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By Nick Wakeman

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Nick Wakeman

What CACI's CEO move says about today's market

In a normal market, you’d look CACI International’s sudden announcement that it’s CEO had left, and that a new one had been hired, and think, What’s going on over at CACI?

But this isn’t a normal market, and that’s the message here. The departure of Dan Allen as CEO and the appointment of Ken Asbury say as much about today’s business environment as it does about CACI.

During the interview I had with both CACI Executive Chairman Jack London and Asbury, and during the analyst call that the company conducted later, the theme couldn’t be clearer: business development is paramount in today’s market.

Repeatedly, London and Asbury emphasized organic growth, win-rates and recompetes. They used words like “aggressive” and “robust” to describe the focus they’ll put on keeping their current work and targeting new business.

As part of this, CACI is revamping its business development organization, which will now report directly to Asbury. He described BD as a passion of his. The executive in charge of business development, Krisstie Kondrotis, also has left the company.

CACI’s moves may be dramatic, but the factors that the company is dealing with are not unique to CACI.

It’s a familiar laundry list of challenges: sequestration, budget cuts, continuing resolutions, fights over the debt ceiling, an emphasis on lowest price, fewer new starts, contracts getting consolidated, delays in awards. It goes on and on.

These factors have created a market rife with uncertainty.

Companies across the market are reacting in a variety of ways, depending on the type of work they do, and the kind of business they are.

On the negative side, we’ve seen executives fired or quitting, layoffs of workers, and divestitures of business units. On the more positive side, we’ve seen companies making acquisitions and investing infrastructure and new technologies.

But it isn't really an option to not react.

For CACI, London and the board looked at the market, and didn’t think Allen had demonstrated the ability to win enough recompetes or new business, so he was “removed” – the word they used in their 8-K filing with the Securities and Exchange Commission.

The company's organic growth stagnated in 2012, and it it had to lower its revenue guidance.

“The bottom line is we saw a world changing around us, and we didn’t feel we were adequately positioned internally for a focus on the organic competition that is coming,” London said on the analyst call.

Bringing on Asbury was a move to get ahead of the curve of what CACI, and others, see as an increasingly competitive market -- probably the most competitive it's been in many, many years.

“The objective was to get out in front of the issues that are looming and get ourselves in position to compete with a different style, a different leadership and a different expertise,” London said.

Does everyone need to make the kind of move CACI just did?

Probably not. I’m not advocating that you fire your CEO, but if London and other executives I’ve talked to are right, then you’ll need to be just as bold to win in this market.

Welcome to the new normal.

Posted by Nick Wakeman on Feb 21, 2013 at 7:24 PM


Reader Comments

Mon, Feb 25, 2013 Don O'Neill

The New Normal is austerity. Sequestration is simply an opportunity to force a commitment to Fixed Price Contracting and the management of Technical Debt. The sooner the Defense Department and its prime contractors t gets on the path to these benefits, the sooner the austerity crisis will be resolved.

Sun, Feb 24, 2013 SPMayor Summit Point, WV

Interesting - it would seem the same grade and organizational creep that Government experienced was in its own way taking place in industry as well.Easy money, easy times led to some habits that may not have seemed bad enough to deal with them but now cannot be avoided. Both Government and industry will have to address their respective shortcomings. As I once read: organizational & institutional sacred cows make the best hamburger. We are all challenged to slim it down, go back to basics and understand keeping it simple is the only way to survive.

Sat, Feb 23, 2013 Know Better DC

When the US Senate flipped in November 2006 to a Democratic Majority the handwriting was on the wall to the GovCons in a wartime posture that the end of "fat times" was upon them. Instead of building relational capacity and a peace time strategy, they all sat at the same slot machine and pulled harder and faster. When you can't build tanks, then you sell hamburgers. These guys all drove Porsches and Land Rovers and thought they were the Smartest Guys in the Room. Most of them were cheap salesmen without a clue. CACI headquartered in Virginia. US Government spent $77B a year with defense contractors. Hard to fail unless that stops--which is exactly what happened.

Fri, Feb 22, 2013 Amtower

This ties back to Bob Davis's recent article. Any serious Government contractor needs to instill BD into the culture of the company....

Fri, Feb 22, 2013

No matter what industry you are in you can't make money the way you used to in the past. The skills for sales teams have been raised to be able to analyze market opportunities, understand what drives value for the client and position their message. The days of feeding off reliable contracts are long gone.

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