12th Annual Top 100
Masters of Reinvention<@VM>1. 'Bolt-on' acquisitions bolster Lockheed <@VM>2. A well-oiled machine gears for action<@VM>3. No slowdown in growth at SAIC <@VM>4. Prosperity puts CSC in the big leagues<@VM>5. General Dynamics has eyes on new prizes<@VM>6. EDS makes NMCI a springboard to success<@VM>7. Strong defense pays off for Raytheon<@VM>8. Dell tries to overcome its PC image<@VM>9. Beefed-up consulting biz gives Booz Allen Hamilton new gravitas<@VM>10. Boeing maintains altitude, despite corporate turbulence<@VM>11. Buying spree fortifies BAE Systems<@VM>12. Titan finds sweet spot of government spending<@VM>13. Anteon's mid-1990s planning hits paydirt<@VM>14. IBM pursues new supply chain management avenues<@VM>15. L-3 reaps rewards of military modernization<@VM>16. ITT finds the right mix of products and services<@VM>17. CACI savors 20 percent growth rate<@VM>18. MCI looks for right marriage partner<@VM>19. GTSI bulks up for the future <@VM>20. Motorola hones its wireless chops
companies transform and grow with rapidly changing market
When Rear Adm. Scott Fry
retired from the Navy last year, Bahman Atefi knew Fry would be a great hire for
Alion Science and Technology Corp.
Fry had 32 years on active duty and 20 years in senior management positions,
including commander of the Eisenhower Battle
Group and executive assistant to the Chief of Naval Operations. His last duty
station was commander of the Sixth Fleet.
Just one problem: There were no openings at Alion for someone with
Fry's expertise and experience.
The company hired him anyway.
"If you hire the right people, the opportunities will come," said
Atefi, chairman and chief executive officer
of Alion, a McLean, Va., science and engineering company ranked No. 63 on
Washington Technology's 2005 Top 100 with $156.2 million in prime IT contracting revenue.
Fry joined Alion in February 2004 as senior strategist for defense
programs. In that role, Fry helped identify and pursue the company's
acquisition in April of John J. McMullen Associates Inc., a naval architecture and engineering firm. Fry now runs that $100
million business as group senior vice president and general manager.
"You go after talent and help people grow," Atefi said.
Alion's hiring of Fry is just one
of how companies up and down the Top 100 list of federal prime contractors are
making bold moves to bolster their positions
in the government market. IBM Corp. (No. 14), for example, is investing in RFID
technology, banking heavily on a growing
demand among government agencies. EDS Corp. (No. 6) purchased the human
resources capabilities of Towers Perrin to position
itself for an expected expansion in human resources outsourcing.
Other contractors are pursuing new lines of
business or reorganizing to focus company resources on areas of
anticipated growth, such as homeland security or defense. All are taking risks, knowing that the strategy that works today may not work
"We tend to reinvent ourselves every
two or three years," said Renato DiPentima, president and CEO of SRA
International Inc. (No. 27).
For STG Inc. of
, the impetus for change arrived when the small
business won a spot on the large Commerce Department's Information Technology Services
contract, or Commits, in 2000. With that win, STG's founder Simon Lee set the
company on a path for growth that
required him to let go of some control and trust others to perform.
"It's been an evolution,"
Phillip Foote, who has worked at STG since 1999 and was named chief operations
officer last year.
Lee has taken on the role of
strategist at STG, while Foote is now responsible for operations and
implementing that strategy.
As part of the plan, STG has
been hiring people with experience at larger companies such as Northrop Grumman
Corp., Computer Sciences Corp. and
Boeing Co. as well as people with extensive government experience.
"Unless you build the right team, it
doesn't matter what your strategy is," Foote said.
The payoff has been that STG hit the $200 million revenue mark in
2004, a dramatic increase over its $48 million sales in 1999, the year
before it won Commits. As a result, the company rose to the No. 61 spot on the Top 100 this year with $159 million in prime IT
A similar story is told at
, another IT services company
moving into the middle tier of the federal market.
Founder and Chairman Charles
Narang brought on Michael Solley as CEO a year and a half ago. Solley previously
helped run the federal business at
Nichols Research Corp. until CSC acquired it. He then became CEO of MTC
Technologies Inc. (No. 59) and helped
that company grow and become publicly
traded in 2002.
NCI debuts on the Top 100 this year at No. 92, with $88.3
million in prime contracting revenue and overall revenue of about $171
million in 2004. The company expects to be at more than $200 million by the end of 2005, Solley said.
Last year, Narang and Solley revamped their business development
efforts by pushing more responsibility to their general managers as well
as creating a centralized business development office that can target large opportunities.
