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Google's federal business in apparent decline
By John Letzing, MarketWatch
Last Update: 5:26 PM ET Feb 13, 2009
SAN FRANCISCO (MarketWatch) -- While Google Inc. has made efforts to expand its appeal to federal agencies in recent years, the company's actual sales to the U.S. government have been in decline, according to data posted on a White House Office of Management and Budget Web site.
Google GOOG offers a number of products to federal buyers from the Defense Department to the Peace Corps, including hardware used to search databases and souped-up versions of its Google Earth image and mapping technology.
The Mountain View, Calif.-based company recently leased about 15,000 square feet of office space in Reston, Va., on the outskirts of Washington, D.C., to house its federal enterprise-sales team, according to the Fairfax County Economic Development Authority.
Sales to a variety of government agencies are one the ways Google has sought to expand beyond its core business of selling online-search advertisements, which still accounts for the bulk of its revenue. More direct sales to the government sales also could provide an additional, relatively recession-proof source of revenue.
More direct sales to the government sales could provide an additional, relatively recession-proof source of revenue.
For example, Google offers Google Apps software including word processing and spreadsheet tools to government buyers, and has won sales to agencies including the Swedish police service.
But data available from the Office of Management and Budget's site, Usaspending.gov, show Google's contracts with U.S. federal agencies have declined from $413,960 in 2006 to $81,046 in 2008.
In addition, customers listed for Google in 2006 including the Agriculture and Treasury departments do not appear in the 2008 numbers.
The government's accounting year begins Oct. 1 and ends the following Sep. 30. For the first months of the 2009 accounting year since September, Google has won $4,030 in federal contracts, according to the data.
Google's federal customers for 2009 include the Justice and Health and Human Services departments, the data show.
A Google representative wasn't able to immediately respond to a request for comment.
Google has won some key lobbying victories in Washington recently. For example, bands of valuable wireless spectrum auctioned by government last year to companies including Verizon Wireless VZ feature "open" network requirements, heavily touted by Google. In addition, the search giant is expected to benefit greatly from its relatively close association with the new administration.
Its chief executive, Eric Schmidt, has been a high-profile supporter of President Barack Obama, and the stimulus package passed by the House on Friday includes funding for projects expected to benefit Google and other technology companies, such as increasing the availability of broadband Internet connections in rural areas.
A number of Google's rivals and peers in the technology market regularly seek out federal contracts.
Microsoft Corp. MSFT, for example, has seen the value of its federal-government contracts grow from $59.5 million in 2006 to $63.2 million in 2008, according to Usaspending.gov.
Products and services sold by Microsoft to the government include software and technical support for the Commerce Department, Drug Enforcement Administration, the Navy and others, according to the data.
Usaspending.gov says it pulls data largely from the Federal Procurement Data System and the Federal Assistance Award Data System.
Early last year, Google spokesman Emmanuel Evita disputed the data presented at Usaspending.gov, though he declined to comment on the company's revenue from federal contracts. See related story on Google's sales to the federal government.
Shares of Google were down 1.5% Friday at $357.68.
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