The Top 100 turns 25 and wow has the market changed

We take a look back at the first Washington Technology Top 100 to explore how the market has changed and where it might be headed.

In 1994, Washington Technology produced its first Top 100 rankings of the largest government IT contractors in the federal market.

Even then the definition of IT was a bit fuzzy so our definition focused on telecommunications, engineering services, professional services, and research and development.

This year’s ranking is the 25th edition of the Top 100 and it shows a market that has gone through tremendous changes.

Looking back at those first couple lists, I’m struck by the numbers. In 1994, none of the companies on the list had more than $1 billion in prime contracts. On the 2018 Top 100, 27 do and 13 of those have more than $2 billion.

More significantly are the changes in the names. Of the 100 on the list that year, 84 names are gone and it is easy to argue that many of the ones that remain are so very different.

The business world was different as well. In 1994, it was common to have large conglomerates that owned many very diverse businesses.

That’s why the No. 2 company is General Motors through their ownership of EDS and Hughes. Black & Decker is No. 16 thanks to its ownership of PRC Inc. A French company Groupe Bull is at No. 27 because it owned Zenith Data and HFSI (later part of Wang).

But the roots of many of today’s prominent players can be seen on the 1994 rankings. The old Grumman Aerospace Corp. is No. 18 but what was then known as Northrop Corp. isn’t on the list at all. What was then Martin Marietta is no. 13 and Lockheed Corp. is No. 30. Science Applications International Corp. is No. 11.

The list also shows how dominant telecommunications companies were in the early days of government IT. AT&T is ranked No. 1 but also on the rankings are GTE Corp. (No. 6), Cincinnati Bell (No 19), Bell Atlantic (No. 23), Bell Canada (No. 45), Sprint (No. 46), and MCI (No. 71).

In 1995, the Top 100 began looking more like what we are used to: Lockheed Martin had been created through a merger and was ranked No. 1, a spot it wouldn’t give up until 2017. AT&T had dropped to No. 3. Northrop Grumman also formed through a merger and was ranked No. 3, the same ranking they have this year.

Granted the vast majority of missing companies from today's list have been acquired but that still reflects a significant amount of churn in the market.

That churn is likely going to continue as some of the largest Top 100 companies have rediscovered the need for scale. Leidos acquired the former Lockheed Martin IT business in 2016 and restarted the mega-merger trend.

Since then we have seen General Dynamics buy CSRA. And Vencore, KeyPoint Government Solutions and DXC Technology’s U.S. public sector business merged to form Perspecta.

Science Applications International Corp. and CACI International both fought hard to buy CSRA and showed that they have the capability to muster a large amount of capital to make a big deal. Even though they ultimately failed, they made a serious statement.

When the 50th Top 100 is published, will we see as significant a change as we do today looking back at the first Top 100? I’d venture a yes.

The trend toward more commercial technologies and more commercial best practices has helped feed the success in recent years of several companies on the Top 100 including Accenture, Deloitte, CGI and Microsoft. Others are sure to follow.

The trend also has driven established players to change how they approach the market, especially trying to establish more solution-based businesses as opposed to just selling services. This is one reason CSRA was so attractive to buyers.

But other long-time government players also are adapting like Booz Allen Hamilton, Leidos, SAIC and CACI.

The bottom line is that the market is in a constant state of change. History proves that and today’s leaders need to pay attention.

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