"You give the GMs the resources they ask for, and you have those
resources report to them
directly," Narang said. "We've been trying to build the infrastructure and
processes so that when we grow two to
three times our size, we'll have the resources in place to handle it."
The key is empowering managers and making
sure you have the right managers in place for the company to grow, Solley
"When you go from being a small
to a medium size and large business, it gets difficult to have just one or two
people trying to keep tabs on everything,"
Over its 27 years, SRA International of Fairfax, Va., has successfully
made the transition from small
company to midtier player and now is on the verge of breaking the $1 billion
annual revenue mark. The new
challenge is positioning the company to reach the $2 billion level, DiPentima
DiPentima, who took over in
as CEO from SRA's founder and long-time chairman and CEO Ernst Volgenau, is
overseeing many changes to reach the new goal.
Last year, for example, the company restructured operations around three
business sectors: civil, defense and command, control, computers and intelligence or C3I.
But the most critical factor for continued growth is the investment SRA
has made the last two years in
business development, proposal and capture management and recruitment and
staffing, DiPentima said.
More business development people increases the number of opportunities
the company can identify, while adding capture managers and proposal managers gives SRA the ability to respond more
quickly to the leads that business development identifies,
"Having won the contracts, we had to make investments in a robust
recruitment and staff operation to make
sure we could deliver the people," DiPentima said.
Those investments are already paying off for SRA, which
before January 2003 had never won a contract with an initial value of
more than $100 million.
"In the first six months of
we won four," he said. "Now, we are winning a nice flow of contracts in that
$100 million to $350 million range. Six years
the range we were dealing in."
The next step is looking at the larger jobs of $350 million or more.
"When you become a $1 billion company, you have to win a whole lot more
work then when you were $100 million," DiPentima said.
One of the biggest challenges facing contractors of all sizes is how to
stand out in the crowd. After all,
nearly all the companies in the market claim to be experienced, innovative,
nimble and well versed in the latest
technologies and solutions.
Part of STG's plan for distinguishing itself has been to embrace
performance-based contracting as a
way of doing business. Thanks to holding contracts such as Commits and now
CommitsNexGen, as well as the Veterans
rmation Technology Support
Services, the company now performs 70 percent of its government work under performance-based contracts or task orders, Foote said.
STG, which offers IT and engineering services, also is in the
running for the Army's
rmation Technology Enterprise
Solutions 2 Services contract, another performance-based contract.
STG also must find customers
that understand performance-based contracting, Foote said.
"You have to show the customer
that you are not going to put the burden back on them," Foote said. "It is a
partnership; you both take a risk. Their
risk is picking you to do the work. Your risk is tying your pay to your
Internally, STG's staff also
to embrace the performance-based contracting concept, Foote said. The company
sets objectives in its strategic plan and has
incentives for meeting those objectives. For example, the company shares award
fees with the employees.
"If you are going to go
after performance-based work, you have to run your company that way. You have to
live it, too," he said.
Reward good people
One of the adages in the government market is that company assets walk
out the door and go home every day. Most
companies on the Top 100 point to their employees, not to their sophisticated
technologies and solutions, as their key to
Finding the next Adm. Fry and then hanging on to him or her is a top
priority. Consequently, most companies offer
incentives to reward good performance as well as career advancement and
Alion, for example, spends
about $2 million funding internal research and development projects that are
proposed by employees.
The employee-owned company,
which expects to reach about $450 million in annual revenue this year, has a
committee that reviews the
proposals, Atefi said. Grants that range from
$50,000 to $200,000 are awarded twice a year.
Often the results can be
taken to a government customer, which may decide to fund further development, he
"The most important thing I
every day is creating an environment that the best and brightest would feel good
about," Atefi said. "This is a tool for
can be reached at firstname.lastname@example.org.
Although it might appear that Lockheed Martin Corp. has tentacles
reaching to every corner of government, company officials still see plenty of
agencies and offices where they can extend the company's reach. One way they
intend to achieve this goal is through "bolt-on" acquisitions.
Linda Gooden, president of Lockheed Martin
rmation Technology, said the
company is looking to buy companies with capabilities and customers where it
needs to strengthen its foothold, especially in civilian agencies. Specifically,
the company wants to increase its business with the Agriculture, Interior and
State departments, she said.
Despite canceling its pending $2.2 billion purchase of
defense company Titan Corp.
last June, Lockheed Martin remains an aggressive acquirer. The company in March
purchased the Sytex Group Inc. for $440 million. Based in
, Sytex provides IT solutions
and technical support services to the Defense Department and other agencies.
Lockheed Martin also bought Marion, Mass.-based Sippican Holdings Inc., a
supplier of naval electrical systems, for an undisclosed amount in December.
