Northrop Division Makes Lucrative Move to Virginia

After years of flat sales, Northrop Grumman's DSSD is making a comeback

Nine months ago, Northrop Grumman's Data Systems and Services Division moved its headquarters from Bohemia, N.Y., to Herndon Va., in an effort to perk up sales that had been flat for the past four years. The move, according to DSSD General Manager Herbert Anderson, appears to be paying off.

"Since we have moved to Herndon we have made good strides in turning things around," Anderson told reporters last week at a news conference.

"In the past six months the company has closed four deals that have a combined value of $300 million," he said, adding that the company hopes to close another $100 million in contracts before the year is over. (See sidebar)

Division officials attribute the uptick in sales to enhanced responsiveness associated with having all key personnel in the Washington area. Some 80 percent of DSSD's customers -- along with most of the division's subcontractors -- are in the nation's capital.

Beyond getting new business, Anderson said the division has improved service on existing contracts and pointed to the Internal Revenue Service's Service Center Recognition/Image Processing System, or SCRIPS program, as a case in point. During the 1994 tax season, SCRIPS ran into problems and was criticized for not meeting mission requirements. This year, said Anderson, the IRS processed more than 200 million handwritten U.S. tax forms and raised processing speeds by more than 50 percent.

"Today, it is one of the first systems fully implemented under the IRS Tax Systems Modernization program," said Anderson.

The division is currently bringing in about $700 million in sales a year. By 2002 it wants to break $1 billion in annual sales. But the road to the billion dollar mark will come by pursuing new streams of revenue.

Most of DSSD's sales currently come from military contracts. By the year 2000, plans call for the division to bring in only a third of its sales from the Defense Department. The rest is to come in equal measures from civilian or non-federal government agencies, as well as the private sector.

"In the commercial marketplace we will target the Fortune 500 companies," with a special emphasis on the health-care market, said Anderson.

Recent contract awards to Northrop Grumman's Data Systems and Services Division (DSSD) include:

- High Performance Computing Modernization Contract in May 1996. The Naval Oceanographic Office Stennis Space Center in Mississippi awarded DSSD a $170 million contract over an eight-year period. DSSD is to design, install and support a complete high-performance computing environment to enable more advanced modeling of the world's oceans and atmosphere.

- Information Technology Omnibus Procurement Program in June 1996. The Department of Transportation conferred to DSSD two separate awards under its $1.1 billion program. DSSD has not provided specific dollar figures on the value of these awards, but has stated that prime contractors each may win contracts totaling $3 million per year under their own marketing efforts.

- Amdahl Subcontract. In June 1996, DSSD received a subcontract award from Amdahl to provide mid-range computer hardware services as part of an outsourcing contract between Amdahl and Computer Sciences Corp. The award is valued at $75 million over five years and calls for DSSD to service Hewlett-Packard, Digital Equipment and IBM mid-range systems, as well as Sun Microsystems, Silicon Graphics and IBM UNIX and RISC-based servers and workstations.

- Defense Enterprise Information Services II. DSSD got an undisclosed piece of the Defense Information Systems Agency's $3 billion DEIS II program. The division will provide information systems development, integration, operations and maintenance for standard applications and facilitate migration of information systems and data into an integrated interoperable infrastructure. Some 80 percent of DSSD's customers -- along with most of the division's subcontractors -- are in the nation's capital.

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