Network Company Seeks Niche in Fed Market

NetCom Solutions International Inc. is returning to its roots.

The Chantilly, Va., company intends to announce Aug. 6 it has created a wholly owned subsidiary, NetCom Solutions Government Services Inc., to provide its networking services and solutions to federal, state and local government customers.

"NetCom Solutions has enjoyed enormous growth in the six years of its existence, virtually all of it within the commercial sector," said Emmit McHenry, chairman, chief executive officer and owner of NetCom Solutions. "Now, with economic uncertainties and the downturn in the telecommunications and technology areas, it is an appropriate time for our company to diversify."

McHenry also said the company has received "increasing demand from both government agencies and contractors that we make our networking services more available to the public sector."

William Black, president and chief operating officer of the new subsidiary, said NetCom Solutions fills three customer needs: end-to-end network communications, including wire line, wireless and optical infrastructures; maintenance for installed networks; and automated logistics services for parts and equipment.

"We guarantee delivery and maintenance in four hours [to customers] in 38 cities across the country," Black said. "That's something all the large prime contractors value."

McHenry, a co-founder of Network Solutions, the Internet domain registration firm now owned by Verisign Inc., founded NetCom Solutions in 1995.

That first year, sales were $7 million, Black said. In 1998, the company recorded annual sales of $34 million; by 2000, sales had grown to $262 million ? a 770 percent growth rate over two years. Following the Internet boom times of the later 1990s, almost all of the company's sales were derived from the commercial market.

"This growth rate has been sustained by internal investment. We have very little outstanding debt," Black said. "Now we're looking for strategic acquisitions."

But to sustain growth, NetCom Solutions, is re-establishing its government presence.

"We believe this is a great time to re-emphasize the government market," Black said. "In 2001, about $1.6 billion is available for telecommunications contracts in the federal marketplace, and that is expected to rise to some $3.8 billion in 2002."

The new federal subsidiary's strategy is uncomplicated, he said. The firm intends to carry over its relationships with major commercial customers that also have a major presence in the federal market, such as AT&T and Lucent, along with systems integrators like DynCorp and Science Applications International Corp.

"The kinds of contracts I'll be pursuing right now will be small business set-asides that would require me to team with the kinds of companies we're already working with," Black said. "The size of the contracts would be in excess of $20 million, [and] we're looking to probably add between 20 and 50 people total by this time next year."