That month, the company also agreed to buy Stasys Ltd. ? its first foreign
company specializes in
military communications. The terms of the deal, completed in February, were not
The transaction was an indication that Lockheed Martin is looking outside
borders for potential
acquisition candidates, said Arthur Johnson, senior vice president of corporate
Also in December, Lockheed Martin for an undisclosed amount bought
Soflinx Corp. The
wireless sensor company
specializes in biochemical detection.
For the 11th consecutive year, Lockheed Martin tops the Washington
Technology's 2005 Top 100 list with nearly $6 billion in federal prime IT
The nation's largest defense contractor had one of its most successful
years in 2004, Johnson said, with record sales of $35.5 billion, an almost 12
percent increase over 2004's $31.8 billion. It built a record backlog and
landed a key recompete and other significant civilian and defense contracts,
giving the company its highest win rate ever, Johnson said.
"Our business is an extremely competitive business," Johnson said.
"Every competition is hard fought, and we don't like to lose."
, company also got a new boss
last year. Robert Stephens, president and chief operating officer and the former
chief financial officer, took over from Chief Executive Vance Coffman.
Stevens was selected because he "picked the company up by the
bootstraps" and moved it from "a very old-boy-network type of financial
management to a very strong management process" by reorganizing its financial
setup, said Paul Nesbit, an aerospace analyst at JSA Research Inc. of Newport,
R.I. Credited with paying off some of the company's debt, Stevens will
continue to "have a strong hand on financial activities," Nesbit said.
Lockheed Martin won some substantial contracts for IT work in civilian
agencies in 2004. Among its big civilian agency contract wins in 2004 were: the
U.S. Postal Service's $2 billion Universal Computing Connectivity contract;
the Justice Department's $980 billion
rmation Technology Support
Services III blanket purchase agreement, awarded to multiple contractors; and
the $700 million
rmation Technology Solutions
Engineering contract from the Environmental Protection
Johnson said IT is the company's sweet spot.
"We understand how to put large complex systems together," he said.
"We understand what is required to integrate those systems and to bring them
According to Gooden, Lockheed Martin had more than $8 billion in IT sales
in 2004. Roughly 25 percent of the company is centered on IT, including mission
applications and command, control, communications, computer, intelligence,
surveillance and reconnaissance, but excluding weapons systems.
The IT division has been a solid growth area for the company, especially
in providing systems to federal civilian agencies, Nesbit said.
Lockheed Martin also nabbed several significant defense and intelligence
IT contracts in 2004, including an $87 million, four-year task order from the
General Services Administration to provide the Defense Department with
enterprisewide IT support for the U.S. Central Command in the
The company also was selected to share in task orders potentially worth
$9 billion under the Air Force's Network Centric Solutions program.
Lockheed Martin has started 2005 with a bang by winning the Federal
Aviation Administration's $1.9 billion aviation flight service stations
contract, and the $1.7-billion system development and demonstration contract for
the Presidential Helicopter Replacement program.
This year, Lockheed Martin is looking to fill its plate again with big
contracts. The company will pursue a $3 billion contract for IT infrastructure
work for the Army Corps of Engineers. In homeland security, it will bid on
contracts for the
's Shield Initiative, the
fourth phase of the Transportation Worker Identification Credential program, and
awards under the Justice Department's $10 billion Integrated Wireless Network
More than 90 percent of Lockheed's business is with domestic and
foreign governments, so it's no surprise the company also plans to bid on
GSA's $50 billion Alliant contract for governmentwide IT solutions; the IRS'
A-76 Seat Management Pilot program; the U.S. Census Bureau's 2010 Decennial
Response Integration System to develop and integrate systems needed to support
the 2010 census; and the National Archives and Record Administration's
contract for the implementation of the agency's electronic records program.
Lockheed views its relationships with its clients as a key to its
powerful position in the market, where past performance can make or break a
"I believe we have a tremendous reputation and a tremendous image with
customers," Johnson said.
By Heather Hayes
Despite having taken in more than $4.7 billion in prime contracting revenue in
2004 and holding steady at No. 2 on Washington Technology's 2005 list of Top
100 federal prime contractors, Northrop Grumman Corp. is just beginning to
realize its potential, according to Steve Perkins, the new vice president of
business development and strategy at Northrop Grumman Information Technology.
The IT unit, created through the acquisition of several IT companies,
largely has completed its internal integration and transformation of the last
several years and is now coordinating more effectively with sister units, such
as Mission Systems and Integrated Systems.
