Belcan uses acquisitions to build federal platform

Consolidation among large, pure-play government services primes took up the attention of many market observers last year but merger-and-acquisition activity in the space has not been exclusive to that select group of buyers.

Shipbuilder Huntington Ingalls started a $1 billion government services business unit with its $380 million purchase of Camber Corp. KBR launched a similar segment with $2.5 billion in annual sales after it spent $870 million on Wyle and the former Honeywell Technology Solutions.

And then there is Belcan, a Cincinnati-based engineering services group founded in 1958 by the late Ralph Anderson and acquired by private equity firm AE Industrial Partners in July 2015. Belcan has nearly 7,000 employees worldwide and recorded $700 million in revenue last year.

Under AE’s ownership, Belcan has made a triple play of government IT and professional services acquisitions over nine months: Intercom Consulting & Federal Systems Corp., Kemtah Group and Schafer Corp. The deal for Arlington, Va.-based Schafer closed earlier this month and Belcan formed a new standalone government services business in conjunction with that transaction.

Washington Technology spoke last week with Lee Shabe, president of the government services segment since March, who strongly signaled Belcan remains on the hunt for further deals to grow its federal footprint. Shabe will oversee the business’ strategic initiatives, customer accounts and M&A initiatives.

Shabe estimated government services to currently represent about 10 percent of Belcan’s total revenue. Shabe told WT Belcan wants to see government services sales of $250 million between the “next two-to-three years,” which would take that share of overall revenue to nearly 30 percent.

Government services also offers Belcan a way to diversify its revenue mix and add a “new lifecycle for money” through longer-term contracts, Shabe said. KBR offered the same diversification and long-term contract rationale behind its own moves for Wyle and HTSI.

“Strategically we’re going to continue to focus on the federal civilian marketplace[with DHS] an obvious space this administration is going to continue to invest in and we’ll do the same,” Shabe said.

The defense and intelligence fields are also areas Belcan eyes for growth in line with the Trump administration’s plan to increase national security spending. A push into those markets could involve both organic and inorganic growth strategies to help balance Belcan’s government customer mix, Shabe said.

“What I’d like to do is look for a DoD-centric company that gives us additional runway in the new market,” Shabe said. “The other things I’m looking for are key contracts that are needed to grow. So that could be companies that have some of these larger contracts like EAGLE II or Alliant for DoD or federal civilian customers.”

Landsdowne, Va.-based Intercom was purchased in July 2016 and brought new federal enterprise IT services such as cybersecurity and systems engineering to Belcan. Albuquerque, N.M.-headquartered Kemtah was bought in January and adds more of that same work.

Schafer added a mix of professional and technical services for military and civil agencies, plus GSA Schedule and Navy Seaport-e contract positions. Kemtah also holds a GSA Schedule contract along with spots on the FBI’s Triple-S and National Institutes of Health’s CIO-SP3 contract, among others.

Each acquired company will operate under their current names with “A Belcan Company” added on to carry on their brand recognition in the government market, Shabe said.

“All three have exceptional brands and we don’t want to take away from that. We’ll look to transition that over the next year.”

That transition, Shabe said, is aimed at showing “Belcan is a leader in the government services space."