Unisys Realigns Government Unit

By Nick Wakeman, Staff WriterUnisys Corp. renamed its federal unit and appointed a new president to oversee that business as part of a realignment that includes creation of a new unit that will seek to extend the company's global reach in electronic government, outsourcing and network services.James McGuirk, who has been president of Unisys' federal group since 1992, has been handed the new post of president of Unisys Worldwide Public Sector. In this capacity, he will oversee all of Unisys' state, local and international government work but not U.S. federal government contracts.Nancy Friedman has been tapped to be president of Unisys' newly named U.S. Federal Government Group. Friedman joined the company a year ago from Litton Enterprise Solutions Inc. in McLean, Va., where she was senior vice president and general manager. Friedman said the realignment would help her unit bid on larger projects. Her wish list includes the recompetition of the Treasury Information Processing Support Services contract, worth $750 million over five years. An award is expected in May 2000. The contract is for a broad range of networking and information processing equipment and services.The federal unit also is considering bids as a prime or subcontractor on major projects such as the Navy-Marine Corps Intranet, worth an estimated $2 billion over eight years, and the Customs Modernization project, worth $2 billion over 15 years. Requests for proposals for both contracts should be released in the first quarter of 2000.The management changes, effective Nov. 29, are part of a broader realignment company executives announced Nov. 18 to structure the Blue Bell, Pa.-based company around customers and in strategic markets, such as electronic commerce, outsourcing, network services and global industries.Lawrence Weinbach, who was brought in as Unisys chairman and chief executive in September 1997 with a mandate to turn the company around, called the changes the culmination of a two-year effort to revitalize the $7.2 billion systems integrator. Before Weinbach, the company's stock price had been slumping and it was saddled with $2.3 billion in debt.Since Weinbach came on board, Unisys' revenue has risen from $6.6 billion in 1997 to a projected $7.5 billion for 1999. He also has been successful in paying down the company's debt and improving earnings.Government revenue, including U.S. federal, state and local and international work, accounts for more than 32 percent of Unisys' overall revenue, according to McGuirk, who will be organizing Unisys' international efforts and state and local work into a unified structure for the first time.In the past, Unisys organizations in different countries have been deciding on an ad hoc basis what government work to pursue and what not to pursue, McGuirk said. "We've been running it too much by geography," he said.McGuirk said his unit will target business in three areas: entitlement programs that are similar to Medicaid and Social Security, tax collection programs and government administration, such as public safety and voter registration.The government niche is "a nice, stable business" for Unisys, said Michael Schroeder, an analyst with the market research firm Wasmer, Schroeder of Naples, Fla."Some might argue that the margins aren't as good [as commercial business], and that may be true, but you give up some things for the stability."Part of Friedman's new role at the federal unit will be to get the message out about its areas of expertise, she said. "When people think of Unisys, I want to be able to tick off the things that we do well," she said. Those things are electronic commerce, enterprise technologies, outsourcing and network services, she said. "We haven't gotten that message out."The federal unit has about 3,200 employees. McGuirk said he was still formulating how many people he would pull together for the international unit.Under the company realignment, the federal unit is under the Global Industries group, based in Blue Bell, which also includes financial services, transportation, communications and publishing markets. Friedman and McGuirk will report to Joseph McGrath, who heads Global Industries."We are going to be able to better leverage our capabilities from across the company," said Friedman, who served on the panel of 10 executives that developed the new structure over the past seven months. "Too often the federal unit [at predominantly commercial companies] is just seen as an add-on," she said.The federal unit also has played a leadership role within Unisys in developing several of the electronic commerce applications that the commercial side of the company will be selling, Friedman said.The federal unit has built systems for Web-based bidding, procurement and management. The unit also operates Unisys Federal Online, which allows users to shop for more than 100,000 IT products from 1,200 manufacturers.Unisys, which announced a sweeping electronic commerce initiative Oct. 27, wants to cash in on a potentially huge market that companies of its ilk cannot afford to ignore, said Schoeder. Other companies that have launched electronic commerce initiatives are Computer Sciences Corp. of El Segundo, Calif., Electronic Data Systems Corp. of Plano, Texas, and IBM Corp. of Armonk, N.Y."Execution is the key," Schroeder said, but he added that Weinbach has delivered on his promises to strengthen the company's balance sheet and bring down its debt.The company's earnings grew to $387 million in 1998 from $199 million in 1997. At the third quarter of 1999, earnings also were ahead of 1998's pace, with $366.3 million reported for the nine months ended Sept. 30, compared to $240.7 million for the same period in 1998. XXXSPLITXXX-Supplies systems integration, outsourcing, electronic commerce and network support servicesBlue Bell, Pa.35,000$7.5 billion$7.2 billion$387 millionUIS on New York Stock Exchangewww.unisys.com