"What you're beginning to see in terms of the scale and the
importance of the programs that we're winning is a direct result of pulling
together and collaborating across business sectors," Perkins said. "It's
increased our breadth and scale, and by fusing the capabilities and market reach
of the various business units, we can truly operate as a tier 1 IT company in
the government marketplace."
Northrop Grumman IT is working with its sister sectors on 75 projects and
opportunities, including Custom and Border Patrol's
's Shield initiative, a five-year, $2 billion contract to upgrade electronic
surveillance systems capabilities along
The company is finally achieving "maybe not perfect, but
decent" coordination among its units, said analyst Payton Smith of Chantilly,
Va., market research firm Input Inc.
"It's always represented more of a challenge for them, the size of
the company and the number of different divisions involved," he said. "But
they are beginning to leverage that as a real strength, to really maximize and
bring forward all of their various resources to a project."
Perkins said Northrop Grumman's newfound cohesiveness will help the
company build on its strong success in 2004.
"We're coming into 2005 with a great deal of momentum," he said.
The IT division, which chipped in $5.1 billion in 2004
revenue, captured several important contracts last year:
The Secure Data Network Project, a seven-year, $337 million Homeland
Security Department task order program to design, operate and maintain the
agency's classified network infrastructure for its headquarters and
directorates nationwide. Perkins described the win as an indicator of the
company's "strong ability to help DHS operationally to manage its
infrastructure and its business."
The MAXHR contract, a $175 million blanket purchase agreement let by
DHS to implement and manage a new human resources management system. Northrop
Grumman is building a similar system for the Defense Department called the
Defense Integration Military Human Resources System.
NetCents, a $9 billion contract awarded to eight companies to provide
IT products and services for the Air Force's Network Centric Solutions
Program. The companies compete for task orders under the five-year program.
IDENT1, an eight-year, $244 million award from the U.K. government to
provide advanced biometric identification technology as part of an integrated
computer system that links more than 50 police forces and agencies throughout
England, Scotland and Wales.
Northrop Grumman will continue to focus much of its
attention in 2005 on growing business areas such as defense and homeland
security, Perkins said. But the newly streamlined company also is ready to make
strong forays into new markets, most notably public health and energy.
To bolster its capabilities in public health,
Northrop Grumman in March acquired Integic Inc., a
, IT provider specializing in enterprise health and business process management
solutions. Perkins said the $161 million company has a strong record providing
health systems to DOD, and its ePower product will help Northrop Grumman expand
its capability in workflow management.
In the energy arena, Northrop Grumman plans to pursue opportunities to
manage and operate the Los Alamos National Laboratory, a $40 billion program,
and the Nevada Test Site.
"That's a market that we believe will have significant
growth and concentration," Perkins said. "There are many labs and ranges out
there to be managed, so we think energy represents a very strong area for us."
Northrop Grumman will go after more business in homeland security,
intelligence, international defense and state and local government markets in
2005. The company was selected as the preferred bidder on the $1.2 billion U.K.
Airborne Warning and Control System, which will supply aircraft maintenance and
design engineering support for its airborne warning aircraft, and is is in
negotiations with the Royal Air Force on the project.
The company also was down-selected as one of two bidders that will
compete for the Virginia Information Technologies Agency's $1 billion contract
to consolidate and outsource IT systems and services across all state agencies,
an award that is expected to be decided in November.
Perkins said that the company hopes to win more homeland security
business by leveraging its core strengths in network management and integration,
especially as national programs begin to reach into the state and local market.
"We think that we are particularly well-positioned to help them on both
sides of those systems," he said.
The company is not without its challenges, not the least of which is
attracting and retaining personnel with hard-to-find technical skills and
security clearances. Perkins said Northrop Grumman is trying to fill nearly
9,000 job openings.
"We're certainly not unusual in that, though," he said. "Everyone
is dealing with that challenge."
Still, Perkins is bullish on the company's prospects over the next few
years, and with good reason, according to Input's Smith.
As the Office of Management and Budget's governmentwide mandate for
agencies to consolidate infrastructure and eliminate redundant systems begins to
take off in 2005 and 2006, Northrop Grumman is set to take advantage of the
"That's going to be very much an integrator-driven effort, and I
think Northrop Grumman, particularly the IT sector, is probably one of the most
well-positioned to be able to support those requirements," he said.
By Alice Lipowicz
It's a giant defense contractor
without a tank or an aircraft to its name. Yet Science Applications
International Corp., whose specialty is developing and integrating military IT
systems, is growing at an unusually fast clip.
SAIC saw its revenue jump by 23
percent last year, reaching a record $7.2 billion ? an especially high rate of
increase considering only 4 percent of the growth came from acquisitions.
