Planning Technologies Inc.

Planning Technologies Inc.

Ron Spencer, co-founder and vice chairman
Atlanta, Ga.
Contracts: $94.536 million

Planning Technologies Inc.'s success in the federal marketplace and the consolidation trend affecting smaller information technology companies are attracting many potential suitors to the Atlanta-based company. But so far, PTI executives have turned away all offers.

Ron Spencer, co-founder and vice chairman of PTI, said "six to eight organizations have contacted us in the last month or so to talk about a possible sale."

Spencer said the company is on a roll and that he has no intention of selling out yet. Executives want to continue building value in the communications network systems integration firm for a possible sale or initial public offering in or after 2000, he said.

Planning Technologies is currently owned by Spencer and PTI chairman and CEO Arturo "Jake" Sanchez, a Hispanic businessman who holds an undisclosed majority stake.

When the company was founded in 1991, executives concentrated on getting commercial work. "The original idea was to focus on helping mid-range to large corporate clients with the design and planning of large networks," especially those using multiple operating systems, Spencer said.

PTI shifted to federal government work in 1993 when it joined the Small Business Administration's 8(a) program for small, socially and economically disadvantaged businesses. The company now gets about 80 percent to 85 percent of its business from the federal government.

Planning Technologies took the No. 1 slot in a ranking of 8(a) companies by Input, a Vienna, Va.-based market research and consulting firm. That listing compared 8(a) companies based on total prime contract obligations received during the U.S. government's fiscal 1996. PTI recorded $94.5 million in federal contract obligations last year, according to Input.

Spencer said the company took in $73 million in sales in 1996, compared with $36 million in 1995. PTI now has contract vehicles in place worth $150 million over three years, he said.

PTI officials predict a steep growth curve for the company in the next few years. Spencer said the firm is expected to have $70 million to $90 million in sales in 1997 and should reach $200 million in annual revenue by the end of 2000.

Of that expected $200 million, about $40 million to $50 million should come from the fast-growing area of consulting and engineering services, he said. "It's very profitable," Spencer said. "There is a high need [for it] with all the outsourcing."

PTI executives plan to grow the company internally and do not expect to make any acquisitions, Spencer said. By the end of 2000, the company should be worth about $300 million to $400 million.

The 8(a) program gave PTI the capability to secure indefinite-delivery, indefinite-quantity contracts and to learn the intricacies of the federal procurement process, Spencer said. "None of us knew the federal business when we started in the 8(a) program," he said.

However, changes in procurement methods have taken away the intrinsic advantage that 8(a) companies once had to win federal contracts, Spencer said. The increasing use of General Services Administration schedules and blanket purchasing agreements have led to a decreased emphasis on the 8(a) program, he said.

"It's an open season on open contracts with the federal government," Spencer said. Like much of its competition, PTI is developing GSA schedules and BPA agreements to increase its market share. Planning Technologies also is turning more to teaming arrangements with other companies.

PTI's customer base includes the U.S. Army, Air Force, Navy, U.S. Fish and Wildlife Service and the National Institutes of Health. The company does a substantial amount of business through GSA regions, the Kansas City, Mo., region in particular, said Spencer, who also serves as president of PTI's Federal Division.

Planning Technologies was recently selected as a subcontractor by Lucent Technologies of Murray Hill, N.J., on the Navy's Voice, Video and Data project. Known as Vivid, the project is designed to upgrade the Navy's communications infrastructure, including links to ships at sea, and could generate $2.9 billion for contractors over 10 years.

- Patrick Seitz

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