Top 100: Deloitte cracks the top tier

BearingPoint acquisition fuels federal growth

Deloitte LLP’s acquisition of BearingPoint’s government practice in early 2009 is a good example of how a sum can add up to more than its parts.

By bringing together its own top-ranked consulting and advisory practice with a federally focused systems integrator such as BearingPoint, Deloitte not only managed to triple its size but also grew its federal business by another 10 percent in 2009. As a result, Deloitte cracked the top 20 of Washington Technology’s Top 100 federal contractors list for the first time.

Deloitte roared in at No. 18 on the 2010 list with $1.7 billion in prime federal contractor revenues.

“I would characterize 2009 as a grand slam,” said Robin Lineberger, principal for Deloitte Consulting LLP and chief executive officer of federal government services. He was the leader of BearingPoint’s federal practice before the acquisition.

“We exceeded all of our practical expectations for the year," he said. "As a result, we are poised for a strong 2010."

Deloitte was able to retain 100 percent of BearingPoint’s federal clients, and Lineberger credited the advance in the federal government sector to the accelerated adeptness with which Deloitte’s top-ranked mergers and acquisition practice were able to integrate the two companies, smoothly transitioning nearly 4,000 employees and 3,000 contracts. BearingPoint held long-term relationships with most major departments and agencies, including the Defense, Homeland Security and Justice departments and the General Services Administration.

“The current and future synergies are substantial,” Lineberger said, noting that Deloitte can provide a broader and more specialized set of products and services, including valuation and intellectual property, to a larger client base. “Finally, we now operate at a scale [inclusive of our commercial capability] that allows us to address a wider range of possible challenges facing our federal clients."

Those challenges include a perfect storm in the public sector of fiscal pressure, talent constraints and mission expansion, even as new demands for transparency, sustainability, IT security and financial accountability further stretch the federal workforce’s ability to respond.

Lineberger said Deloitte is especially well positioned to help federal agencies deal with transformational challenges such as health care, financial and immigration reform, sustainability, information management and analytics, and cybersecurity.

“We plan to take a market-leading position in each of these,” he said, adding that Deloitte is also working to hire experienced government employees with deep industry expertise in mission operations.

A highlight of 2009 was the launch of Deloitte’s Center for Federal Innovation at its new federal headquarters in Arlington, Va., Lineberger said. The site will showcase production-ready solutions that address a swath of public-sector needs. Areas of focus include cybersecurity, technology strategy and architecture, information management, package technologies, systems integration, and technology and process management.

The biggest challenges that Deloitte faces in 2010 will be continuing to grow while maintaining the company's existing quality of services. The strategy for achieving that goal will rely heavily on the company’s ability to recruit and hire the best possible talent. “Contrary to the broad labor market softness, talent for the federal market is tightening,” Lineberger said.

Deloitte’s fiscal 2011 kicked off at the end of May, and Lineberger expects the company to grow its federal business another 10 percent during that period. To grow even more, Lineberger said, Deloitte will look to acquire small to midsize firms that will help the company gain access to new clients, services and contracts.

About the Author

Heather Hayes is a freelance writer based in Clifford, Va.

Reader Comments

Fri, May 28, 2010 Observer IV

Of course Mr. Lineberger paints a rosey picture, especially if unchallenged. But the fact remains, BearingPoint's business was a dead man walking when Deloitte paid too much money for it. Lots of troubled contracts, departures of many valued staff and many other personnel problems. The public record contains the details of the business problems, including lack of profit. It should have been a fire-sale but was not. The new owners face legacy troubles with the legacy financial system at DHHS and will be shunned at places like VA and DOI where BP suffered the kind of contract setbacks that take many years to overcome. We should hope the Deloitte business can recover because the industry, and the government, could use a lot more competition. But there are no big bucks in it for Deloitte for quite some time, we would think.

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