TOP 100: Serco keeps Navy as top customer while expanding footprint

While Serco Inc. -- the North American subsidiary of Britain’s Serco Group -- may have once been known as a Navy contractor, the company was able to not only break into new areas this year, but also add new capabilities.

“You can see Serco now not just doing Navy,” said Dave Dacquino, the chairman and CEO of the company. “We’re in Air Force, we’re in FEMA, and now in Army, so we are really leveraging our expertise all across the federal space.”

The company is ranked No. 35 on the 2018 Top 100 with $723.4 million in prime contracts.

In January, Serco was one of three companies awarded a $610 million contract to support the Federal Emergency Management Agency’s emergency response and disaster recovery missions.

But the Reston, Virginia-based company has continued to stick to its Navy roots. Just last month, Serco was awarded a $232 million contract to support the Naval Electronic Surveillance Systems. Normally the contract has multiple awardees, but was changed to a single winner.

In Dacquino’s first year as CEO, he decided to replace two of his board members and brought on aerospace and defense veteran Pamela Drew as well as retired Navy Vice Adm. Carol Pottenger.

Pottenger and Drew are the first females to serve on Serco’s board, and Dacquino said their presence has already had benefits for the company.

“I know very clearly in that federal space that diversity plays into success and our customers pay attention to that,” he said. “These two individuals are bringing a tremendous amount of access and strength for us.”

Serco also stands out from its competitors, Dacquino said, because it employs veterans who have had firsthand experience with its customers.

“Our employees board those ships and treat those ships like their home because it is the sailors’ home,” he said.

In October, Serco acquired Massachusetts-based BTP Systems for $20 million in one of the highlights of the company’s year.

The acquisition added critical engineering and logistics capabilities with both new and current customers, Dacquino said. In a release, the company said the addition of BTP Systems would complement Serco’s “existing ship and shore modernization work.”

“The Navy now views us as the whole solution from down below decks to the very top mast of the ship, so that very clearly changes our posture, not only with the Navy, but with other defense contracts as well,” he said.

Dacquino acknowledged that Serco has been quite active in mergers and acquisitions -- and that he expects to see another acquisition soon -- but noted that the company isn’t interested in acquisitions for the sake of scale.

“Don’t look for Serco to buy bulky things to just get bigger,” he said. “We are buying very strategically critical capabilities and that’s what I like to tell the employees of the acquired company -- now we are going to grow together.”

And just this month, the company cleared a major checkpoint when it secured a new potential five-year $948 million contract to continue its health insurance eligibility processing services for the Center for Medicare and Medicaid Services to implement the Affordable Care Act of 2011. Serco has performed the work since 2013.

In the coming year, Serco plans to dedicate time to grow its engineering, logistics, IT and management capabilities, as well as explore trends within the federal government contracting market.

“We are very clearly telling our customers if what you’re interested in is just cost, then you won’t see Serco in the bidding process,” Dacquino said. “We are interested in critical capabilities to complete the critical mission.”