Survival Guide: Paul Lombardi, consultant and former DynCorp. CEO

Washington is a very small town, where everyone in the government IT community knows each other well, said Paul Lombardi, former chief executive officer of DynCorp. After nearly 40 years in this community, he knows the value of maintaining good relationships. Lombardi began his career in 1966 working for the Navy, where he helped design high-speed ship engines, then later worked for the Energy Department. He left government service in 1982 to join Advanced Technology Inc., which merged with PRC, now part of Northrop Grumman Corp. Lombardi joined DynCorp in 1992 and oversaw the building of the company's IT practice, which grew from zero to more than $1 billion in 10 years. The company's annual revenue stood at about $2.3 billion when Computer Sciences Corp. purchased it in March.Lombardi, who now has his own consulting firm, InPower, talked with Editor Steve LeSueur about what it takes to succeed in today's government IT market.What advice would you give to companies coming into the federal sector?First, understand the federal space and the processes by which you've got to do business.What do you mean by that?It's regulated to the nth degree. In the Defense Department, for example, you've got the DCAA [Defense Contract Audit Agency] and regulations that don't exist in the commercial sector. You always have litigation hanging over your head as a potential problem if you don't adhere to this. The ethical issues have to be clearly understood if you want to survive in this industry. I could take you to dinner and you wouldn't even think about it. But I take a government official to dinner, there's hell to pay.What other advice would you give?Focus on one or two elements of an agency. Otherwise, you're spinning your wheels and wasting money. Each agency and each subelement of each agency has different buying habits and different mores and different ways of doing business. It's impossible for a one- or two-man shop, or even a 30-man shop, to identify targets that are real and attainable in the entire federal space. Also, you have to make alliances with companies that are very successful. There has to be a network of contacts that is either developed by them or which some group of people supply it to them.  With all of the difficulties of doing business with the federal government, why bother?I liken it to Carl Sagan -- it's billions and billions of dollars. There is no such thing as market share in federal service IT. The numbers are so huge that it's so attractive. There's precious little price of market entry, and the rewards, if you are successful, are quite large.  Do you have to be a large company to play in this market? DynCorp felt that, as a $2 billion company, we were still way too small. That's one of the main reasons I recommended to the DynCorp board that it was better to be acquired than to take the company public. The big projects, the ones that are $800 million to $1 billion, to bid them successfully, each bid costs $2 million to $3 million. That limits the number of bids you can make. The bigger you are, the more resources you have that you can devote to that. Big companies also have the credibility and the long-standing relationships with the customer base that the smaller companies don't have, which also gives them an advantage.Having said all that, I will tell you that there's still a place for small companies in this kabuki. But they have to have a technological core competency that is either so unique or so wanted that they have a place at the table. Now, small businesses may be cut out as the primes for awhile, but if you make the appropriate liaisons and network with larger companies and build your reputation, you're going to get bigger, and then you can start pecking away at the bigger and bigger contracts. Be patient. What is the biggest blunder a company can make as it tries to build alliances with other companies?This is a very small town. If you're a small company, and you make an alliance with a larger company and make a commitment to provide a certain level of service or business, then keep that commitment. If you get tagged as a company that doesn't keep its commitments, then small companies shy away from you, big companies shy away from you, and government people shy away from you.