Familiar faces mask a changing market

Lockheed Martin Corp. began its 10-year streak as the No. 1 company on the Washington Technology Top 100 in 1995. Other companies finishing among the top 10 that year include Northrop Grumman Corp., Computer Sciences Corp. and Science Applications International Corp. -- all top-ranked companies this year as well.

Among the qualities that have sustained these companies during the past decade, one stands out: an ability to adapt to a constantly changing market. Consider this -- in 1995:

  • Procurement reform was barely in its infancy.

  • Multiple-award task-order contracts were rare.

  • The General Services Administration's schedules had yet to explode as contract vehicles.

  • Defense transformation and network-centric warfare were still on the drawing board as the Defense Department applied lessons learned from the first war in Iraq.

  • Homeland security was, at best, a theoretical concept.

Today, these issues dominate business planning among the leading Top 100 companies, which are ranked by their federal prime IT contracting revenue. Market research firm Federal Sources Inc. analyzed GSA procurement data to create the rankings.

These companies are chasing a federal IT budget slated to reach $59.3 billion in fiscal 2004, according to FSI.

"The biggest uptick that we're seeing now is the homeland security piece," said Steve Carrier, vice president of business development and strategic planning at Northrop Grumman's IT division. For the fourth year in a row, the Los Angeles-based company holds the No. 2 ranking with more than $4.9 billion in prime contracts.

The big homeland security prize on the horizon this year is the U.S. Visitor and Immigrant Status Indicator Technology System, known as U.S. Visit.

Computer Sciences Corp., which is No. 3, Accenture Ltd., which is No. 24, and Lockheed Martin are leading teams chasing the contract, which could be worth $10 billion, to build a system to monitor foreign nationals entering and exiting the United States.

The teams read like a who's who of Top 100 companies. CSC's team includes Northrop Grumman; EDS Corp. (No. 8), Anteon International Corp. (No. 19), General Dynamics Corp. (No. 6), Bechtel Corp. (No. 74), Arinc Inc. (No. 30), Cubic Corp. (No. 71), and Motorola Inc. (No. 21).

This year's list also highlights the continuing importance of the role that mergers and acquisitions play in the federal market. URS Corp. of San Francisco made its debut on the Top 100 at No. 29 thanks to its acquisition of EG&G Technical Services Inc. from the Carlyle Group.

Lockheed Martin continues to be an active acquirer, completing a swap with Affiliated Computer Services Inc. of Dallas, where Lockheed Martin got most of ACS' federal business, and ACS picked up Lockheed Martin's state and local business.

ACS, however, held onto its lucrative Education Department student loan program, which kept it on the Top 100 at No. 38 with $200 million in prime contract revenue.

Lockheed Martin has yet to complete its acquisition of Titan Corp. (No. 9) because of Justice Department and Securities and Exchange Commission investigations into alleged illegal payments Titan made to win work in several countries. A vote by Titan shareholders has been postponed twice and is now scheduled for June.

CACI International Inc., at No. 17, and American Management Systems Inc., at No. 48, are on the cusp of a deal that will send AMS' defense business to CACI. CGI Group Inc. of Montreal is buying the rest of AMS.

This year's rankings also show the value of information technology to engineering services firms. Several of these firms on the list moved up, including Mitre Corp., which rose from No. 28 to No. 18 with $469.6 million in prime contracts. Mitre is one of three not-for-profit companies on the list. The others are Battelle Memorial Institute at No. 35, and Research Triangle Institute at No. 99.

Debuting on the Top 100 are four Native American-owned companies, which mirrored the rise of these firms on Washington Technology's Top 25 8(a) rankings, released in September.

Three of the companies -- Artic Slope Regional Corp. (No. 61), Chugach Alaska Corp. (No. 72) and Chenega Corp. (No. 81) -- are Alaskan Native Settlement Act corporations. The Confederated Salish and Kootenai Tribes on the Flathead Indian Reservation in Montana own the fourth company, S&K Technologies Inc., which is No. 94. *

Senior Editor Nick Wakeman can be reached at nwakeman@postnewsweektech.com.

About the Author

Nick Wakeman is the editor-in-chief of Washington Technology. Follow him on Twitter: @nick_wakeman.

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