No. 15: For BAE, persistence pays off

With a tight grip on the defense sector, BAE shifts its focus to information security

BAE Systems Inc.

Top 100 revenue: $1.5 billion

45,000 Employees

2006 revenue: $11 billion

2006 net earnings: $1.1 billion

2005 revenue: $9 billion

2005 net earnings: $665 million

Absorbing a huge acquisition took a lot of attention at BAE Systems Inc. in 2006, catapulting the company into the top ranks of U.S. defense contractors. The company lands at No. 15 on Washington Technology's Top 100 list with about $1.5 billion in prime government services revenue.

Its parent company, United Kingdom's BAE Systems, also has been in the news for its proposed sale of a large stake in Airbus, which will bring in more cash for acquisitions.

But alongside those high-profile events, the U.S. subsidiary has been persistent in building its offerings in providing military and civilian government services and solutions, primarily in growth areas such as intelligence and homeland security.

Those areas are a major competitive playing field for expansion, said Gene Glazar, vice president of business development at BAE Systems' Customer Solutions Group. His unit, one of three operating divisions in BAE Systems, which includes North America, Sweden and South Africa, generates about $2.5 billion in annual revenues with its 14,000 employees.

That's a fairly large chunk of the whole: North American sales in 2006 totaled $11 billion while the entire company generated $20 billion.

About 90 percent of the customer solutions group is in government sales, and the bulk of that is Defense Department work. But there is likely to be greater growth in areas such as U.S. government homeland security, intelligence and civilian agencies, Glazar said.

"We're shifting to additional areas of the market, offering not just services but solutions," Glazar said. "Our footprint in this space isn't huge, but we plan on growing it."

The customer solutions unit has focused most heavily on information security and information sharing. It has also performed ongoing network center support, mission support, and infrastructure and program execution, including a great deal of classified work, he said.

In the Homeland Security Department's U.S. Visitor and Immigrant Status and Indicator Technology program, which records fingerprints of incoming foreign visitors and checks them against terrorist watch lists and other databases, BAE has a contract to manage investigations of anomalies that arise in the operation of the program, Glazar said.

BAE also has worked with the chief information officer's office at DHS and has been awarded contracts in two functional areas for the Enterprise Acquisition Gateway for Leading Edge Solutions procurement vehicle.

The company also assists in helping government clients identify how to meet a need or develop a capability by taking advantage of existing IT resources rather than purchasing new IT systems, Glazar said. During a time of tightening IT budgets, government managers are looking to solve problems by building on existing resources.

"If an executive picks up the phone to say, 'What do you think of this?' they can look to us to help address their challenges," Glazar said. "If I can be a trusted adviser, that is what I want to be."

Although BAE often competes with major systems integrators and defense firms, Glazar said systems integration is not a strong focus area right now. Nonetheless, he said BAE has some advantages in the systems integration arena because it has fewer older investments in specific hardware systems and programs.

Glazar, who joined BAE in 2004 after a 25-year career as a manager at companies including Computer Sciences DynCorp, Lockheed Martin, Orbcomm and Titan, said BAE's culture ? combining an emphasis on excellence, dedication to the customer and camaraderie ? makes the company stand apart from the pack.

"Getting folks completely focused on a mission is hard to replicate," Glazar said. "If we can scale this and execute it flawlessly, we will strive for that."

BAE is one of a handful of large foreign-based firms that have become large U.S. defense contractors. Its U.S. subsidiary is run by U.S. executives, many with classified clearances, and has firewalls protecting sensitive information.

Since 1993, BAE has bought more than a dozen companies, growing its North American division from about $250 million in sales in 1993 to about $11 billion
in 2006. The company spent $4.1 billion in 2005 to buy United Defense Industries, makers of the Bradley armored vehicle used in Iraq.

"We're the new company on the block," Glazar said. "We're moving pretty fast and we're getting people's attention."

Profiles of the Top 20 companies in the 2007 Top 100


No. 1: Lockheed Martin's reinvention

No. 2: With SBInet, Boeing IDS takes flight

No. 3: Northrop Grumman rises to new challenges

No. 4: KBR gets down to business

No. 5: IPO catapults SAIC into a new era

No. 6: Raytheon strives for balance

No. 7: General Dynamics in full sprint

No. 8: Fluor's ready in a pinch

No. 9: L-3 leadership stays the course

No. 10 EDS, Hard-learned lesson

No. 11 CSC, Experience that counts

No. 12: Battelle seeks new frontiers

No. 13: Booz Allen, Quality over quantity

No. 14: Bechtel telecom makes a splash

No. 15: For BAE, persistence pays off

No. 16: ITT makes a push into new markets

No. 17: Dell, Talking about evolution

No. 18: Technology and service fuel IBM

No. 19: Verizon caps off a busy year with a big win

No. 20: United Technologies gains altitude

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