SAIC's growth trajectory is likely
to remain upward, with federal IT budgets set to rise by 7 percent on average
next year and as high as 25 percent in the Homeland Security Department.
"We see more and more emphasis on
data mining, command and control, intelligence, surveillance, reconnaissance ?
the kinds of areas in which our company is either in a leadership position or
plays a significant role," said Duane Andrews, chief operating officer.
"There will be less emphasis on the heavy metal bending because it's now a
more information-oriented world."
For intelligence, defense and homeland
security, "more and more of these sectors are growing in the types of IT
systems work that SAIC does," said John Pike, director of Globalsecurity.org.,
an online information service company in
SAIC's growth is due in large part
to its success in winning competitively bid contracts. Of the 10 largest
Pentagon prime contractors, SAIC had the highest percentage of contracts, 74
percent, won with "full and open competition" from 1998 to 2003, according
to a recent study by the Center for Public Integrity, a non-profit investigative
None of the other Pentagon primes even
came close to SAIC's percentage of competitively won contracts, including
Boeing Co. at 40 percent, Northrop Grumman Corp. at 33 percent, and Lockheed
Martin Corp. at 25 percent, the study said. Those companies had much higher
percentages of sole-source contracts.
San Diego-based SAIC, with more than
45,000 employees, is the largest employee-owned research and engineering firm in
the country. Its successful growth, without large acquisitions or sole-source
contracts, demonstrates the company's great strengths as a competitor, said
John Allen, co-director of defense and government services for
, investment banker BB&T Capital Markets/Windsor Group.
"Few companies are as 'pure
play' as SAIC as a service-oriented business," Allen said. "They have a
tremendous amount of talent. And financially, you don't get much stronger.
Their growth rate historically has been very high, and it will be sustained."
SAIC jumped up two places to No. 3 on
this year's Washington Technology Top 100 list, showing a prime contracting
revenue gain of 32 percent. SAIC had federal prime contract revenue of $3.78
billion, up from $2.86 billion a year ago. The figures don't include
intelligence work, subcontracts or non-IT revenue.
J. Robert Beyster, who retired as
chief executive in November 2003, founded the company. Kenneth Dahlberg, who
formerly held high-level positions at General Dynamics Corp., Raytheon Co., and
Hughes Aircraft Corp., replaced him.
Dahlberg has been reorganizing
SAIC's many units to avoid overlaps.
"A year ago we consolidated a number
of groups and business units to be better aligned to key customers and markets,
and created a unified corporate team with clear roles among senior executive
staff," Andrews said. "Overall, this has been a success, and improved
customer focus has supported strong growth."
In March, SAIC completed the sale of
the Telcordia Technologies division, which had been a large portion of SAIC's
commercial sales. The company's balance sheet now shows roughly $2 billion in
cash. Considering the leading role that Dahlberg played in General Dynamic's
$1.5 billion buyout of Veridian Corp. in 2003, the expectation is that he'll
be shopping for more targets for SAIC.
The largest purchase thus far is
ProcureNet Holdings Inc., a procurement technology firm in
, with annual revenue of $250 million. Smaller purchases were Fairfax, Va.-based
Presearch Inc. and Trios Associates Inc.
Ninety-four percent of SAIC's
business now is with the government, and about 65 percent is with the Defense
Department, much of it classified intelligence work.
The company has been in the headlines
for problems with the FBI's $104 million Virtual Case File System to track
terrorists, part of the agency's huge Trilogy modernization program. FBI has
all but scrapped SAIC's software and is planning to start over. SAIC, while
receiving some pointed criticism over the project, has come through it
relatively unscathed, Allen said. "I don't think you'll see any long-term
impact from it."
Most of SAIC's recent growth has
been in government business, including the Army's $21 billion Future Combat
Systems modernization program, along with the prime contractor, Boeing Co. of
Chicago. SAIC also has large contracts with the Air Force and several
longstanding contracts with NASA, among others.
The company in April won a sole-source
contract for research and development of a nuclear countermeasures systems
architecture, to interact with nuclear detection systems. Although that award
was from the Navy's Space and Naval Warfare Systems Command, it could give
SAIC a leg up on contracts for the new Domestic Nuclear Detection Office to be
created at the Homeland Security Department in 2006.
In April, the Army's FCS came under
fire from Sen. John McCain (R-Ariz.), who recommended that it be reconfigured as
a conventional weapons-buying contract. On April 11, the Army agreed to convert
the agreements it had signed with SAIC and Boeing.
The combat system is likely to
continue to be scrutinized, Pike said, because of the troubled history of
similar giant contracts and Boeing's recent procurement troubles. "SAIC
would have to be watching Boeing very closely," Pike said.
