State & local special report: State markets ? tough nuts to crack

The formula that Dynamics Research Corp. used to enter the state and local market consisted of equal parts business savvy and plain luck.

In the mid-1990s, the defense contractor based in Andover, Mass., was marketing Year 2000 services to states with mainframe systems. It wanted to bring its experience on Air Force mainframes to bear on the problem and ultimately found a niche performing Y2K services in state human services agencies, said Kathy Perras, vice president and general manager of DRC's state and local programs. But the company yearned for large, statewide projects.

That's when luck walked in the door. DRC wanted to build statewide child welfare systems, but customers wanted to hire companies that could transfer systems used in other states rather than build new ones. So DRC went to the federal government, which oversees state health and human services programs, and asked if there was any child welfare software in the public domain that it could obtain. The federal government obliged.

"New Hampshire wanted Oklahoma's system, so we got Oklahoma's system up and running, and we bid it. We bid against Deloitte, which actually wrote the software, and we beat them. That's how we got our first qualification," she said.

That was in 1996. And the company has focused primarily on child welfare and related programs since, Perras said.

In addition to New Hampshire, DRC has worked on child welfare projects in Arkansas, Colorado and Ohio. The company won a $35 million project in Ohio three years ago. The system is moving from the test stage to a statewide deployment and is scheduled for completion in November.

DRC has about $20 million in annual sales from its state and local business but hopes that will increase with more wins in the human services area this year. But the company will have to compete against a formidable set of opponents focused on child welfare that includes Accenture, CGI and Deloitte, Perras said.

"We didn't win as many opportunities last year as we had hoped, so we have a refocused effort this year," she said.

Perras is skeptical that DRC's strategy would work for other federal integrators now. The federal government no longer helps companies replicate existing systems, although it might be possible to obtain one from a particular state, she said.

"There is a very large barrier to entry," Perras said. "You have to come to the table with a solution. You must have a child welfare system in your pocket to come into a state and bid. No one is paying for brand-new ones anymore. ... It doesn't matter how big you are, you don't qualify."

The remaining alternative for breaking into the health and human services market is to either acquire or team with a company that has an established business, Perras said.

"There are some companies that have gone that route, but that is the only way to get in. It is a closed space," she said.

About the Author

William Welsh is a freelance writer covering IT and defense technology.

Reader Comments

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

What is your e-mail address?

My e-mail address is:

Do you have a password?

Forgot your password? Click here
contracts DB


  • Dive into our Contract Award database

    In an exclusive for WT Insider members, we are collecting all of the contract awards we cover into a database that you can sort by contractor, agency, value and other parameters. You can also download it into a spreadsheet. Read More

  • Is SBA MIA on contractor fraud? Nick Wakeman

    Editor Nick Wakeman explores the puzzle of why SBA has been so silent on the latest contractor fraud scandal when it has been so quick to act in other cases. Read More


  • How Do You Support the Project Lifecycle?

    How do best-in-class project-based companies create and actively mature successful organizations? They find the right mix of people, processes and tools that enable them to effectively manage the project lifecycle. REGISTER for this webinar to hear how properly managing the cycle of capture, bid, accounting, execution, IPM and analysis will allow you to better manage your programs to stay on scope, schedule and budget. Learn More!

  • Sequestration, LPTA and the Top 100

    Join Washington Technology’s Editor-in-Chief Nick Wakeman as he analyzes the annual Top 100 list and reveals critical insights into how market trends have impacted its composition. You'll learn what movements of individual companies means and how the market overall is being impacted by the current budget environment, how the Top 100 rankings reflect the major trends in the market today and how the biggest companies in the market are adapting to today’s competitive environment. Learn More!