How IT keeps General Dynamics' revenue rolling

Unit continues to be leader for defense contractor

General Dynamics Corp. had a respectable year in 2010. Revenues were up, albeit slightly, and contracts steadily rolled in.

The company, based in Falls Church, Va., brought in $32.5 billion in 2010, up 1.6 percent from $32 billion in 2009. Its net income was $2.6 billion, up 8.3 percent from $2.4 billion the year before. Those accomplishments earned it the No. 5 spot on the Top 100 list with $5.5 billion in prime contracts.

A major contributor to its success was the company’s Information Systems and Technology group, which earned the highest level of revenue in its history – about $11.5 billion – and retained top billing as GD’s revenue leader. It grew 7.5 percent from $10.8 billion in 2009.

One of the wins that contributed to its growth last year is a $228 million contract, awarded in March, to modernize the Federal Aviation Administration’s Voice Enterprise Services program, which involves moving the system to voice-over-IP and IP telephony technology. In June, NASA awarded General Dynamics C4 Systems, a part of IS&T, $642.2 million to modernize its Satellite System Ground Segment. That means GD will implement a new architecture to ensure global space-to-ground telecommunications and tracking coverage for the space network, which supports all NASA flight missions, including the Hubble Space Telescope and the International Space Station.

Gerard DeMuro, GD's executive vice president in charge of IS&T, attributes the division’s success to the sum of its parts.

“If I had to cite one thing, I think it’s a demonstration of the relevance of our portfolio, domain expertise that our teams have and understanding customer needs, and fashioning very cost-effective, high-value solutions for those customers,” he said.

GD’s progress on the military’s Joint Tactical Radio System and Warfighter Information Network-Tactical will also continue to be key contributors to the group’s success, DeMuro said, but the company is also looking to areas of growth potential.

“Cyber is an integral part of everything that we do,” he said. “Given the world environment, I think that that will continue – to be able to monitor, sense and detect what’s going on in your network, protect and defend it. There are tremendous opportunities there.”

Acquisitions will also be important to sustaining an upward revenue tick. Last year, GD made two purchases. In June, GD United Kingdom Ltd. acquired Kylmar Ltd., an English firm that makes sensor and optical surveillance systems for military and security applications. A month earlier, it acquired Missouri-based EBV Explosives Environmental Co., which handles explosives disposal.

“We continue to look for opportunities where we think we have some gaps in our portfolio vs. future customer needs and issues,” DeMuro said.

But GD doesn’t only have to drum up business to prosper. It has to fight in a competitive market for budget-tightened dollars.

“We’re not going to lose our focus on executing for our customers,” DeMuro said of the company’s approach. “The market forces are really driving all of us to be as aggressive as we can and as efficient as we can in providing these services and systems to the government.”

Besides, the challenge is not new, he added. “Other than the dialogue that we’re seeing around budget cuts, if you go back and look at the trend line in [IT] services and even to some extent the communications systems that are used for DOD, the budgets were far more robust in the middle of the last decade than they are now, so we have seen flattening budgets lines for some time. I think this is just a continuation of this trend.”

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