Can Jim Leto breathe new life into Robbins-Gioia?

He’s back! And, boy, is he happy.

Jim Leto and his team of investors have acquired government contractor Robbins-Gioia, where Leto will reprise his role of company president and CEO for the third time.

“I wouldn’t have done it if I didn’t own the company,” he told Washington Technology.

Leto served as president and CEO of Robbins-Gioia twice before, first from 2002 to 2004, when the company was acquired by the Institute for International Research, a U.K. publishing and conference company.

When Informa, another British publishing and conference company, subsequently purchased IRR and with it Robbins-Gioia, Leto returned again at Informa’s request.

At the time, company revenue was about $128 million. This year budgeted revenues are down to $55 million.

“So you can see the atrophy that’s taken place,” he said.

“Over the course of five years both British firms probably took $45 million in dividends out of the company,” Leto said. “That’s money that hypothetically, if we weren’t foreign-owned, would have been reinvested in this business.”

Leto said as a result Robbins Gioia began to atrophy, cutting overhead and losing contracts even though it remained profitable at about $6 million in 2011.

“As a consequence, there’s been almost no investment in the business in the last five or six years. And the business has suffered from it,” he added.

“But the advantage we have now is that $6 million in profit gets reinvested in this business,” Leto said.

Several business issues related to the foreign ownership, plus not wanting Robbins-Gioia’s demise to be on its watch, prompted Informa to reconnect with Leto in 2011. By then, he had stepped down as chairman and CEO of GTSI Inc.

“They said, ‘What are you doing?’ And I said, ‘I’m plowing fields and growing apples because I’m retired.’”

When Informa consultant Ron Bohlin, who’d also consulted for Robbins-Gioia, asked him if he had any interest in buying Robbins-Gioia, Leto replied, “If I ever had the opportunity and I could work out the financials, I would love to buy Robbins-Gioia.”

Bohlin became Leto’s partner, and with three other partners – Brian Hays, Bradley King and Christopher Heath – they bought the company for an undisclosed sum after unsuccessfully seeking financial backing from some private equity firms.

“The long and the short of it was they didn’t see as much value in the company as I did,” Leto said, speaking of his attempts to attract outside funding.

The transaction, which took five months to complete, re-established the 32-year old Alexandria, Va., firm as an independent, U.S.-owned entity and brought together a new leadership team led by Leto.

Bohlin, former McKinsey partner and co-founder of Nextera Enterprises, is chairman and chief strategy officer.

King, former CEO of Serco North America, is president of the federal division.

Hays, former senior vice president of SAIC, is president of the commercial division.

And Heath, former CIO at Robbins-Gioia, returns as chief technology officer and also runs the company’s cybersecurity practice.

With that $6 million in profits firmly residing on this side of the Atlantic, Leto said, “We can rebuild our proposals capability. We can launch a major health care initiative. We can launch a cybersecurity initiative. We can expand other businesses that we currently have, and the company is pretty excited about it, and I am thrilled to be back here.”

Leto acknowledged that health care and cybersecurity are crowded fields. “That’s where all the money is being spent now,” he said.

He pointed out that a lot of the work Robbins-Gioia has done over the years for the Veterans Affairs Department involves medical records, systems support and infrastructure support.

All of that is transferrable to health care in the commercial sector, another area into which Leto is looking to expand.

Leto said he wants to use as much as possible of this year’s budgeted $55 million in revenue to rebuild some of the inherent capabilities of the company – including marketing, proposal capability and business development.

“We have a marketing budget that’s abysmal, we have a proposal budget that’s abysmal, and all of the cuts in overhead were basically [aimed] at making our profit commitment to the owner,” he said.

The company also is now looking at two potential small acquisitions, he said.

“The irony is it’s my money,” he said laughing. “I’ve never owned a company before so this is kind of a unique experience for me. I’ve been a corporate mechanic for the last 25 years.”

Asked what differences there are in owning a company versus running one for someone else, he said, “Actually I don’t see any difference. I still pay attention to the same numbers. I still worry about cash. I get a daily cash report. I’ve gotten a daily cash report in every company I’ve run. And I don’t plan to change my modus operandi one iota. Every company I’ve ever run has been very successful. I don’t plan to change that now.”

As far as major changes in the federal contracting arena since his retirement from GTSI, Leto said “this whole insourcing initiative that the federal government has embarking on has caused a lot of pain to a lot of companies, including this one.”

He estimated that Robbins-Gioia has lost about 200 staff positions to insourcing, bringing the current roster to 350 employees, which includes subsidiary PMTelco, now led by Bohlin.

Asked about his leadership at GTSI, Leto recalled that when he came onboard in 2006, the company was on the verge of bankruptcy. When he left in 2010, GTSI had been hit with a Small Business Administration suspension that delayed new contracts and resulted in a change in management and employee layoffs.

Nevertheless, he views his tenure there as a success. By way of proof, Leto points out that the Darden School of Business at the University of Virginia teaches a business case about GTSI’s successful turnaround, and he’s been asked to be a guest lecturer there.

“We built a model that said if you’re going to sell large integrated applications of product, then you might as well also sell the service that goes along with it,” he said.

Although some industry observers surmised that Leto was forced out of GTSI, he said that when he took the job he told the board that he would retire when he turned 66, and he kept his word.

Now he’s “having fun. My philosophy of work is if it’s not fun, I don’t want to do it.”

About the Author

David Hubler is the former print managing editor for GCN and senior editor for Washington Technology. He is freelance writer living in Annandale, Va.

Reader Comments

Thu, May 31, 2012 Olde Sarge DC

Sounds like "Vulture Capitalism" was alive and well in this case. Not one, but two different "private equity" firms sucked all the value they could out of a once highly active and very profitable company. LBO! LBO! LBO! At least this company got rescued before it was completly dead and tossed on the ash heap of bankruptsy.

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