably the worst-case scenario seeing how the government could always rely on these companies’ competitors to step in.


Conclusion

As you can see, while it is definitely worth for an IT company to get an IT government contract, the fact that their values are so astronomical makes them next to impossible to get. Even though this may sound too good to be true, the numbers beg to differ since this year alone the government paid over $122,74 billion in government contracts. Although this happened through over 1,150,288 separate transactions, keep in mind that we are still in the Q1 of 2017.

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