INS Win Reinforces Wang Turnaround
BR INS Win Reinforces Wang Turnaround By Nick Wakeman Staff Writer A half-billion dollar contract win with the Immigration and Naturalization Service is more than just a revenue boost for Wang Government Systems, McLean, Va. It is a thumbs up for the former hardware manufacturer's strategy to remake itself into a services provider, company officials and analysts said. Wang is the sole winner of the five-year, $538 million, indefinite-delivery
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INS Win Reinforces Wang Turnaround
By Nick Wakeman
Staff Writer
A half-billion dollar contract win with the Immigration and Naturalization Service is more than just a revenue boost for Wang Government Systems, McLean, Va.
It is a thumbs up for the former hardware manufacturer's strategy to remake itself into a services provider, company officials and analysts said.
Wang is the sole winner of the five-year, $538 million, indefinite-delivery, indefinite-quantity contract that includes round-the-clock management of more than 24,000 desktop computers in 750 national and international locations.
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Part of Wang's rebuilding included acquisitions to establish a presence in the networking and outsourcing markets. Over the last four years, Wang has purchased the non-European operations of The Groupe Bull, based in France, which included Honeywell Federal Systems Integrators; DataServ Inc., a Minneapolis-based multivendor service provider; and I-Net Inc., Bethesda, Md., a network services provider.
Acquisitions are still part of the company's growth strategy but "we don't comment on them," Hogan said. But the company is in a strong financial position to make more buys.
Wang sold its software imaging business to Kodak in March for $260 million. "The company is lucky enough to have most of that in the bank, and we have no long-term debt," Hogan said. Wang also has a $225 million line of credit. "So we are poised financially to do other things."
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Wang is competing with a range of companies for contracts, but Wang "can differentiate their skill set well," Burton said. "I recommend the stock."
"We were fortunate enough to pick the right [markets] at the right time," Hogan said. The markets for outsourcing and networking are growing at more than 20 percent a year, and multivendor services are growing at 8 percent to 9 percent.
"Outsourcing is something that is coming on very strong in the federal marketplace," Hogan said. "INS isn't calling its contract outsourcing but what they are actually doing is outsourcing their desktops."
Wang also is in the running for the General Services Administration's Seat Management project, which will be a large, multiwinner outsourcing contract, he said. Market research firm Input, Vienna, Va., estimates that contract to be worth $9 billion. The request for proposals was issued in early October.
Hogan said he also sees opportunities for Wang to win operational outsourcing contracts. The company currently has the contract to manage the billing process for the Pension Benefit Guaranty Corp., a government entity that guarantees pension benefits. Future opportunities that would entice Wang are tax modernization proposals that call for privatizing some tax collection functions, he said. "There are going to be tremendous opportunities," he said.
"The government is doing the same thing that the commercial people are doing," Hogan said. "They are asking, 'What business am I in? I'm in the insurance business or the government business. I'm not in the business of maintaining computers.'"
The INS win will help Wang get into other agencies because $200 million of the $539 million ceiling is earmarked for use outside the INS. "We can market that to other agencies so that gives us a lot of other opportunities, Hogan said.
Along with the INS, Wang also has a strong customer base with the State Department, Postal Service, NASA and the Air Force.
"What has helped us is the appreciation that to win, you need an excellent knowledge of the customer," he said.
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