Equifax targets federal market with new strategy

You’ve got to give Equifax credit.

As one of only three top-tier companies whose primary business is knowing your business, the firm has a lucrative and secure place in the credit and financial reporting market.

But Equifax also sees additional growth potential in the federal sector.

The Atlanta company is making a concerted effort to increase the $50 million in annual revenue it derives mainly from just 10 government agencies, including the Office of Management and Budget, Homeland Security Department and U.S. Postal Service.

“We’re really providing consumer credit information as it relates to current government employees, either existing employees or new employees as they come on board,” said Frank Blaul, senior vice president of government services.

Formerly executive vice president of sales and marketing at Emtec Inc., Blaul joined Equifax one year ago, in August 2009, specifically tasked with expanding the company’s presence in the federal sector by courting new agency clients, large government integrators and small-business information technology providers.

Blaul’s government sector unit launched in June.

Equifax has invested $1.6 billion during the past three years on acquisitions and new product innovation, and the company wants a rapid return on its investment, he said.

Those acquisitions include the 2008 purchase of Talx Corp., of St. Louis, whose technology provides wage and income verification and human resources, payroll and tax department services.

In November 2009, Equifax purchased Rapid Reporting, a Fort Worth, Texas, provider of technology to verify Internal Revenue Service tax identification numbers and taxable income history.

The idea is “to really round out what we call a 360-degree view of the consumer and also commercial or business entity,” Blaul said.

For now, Blaul said he has no plans to hire, opting instead for an integrated team approach that relies on current employees of Equifax’s three business units: commercial, consumer and its Talx subsidiary.

“The biggest thing we need right now is brand awareness, both with the government and the integrator community,” he said. “And we know we can’t be all things to all people.”

The company has a business plan to double annual government revenue to $100 million in more than five years.

“Based on the surveying we’ve done over the last six months, we certainly feel like that’s realistic and certainly attainable,” Blaul said.

Equifax’s technology and massive amounts of stored data can create comprehensive fiscal reporting on individual entities or in batch format to help pinpoint and eliminate cases of government and contractor waste, fraud and abuse, he said.

As an example of Equifax’s new go-to-market assets, Blaul cited Rapid Reporting’s wage-verification technology, which would be a plus if the company decides to bid on the IRS’ Electronic Asset Locator procurement, which seeks to uncover federal tax evaders.

Equifax paid $124 million in October 2009 to acquire IXI, a McLean, Va., company that tracks the household assets, income and spending habits of the richest 2 percent to 3 percent of people in the nation.

“They can get that information really down to the ZIP code plus four level,” Blaul said, adding that Equifax does not identify individual households, only the general areas where the affluent live.

However, unresolved regulatory issues are preventing that data from being available for government use, Blaul said.

Equifax also has set its sights on taking advantage of federal procurement reform efforts, the planned consolidation of the government’s nine electronic databases, and the expected brain drain that will occur as the aging federal procurement workforce retires.

Blaul said Equifax could also help the government create a Federal Acquisition Regulation database that would spot people and businesses that have been barred from government contracting activities.

“We have a patented technology that essentially will [confirm] you are who you say you are when you’re going online to retrieve related information from that government entity,” he said.

The technology also can help verify individual tax returns and Social Security information, Blaul said, adding that the technology also could be helpful for Medicare and Medicaid registrations and recipients.

“The other area where we see great demand is really around the financial services, the regulators in terms of the banking systems, such as the Federal Reserve Board, to name one,” he said.

Blaul said Equifax has the analytic capability to assist lending agencies, such as Fannie Mae and Freddie Mac, the Housing and Urban Development Department, and the Small Business Administration, with online historical and current trends on bankruptcies, credit facilities and borrowing.

“We’re finding high demand for that service,” he said, which is available through an online subscription or in a batch format for extrapolation for data such as spotting fraudulent check-cashing practices.

There are several reasons why a company such as Equifax could succeed in selling fiscal and identity services to the federal government, said Nalneesh Gaur, a partner at Diamond Management and Technology Consultants Inc., of Chicago.

For one, he said, the U.S. public appears to be less concerned about private entities and banking institutions having access to their identity and personal finances than they are about government agencies compiling the same information.

Gaur also cited recent government requirements for greater security oversight and identity management as called for in Homeland Security Presidential Directive 12 and the Real ID program.

“The opportunity is huge in terms of how to go about integrating identities into the various systems that you’re using,” Gaur said.

However, he added, there are also risks associated with this business opportunity.

“There is heightened awareness about privacy, and there’s also heightened awareness about all the security breaches that take place,” he said. “Any company trying to get into this space must take additional measures to protect the information.”

Data breaches harm a company’s reputation and are expensive to correct, Gaur said. “You can actually measure how much it costs a company once there is a breach.”

Warnings notwithstanding, Equifax is going to market with a two-pronged approach. In addition to selling directly to federal agencies, the company also is targeting the integrator community as potential partners.

That “clearly is a community that is a target for us,” Blaul said. “We see tremendous value there.”

Equifax could play a subcontractor role on some of the larger contracts, he said, citing as an example a five-year Federal Housing Administration contract proposal that includes a provision for loan origination and management risk data, IT modernization and professional services.

He said the company’s data attributes and analytics would be an enhancement not only to a winning prime contractor but also to “anybody that lends, anybody that collects.”