ManTech acquisition targets valuable Army customer

If you scan a dozen of the deals in the federal sector during the past few weeks, you’ll find that they mirror government’s concern with security — half involve the acquisition of intelligence, cybersecurity or — more controversially — human terrain systems (HTS) capabilities.

Four companies bought five others with a broad range of security capabilities.

• ICF International Inc. closed on Jacob & Sundstrom Inc., which offers cybersecurity and full-scope identity management services.
• Science Applications International Corp. added cybersecurity and management solutions provider CloudShield Technologies Inc. and Spectrum San Diego, a high-tech security firm specializing in ultra-low-dose X-ray scanning systems.
• Symantec Corp. is buying automated IT security developer Gideon Technologies Inc.
• SafeNet Inc. has bought government cybersecurity consulting firm Assured Decisions LLC.

In addition, ManTech International Inc. ponied up $242 million in January to close on Sensor Technologies Inc., of Red Bank, N.J. STI supports program management offices across the Army in biometrics; HTS; communications; and intelligence, surveillance and reconnaissance.

STI generates solid operating margins and expects $340 million in revenue in 2009 and $450 million in 2010, according to a ManTech statement. But it’s not all about the money. The Army Communications and Electronics Command “has been a major customer of ours, but we’ve lacked direct access to them — the $200 million a year in business we do with them has been as a subcontractor,” said ManTech spokesman Stuart Davis. “With the STI purchase, we now have that direct access.”

The buy also dovetailed with other ManTech goals, Davis said. The company’s mergers and acquisition strategy focuses on acquisitions that can strengthen core competencies, “cyber tuck-ins” that add to those competencies and acquisitions that help the company diversify into civilian agency areas. “The STI acquisition is consistent with our goals in that first direction,” he said.

The timing was right for STI, too, he said. The company had reached a growth crossroads and was eager to own the content and labor rather than entrusting most work to subcontractors.

Like ManTech, STI’s largest customer is the Army. It holds several Army contracts, including a prime position on the service’s Strategic Services Sourcing (S3) indefinite-delivery, indefinite-quantity contract, under which it has received more than $2.5 billion in task orders, according to a ManTech statement.

The facts and numbers fail to adequately describe the company’s colorful profile. For example, a $563 million S3 task order that STI won in 2008 was the target of a bitter protest by other bidders, including Computer Sciences Corp., whose $250 million was rejected. The Army inspector general subsequently found no basis for the protest.

The Army’s HTS program, which STI, along with BAE Systems Inc. and SAIC, has long supported, is also a headline maker. Human Terrain Teams (HTTs), made up of military personnel, linguists, area studies specialists and civilian social scientists, are embedded with U.S. military units in Iraq and Afghanistan. Although not universally accepted by troops on the ground — some HTTs allegedly spent most of their time at headquarters surfing the Web — some teams have achieved their intended goal.

“The HTT's most significant effect on the first brigade to receive an HTT was an overall reduction in lethal operations,” the Army said on its HTS Web site. “In the words of the brigade commander, 'We estimate that, as a result of the HTT, we have reduced our lethal operations by 60 percent to 70 percent.' ”

But the program also has been roundly denounced by the American Anthropological Association for weaponizing anthropology and ignoring ethical considerations, most recently in a 74-page report released in December.

“It’s an area we don’t enter lightly,” Davis said of HTS. “But the work STI does is consistent with work we do and have done before the acquisition.” Also, he said, “ManTech as a company has always been willing to stand shoulder to shoulder with our customer outside the wire,” a reference to the dangerous area outside the relative safety of the green zone in Iraq. The company has a history of taking on risky work, such as the clearing of mines with mine-resistant vehicles, he pointed out.

“It’s about what is most important for our most important customer,” he said. “We can choose to be involved or choose not to be involved.”