For now, SAIC looks to keep on growing
as more federal agencies turn to IT to solve their problems.
"They're continuing to grow
organically, which is tougher and tougher," Allen said. "They are such a
sizeable platform, and they are looking at how to take advantage of all the
assets they have."
By James Schultz
They bought. They sold. They prospered.
In December 2004, less than two years after Computer Sciences Corp.
acquired the then-26,000-employee DynCorp for $914 million, the company
announced an $850 million sale of DynCorp's overseas business units. The deal
with Veritas Capital, finalized in February, involved DynCorp International,
DynMarine and some technical services elements, netting CSC $775 million in cash
and $75 million worth of stock.
The divested entities provided the federal government with security and
aircraft maintenance services ? not part and parcel of "core CSC service
offerings," according to Computer Sciences officials.
"It was a good decision. They got a good deal to begin with when the
commercial IT market was softer," said Bob Kipps, director of Houlihan Lokey
Howard & Zukin's Aerospace, Defense and Government Group in McLean, Va.
"When they sold [the security unit] at its peak, it was a volatile business
that was surging. The danger and risk was tough to stomach, particularly for a
publicly traded company conscious of its corporate image."
But it was also savvy capitalism, Kipps said. In essence, CSC got two for
one: In the just-completed divestiture, the company almost matched what it
originally paid for all of DynCorp in March 2003. And CSC retains the IT nucleus
of the DynCorp enterprise, which was its original aim. That's especially
important given the intense pursuit of government IT contracts by the biggest
industry players, Kipps said.
"CSC is still trying to find the catalyst for organic growth," he
said. "The defense primes' diversification into IT services has made it a
Austin Yerks, president of business development for CSC's federal
sector unit, agreed that conditions aren't hospitable for the kind of natural
expansion that companies prefer. The reason, Yerks said, is because only four or
five large federal agencies are buying IT these days.
"If you peel back the onion of the $60 billion to $70 billion federal
IT market, that money goes to infrastructure and existing contracts," he said.
"Everything else is basically flat."
IT growth across government is forecast at as much as 7 percent, but the
largest federal agencies, such as the Homeland Security Department, are still
trying to figure out how best to restructure and redeploy their IT assets.
Because large-scale contracts are fewer and further between, competition is
"With all this defense consolidation of the last 10 years, everybody is
fielding a major league team," Yerks said. "We face the same problems as the
NFL or major league baseball does. We have to keep our superstars and our
contract pursuits focused. You cannot slip up, or you will lose."
CSC remains committed to playing in the big leagues, Yerks said. The firm
had its share of major wins in the past year, among them a contract for the
operation and maintenance of the Navy's Atlantic Undersea Test and
. The award is for three years and four three-year options, and is estimated to
be worth $762 million if all options are exercised.
CSC's federal sector business unit will support the
center through services that include scheduling and conducting test programs,
operating range instrumentation and test support systems, and performing all
base operations functions. Work will be at locations to include
West Palm Beach
Another major award involves providing technical domain advisory and
assistance services to the Army Aviation and Missile Command. CSC estimates the
value of the contract, which is for one year and up to 10 one-year award term
options, at about $500 million if all options are exercised.
The company will provide systems engineering and systems analysis
services to support the command with design, development, testing, prototyping
and integration of missile and aviation systems and subsystems.
It also will provide analysis of performance effectiveness and simulation
of system design for acquisition support. More
than 200 engineers, scientists and technicians from CSC's Defense Integrated
Solutions and Services Division will work on the project, primarily in
A third CSC venture involves providing IT infrastructure support services
to the U.S. Strategic Command. CSC estimates the value of the performance-based
contract, which is for one year with nine one-year options, to be about $525
million if all options are exercised.
Under terms of the deal, CSC will sustain the command's IT
infrastructure by providing it with information-based operations, maintenance,
logistics, systems engineering, program management and procurement functions.
Specific tasks will include management and refresh of desktops, servers,
networks and related services. CSC's ultimate mandate is to develop a
flexible, next-generation IT infrastructure to enhance the command's mission
and management capabilities.
"There is a group of six to eight companies," Yerks said. "All have
these major procurements in their gun sights. Growth is key. We're larger than
we were last year. We're growing, and that's a good thing."
For the coming year, the main question is investment, according to
Houlihan Lokey's Kipps. How will CSC roll over its dollars from the DynCorp
International sale? Kipps said to watch CSC's reinvestment strategy for clues
to its future corporate direction.
"It will be a defining move for them," said Kipps. "They
essentially doubled down in the federal market space with the DynCorp purchase.
Will they double down now commercially or in the federal market? That's the
question, and I don't know the answer."
