No. 5: Big wins fuel SAIC growth

With revenue up 11 percent in 2007, the past year was kind to Science Applications International Corp.Much of its success can be attributed to large contract awards. The San Diego-based contractor won 17 deals last year, each worth $100 million or more.The biggest prize was a $6.2 billion indefinite-delivery, indefinite-quantity contract from the Defense Department to manage its supply chain of chemicals and packaged petroleum oils and lubricants. Those awards helped SAIC retain its No. 5 ranking on Washington Technology's Top 100 list with $4.9 billion in prime contracting revenue."We feel we've won a lot of significant new work," said Arnold Punaro, the company's executive vice president of government affairs, communications and support operations and general manager of Washington operations.The company's customer base includes the Homeland Security Department's Immigration and Customs Enforcement agency, NASA's John H. Glenn Research Center, and the National Institute of Allergy and Infectious Diseases.Acquisitions also contributed to the company's growth. In September 2007, SAIC bought Scicom Technologies Private Ltd., a provider of hydrocarbon exploration product development services and technology consulting.In August, SAIC acquired Benham Investment Holdings, an engineering and life cycle technology implementation firm that serves Fortune 500 companies and federal government customers.However, SAIC's biggest achievement was meeting the financial targets it had set in its initial public offering in October 2006, said William Loomis, a managing director at Stifel Nicolaus and a columnist for Washington Technology."It was the first year we saw the company's financial goals get laid out post-IPO in terms of 6 [percent] to 9 percent organic growth and 20 to 30 basis points of operating margin improvement," Loomis said. "They made both of the goals, closer to the high end of their target range."To continue on that path, SAIC officials plan to focus on new business areas, increase the company's marketability as a major prime contractor and expand through acquisitions, Punaro said."We're focused on four new big areas," he said. "We're looking at cybersecurity, space superiority, energy and health as other big growth areas where we've got good capabilities."SAIC also wants to be known as a major prime contractor that can provide total solutions throughout a program's life cycle, Punaro said.Also, acquiring more companies would be smart, Loomis said."We've got a good track record on acquisitions," Punaro said. The challenge is finding companies that fit. "You've got to make sure it's got the right price and is going to have the right result."SAIC faces other challenges, including increased competition, especially during a weak economy, he added.In troubled times, "the government feels like they need to step in and do more," Punaro said. "We don't yet see any tightening of the federal purse, and we don't expect to see that."