Billions in IT sales may be on hold

New regulations are forcing telecom and information technology companies that sell to the federal government to meet disability guidelines or risk losing future contracts.

4 min read
WASHINGTON--New regulations are forcing companies that sell to the federal government to meet disability guidelines or risk losing a shot at future contracts.

Telecom and information technology (IT) companies sell about $38 billion worth of goods and services to the federal government each year. Many companies may find themselves ineligible to bid for future contracts after June 21, however, if they cannot offer federal agencies equipment, such as phones capable of higher volumes, that meets the needs of disabled workers. The issue will be the subject of an Information Technology Association of America (ITAA) forum here Monday.

The equipment that must be disability-compliant under new federal rules makes up anywhere from 25 percent to 50 percent of all telecommunications goods sold to the federal government each year, the General Services Administration (GSA) estimates. This could especially affect the largest telecommunications and IT sellers to the government, including telecom companies AT&T, Sprint and WorldCom, hardware manufacturers Lucent Technologies and Motorola, data manager Electronic Data Systems, and computer manufacturers Dell Computer, Compaq Computer and Gateway. Those nine companies combined sold more than $3 billion worth of goods and services to the federal government last year.

"I don't have any members that are confident their products will be 100 percent compatible" by June 21, said ITAA's Bartlett Cleland.

What is covered
Section 508 of the Workforce Investment Act of 1998 called for all federal agencies to accommodate the needs of disabled workers. This was meant not only to benefit those already working in the government but to recruit new talent, particularly in high-tech.

"The impending workplace shortage of the federal government threatens to seriously cripple our ability to provide service to our citizens," Rep. James Moran, D-Va., said March 22 at a hearing in the House Government Reform Technology Subcommittee.

Others have suggested that bringing more disabled workers into the workplace--studies show a 70 percent unemployment rate in that population--could also be an element to reducing the need for H-1B visas for foreign technology workers.

In rules completed Dec. 21, 2000, the federal agency Architectural and Transportation Barriers Compliance Board--or Access Board--produced a long list of accessibility guidelines. For telecommunications equipment and services its list included data reception, transmission and storage. The language is written broadly to include "any equipment or interconnection system" that fits one of its definitions.

The focus of the rules seems to be on equipment that the average worker would come in contact with, including phones and computers, as well as related services such as DSL connections. Equipment most likely tended only by trained personnel, such as servers, is exempt.

The Access Board estimated the cost to the industry to comply with the new rules would be no more than $1 billion annually, but Cleland suspects it will be much higher. "You could take two or three of our companies and rack up $1 billion easily," he said.

Other requirements include:

 All phones must be capable of a volume of 20 decibels, even though the Federal Communications Commission has recommended a maximum of 18dB.

 Every phone must be able to be connected to a TTY or teletypewriter device, although the board gave manufacturers some flexibility in how the connection could be accomplished.

 Every federal Web site must be accessible to the disabled, meaning federal Web masters must be able to purchase the appropriate tools from vendors.

 There are a wide variety of computer-related requirements for compliance, getting to a level of specificity where the computer vendor is instructed how to design, for example, the Caps Lock key on a keyboard.

"I have some concerns that the rules are overly prescriptive, rather than allowing the marketplace to decide," Rep. Tom Davis, R-Va., said.

Cleland agreed. "We always will be frozen in that year" when standards were developed, he said. The narrow focus of some rules also mean longer production cycles for custom products, he said.

However, at a breakfast sponsored by Adobe Systems last week, David Capozzi of the Access Board defended the rules, saying the board had hewn to a middle ground between strict definitions and market flexibility.

"We're told (by the industry), 'Be specific so we know when we've done enough,' and also, 'Let us do it our own way,'" he said. "We try to strike a balance."

The ticking clock
Businesses are scrambling to meet the June deadline for compliance, and there's no secret that they'd like more time.

"We would have liked a longer window," Cleland said. While companies so far have been reluctant to openly criticize the six-month deadline, Cleland said he knows of at least one meeting of a number of prominent companies where leaders discussed ways they could delay the deadline.

"They're in a very tricky political position," he said, but "I will be stunned if we don't see some companies coming forward (to protest) as the deadline approaches."

Among the companies that have publicly committed to provide full accessibility are 3Com, Adobe, AOL Time Warner, AT&T, BellSouth, Compaq, eBay, Global Crossing, Handspring, Hewlett-Packard, Macromedia, Microsoft, NCR, Qualcomm, Red Hat and Sun Microsystems.

Still, when all is said and done, it's possible companies could fall short of compliance but not necessarily lose all of their bidding privileges.

Companies could also gain a reprieve from the current administration of President George W. Bush, who has made no secret of his bent toward laissez-faire regulation of businesses.

"It's really gray, a huge open question" to what extent a federal agency would be free to continue purchasing from a company if its product was not 100 percent compliant with the rules but met the agency's needs. It gets more complicated given the fact that each agency makes its own determinations regarding compliance.

The Justice Department, which is the legal authority overseeing the new rules, has given "a lot of squishy answers" on the topic, Cleland said.