By Cynthia Webb
After a blockbuster year of
acquisitions in 2003, General Dynamics Corp. in 2004 concentrated on nurturing
and absorbing the new companies into its empire of 70,200 employees, while it
continued to win long-term defense contracts.
, defense contractor has not hesitated to scoop up companies to expand its
business. It acquired 37 companies over the past decade and rebuilt its business
through acquisitions after downsizing in the early 1990s.
But it had only three minor
acquisitions in 2004 and has had just one small purchase so far this year. The
company paid an undisclosed sum in April for Maya Viz Ltd., a 55-person
firm that makes visualization software used by the Army in
That's in stark contrast to 2003,
when General Dynamics' $3 billion buying spree included a $1.5 billion cash
outlay for Veridian Corp. of
The company's efforts to
smoothly integrate its purchases have helped it stay competitive, according to
The Veridian acquisition continued to
make a big impact in 2004, helping the company's information systems and
technology group log tremendous growth. The unit builds network and
communications systems for military clients, including the Army and Navy.
Thanks to high demand from federal
customers for communications and IT services, the information systems and
technology group contributed 35 percent of General Dynamics' total 2004
revenue, making it the company's largest segment.
The group, formed in 1997, reported
$6.8 billion in revenue for 2004, compared with $4.9 billion in 2003.
"In 1999, this was a $1.5 billion
operation ... so it really has grown very rapidly," said Paul Nisbet,
aerospace analyst at JSA Research Inc., an independent aerospace research firm
In Top 100 prime IT contracting
revenue, General Dynamics hit $2.2 billion in fiscal 2004, enough for it to take
the No. 5 spot in Washington Technology's 2005 rankings.
For 2004, General Dynamics
recorded revenue of $19.2 billion, an 18 percent increase from 2003, and
earnings of $1.2 billion, up from $1 billion in 2003.
Gerard DeMuro, the IT group's
executive vice president, credited General Dynamics' financial success in 2004
to substantial organizational growth concurrent with its melding of its big
"We spent quite a bit of time
focusing on successfully integrating those units," including Veridian, Digital
System Resources Inc., Fairfax, Va., and Creative Technology Inc., Herndon, Va.,
DeMuro said, "We continued to be strategically focused on where we thought
opportunities existed," he said, noting three of its 2003 acquisitions.
In July 2004, the company bought
Spectrum Astro Inc. of
The 525-person company develops space systems, and satellite and ground-support
equipment. General Dynamics acquired TriPoint Global Communications Inc. of
in September 2004. The 1,450-person company provides satellite and wireless
communications products and services. Terms of the deals were not disclosed, but
DeMuro's group acquired both to boost space vehicle integration and mobile
In November 2004, General Dynamics
paid an undisclosed amount to buy Engineering Technology Inc. of
, a 50-person research and development company.
General Dynamics' past acquisition
track record might pose the biggest challenge for the company, particularly for
the IT group, Nisbet said. Most of its growth happened through acquisitions,
"and I doubt it can maintain that now that it has grown so much," he said.
"To grow 20 percent when you are at $7 billion is a lot different than doing
it when you were at $1.5 billion."
DeMuro said the company's growth is
helped by a continued demand from military and intelligence customers for
computing, communications, intelligence, surveillance and other services and
products, ranging from digital information-sharing technologies and high-speed
encryption tools to ruggedized computing equipment.
"It's an almost insatiable
appetite for [providing] information to the warfighter at as low a threshold as
you can get it," DeMuro said.
With several contractors vying to
offer similar defense and homeland security services, General Dynamics has an
ongoing challenge to set itself apart.
"The best way to win new business is
to perform on existing business," DeMuro said.
The information systems and technology
division had several significant contract wins in 2004. The Army selected the IT
group to lead a prime contract with Lockheed Martin Corp. for its Warfighter
Information Network-Tactical, or WIN-T, which is worth potentially $7 billion
through 2018. The contract involves overhauling the Army's tactical
communications network by developing a mobile and secure voice, video and data
network for soldiers.
In July 2004, the division won a $295
million contract on the Joint Tactical Radio System program, to develop
lightweight, software-based radios for the military. The contract is worth
potentially more than $1 billion through 2011.
In late 2004, General Dynamics signed
an $830 million subcontract with Lockheed Martin for work on the Navy's Mobile
User Objective System, a narrowband, tactical satellite communications system to
provide soldiers with mobile voice, video and data communications capabilities.
General Dynamics is also part of a potential $9 billion contract to provide
comprehensive IT services to the Air Force.
DeMuro said General Dynamics should
continue to benefit from the surge in defense work, with healthy spending
increases still anticipated for homeland security and intelligence needs.
