Perot closes QSS deal

Perot Systems Corp. closed its $250 million acquisition of QSS Group today, nearly doubling the company's government business.

The acquisition of Lanham, Md.-based QSS positions Perot to better chase and win business under large, governmentwide task order contracts, company officials said.

The ascension of large GWAC contracts as the preferred buying vehicle for government agencies was one of the deciding factors for both companies to make the deal, Perot and QSS company officials said.

QSS holds spots on several large GWACs such as the Homeland Security Department's Eagle, Army's IT Enterprise Solutions 2 and the Treasury Department's Total Information Processing Support Services 3.

Because the number of competitors on these contracts is rather large, QSS was looking for strategic partners, said Dick Bishop, QSS president and chief operating officer. "We needed to be more competitive," he said.

As a combined entity, the two companies will be able to pursue work that independently they likely wouldn't be able to, said James Ballard, president of Perot Systems Government Systems. Perot also holds several GWAC contracts, but the QSS acquisition adds more vehicles, particularly with DHS, NASA and the Coast Guard.

Size for size's sake was never part of the equation, Ballard said. "My question always is am I big enough so that the government is comfortable that I can do the work," he said.

Perot Systems is targeting five areas, Ballard said: intelligence, health care, education, homeland security and defense.

And despite tightening budgets, the company is confident in its ability to grow in the current environment, said Peter Altabef, the company's president and CEO.

"At its heart, Perot is an outsourcing company," he said. "Outsourcing can do well in a down economy because we can bring efficiencies and new ways of doing business [to customers]."

QSS brings about $260 million in annual revenue to Perot, which raises the company's government revenue to about $600 million.

Through acquisitions and internal growth, Perot's government business has grown from zero to 13 percent of overall revenue since 2002. With the QSS deal, government revenues will be about 25 percent, Altabef said. The company is expected to report next week 2006 revenue of about $2.3 billion.

"We are very excited about the government marketplace," Altabef said. "Our government business is really coming of age."