Top 100: Strategic acquisitions continue to fuel CACI success

Over the last few years, CACI International has made a reputation for itself as a company unafraid to make a large acquisition that adds value, scale and revenue.

First, it was the $820 million acquisition of Six3 Systems Inc. The 2014 Six3 Systems acquisition not only boosted CACI’s capabilities in intelligence services, but also added a whole new echelon of intelligence solutions capabilities. The move expanded the company’s addressable market, said CACI president and CEO Ken Asbury.

The more recent, $550 million acquisition of L-3’s National Security Solutions group, which closed in late 2015 was born of that same market strategy, Asbury said, and has paved the way for even more success.

The company ranks No. 9 on the 2016 Washington Technology Top 100 rankings with $3.14 billion in prime contracts earnings, moving up from the No. 12 spot last year.

 “We knew they [NSS] were very strong in a couple key areas, intelligence services being one of them, so that again added to our intelligence service market offerings and increased our customer demand,” Asbury said. But extra important for CACI was NSS’ position in the enterprise IT market.

“We had a very nice [enterprise IT] business, but there were parts of the market we couldn’t address simply because of scale,” Asbury said, recalling how the company was hesitant to go after some of the bigger $500 million to $1 billion enterprise IT contracts.

NSS was a solution, Asbury said; the acquisition brought credentials, past performance, more skills and talent that established CACI as a top supplier of enterprise IT in the federal government.

The same goes for any other acquisitions to be made in the future, Asbury said: they must fit into the company’s market strategy, just as Six3 and NSS did.

And that’s something the company is always thinking about. “We’re going through the planning process now where we assess our capability to go after particular kinds of work,” Asbury said, mentioning the logistics and the materiel readiness market as potential target areas.

To him, the company has three options to expand its presence. One, CACI can add a few talented people who will help foster the right relationships; two, the company could try to partner with other companies—a strategy Asbury said the company is employing with commercial companies like UPS to go after a more commercial approach to doing Defense Department logistics—or three, the company could pursue an acquisition to create a more permanent solution.

CACI’s acquisition strategy used to be more opportunistic; now, Asbury said, the company is more strategic and less opportunistic.

The NSS integration is going well so far, partly because the two companies had a lot of the same culture. According to Asbury, 98 percent to 99 percent of NSS employees came on as CACI employees and there was no lull in their success: “They were on target, if not slightly ahead of target, for the first two months of our third quarter, and we expect them to contribute somewhere between $400 million and $450 million at the top line for the remainder of this year,” Asbury said.

But CACI is scratching NSS’ back as well. “Just by the way we were structured and the kind of business we are, we were able to give them a more competitive rate structure because our flow downs to their business are less than what they were [at L-3],” he said.

With the scale and capabilities in place, CACI is able to capitalize on a mantra that it adopted when Asbury became president and CEO in 2013: Bid less, bid larger, and bid more solutions oriented. “We’re really looking at opportunities that we think customers are going to have enduring needs for,” Asbury said.

One example he mentioned was the company’s hotly contested $159 million win to develop and implement the Army’s new Integrated Personnel and Pay System. The contract is good until 2020, but CACI hopes that it is a much longer investment than that. “That’s going to be the single largest installation of that kind of program in the nation, if not the world,” Asbury said. “That’s going to go along for a long time, and our performance will dictate how long we stay with that program, not the competitive forces. And that’s an exciting place to be.”

Moving forward, the company will strive to bid and win new business as well as retain recompeted contracts. CACI also puts a premium on executing and delivering operational excellence, which Asbury said means that the company will bid only things that the company knows it can do well for its customer.

CACI would also like to see organic growth, but is not afraid to use its cash if it sees strategic opportunities to make more acquisitions.