"It's unrealistic to assume that
the rates of growth that we have seen over the past four to five years would
continue unabated," he said. "Having said that, I think we have healthy
markets that provide great opportunities where we are positioned."
JSA's Nisbet said future
defense spending may level off, but there will still be ample opportunities.
"The rate of growth from the
Department of Defense is going to probably flatten over the next few years,"
Nisbet said, though funding from the Homeland Security Department could help
fill voids. "There is a lot more growth coming there as they get more
By William Welsh
The Navy-Marine Corp Intranet, a program that nearly broke the bank at
EDS Corp., is now helping the company win new business.
EDS in March announced that it had won a contract worth $4 billion over
10 years to provide outsourced IT services to the
's Ministry of Defence. Company officials and industry analysts attribute the
win to experience gained on NMCI, an $8.8 billion program that, through a single
network, connects more than 400,000 sailors and Marines at more than 300 bases
"They used the lessons learned [from NMCI], which helped them bid a
credible approach to the Ministry of Defence," said Lorrie Scardino, an
analyst with market research firm Gartner Inc. of Stamford, Conn. "They had
more lessons learned from it than anyone else on God's green Earth."
The contract puts EDS on a short list of companies capable of providing
outsourcing services for national governments. It also goes a long way toward
boosting its reputation in the federal government, she said.
"If you look at the Ministry of Defence contract from a global
standpoint, it says that agencies are willing to consider EDS and work with
them," Scardino said. "I can't imagine that two or three years ago that
same decision would've been reached."
Although EDS isn't yet out of the woods with NMCI, the company
negotiated key modifications to the contract that had been draining its
resources since its award in 2000. The changes, which alter service level
agreements to conform to those used by the commercial sector, are designed to
improve network service and efficiency.
The upshot is that the new service level agreements will let EDS begin,
for the first time, to bill the customer for up to 100 percent on individual
seats, analysts said.
"By the end of 2004, they were at a break-even point from a cash-flow
perspective" on NMCI, said Kevin DeSanto, a vice president with the Aerospace
Defense Government Group at investment firm Houlihan, Lokey, Howard and Zukin in
McLean, Va. Contract modifications and better performance in managing the seats
have enabled EDS to reach that point, he said.
These changes will help EDS remain one of the top players in the federal
IT market. In fact, the company moves up two slots this year to No. 6 on
Washington Technology's Top 100 list with more than $2.1 billion in prime
Fifteen percent of the company's $20.7 billion annual revenue derives
federal, state and local contracts, said Jim Duffey, EDS vice president of
global sales and client solutions,
government. The federal business continues to grow in the low single digits,
which is comparable to the overall growth rate of federal IT sales, he said.
One way EDS intends to grow its federal business this year is through
General Services Administration schedule contracts that reach agencies it
hasn't worked with before. Duffey said the company has had substantial success
doing this with tasks awarded under GSA's eTravel Service contract. EDS has 12
eTravel contracts worth $392 million, he said.
It's the kind of approach to replicating business across the federal
market that the company should be doing on a routine basis, he said. "I'm
trying to get my team to see in how many instances we are providing services to
a federal agency that could be used by another agency," Duffey said.
A big win came in August when the company prevailed in a protracted
bid-protest battle with incumbent contractor Lockheed Martin Corp. over the $750
million Housing and Urban Development Department's IT Systems contract. EDS
won the award in August 2003, but Lockheed Martin protested it, and the
Government Accountability Office told HUD to re-compete the contract. EDS won
the re-compete after spending a year in limbo.
"We didn't want to have to win that a third time," Duffey said.
EDS picked up an $18.5 million prime contract in June from the Treasury
Department for an information and storage system for a financial-crimes
enforcement network, and two homeland security subcontracts totaling $64 million
from Sytel Corp. of
It also won the opportunity to compete as a prime contractor for $9 billion
worth of work on the Air Force's Network-Centric Solutions contract.
EDS also will seek to take advantage of new human resources capabilities
that it acquired in January from Towers Perrin, a
, professional services firm. EDS paid Towers Perrin $420 million for its
benefits administration business, $300 million in annual global revenue and
exclusive rights to its human resources consulting clients and prospects.
The federal government is moving gradually toward outsourcing human
resources, Duffey said, and EDS will be ready with its newly beefed up business
process outsourcing capabilities.
By Doug Beizer
Raytheon Co.'s concentration on defense agencies is paying off ? the
company's revenue grew 12 percent to $20.2 billion in 2004 from $18.1 billion
in 2003, with profits jumping by 14 percent.
Raytheon also garnered the No. 7 spot on Washington Technology's 2005
Top 100 list with more than $2 billion in prime IT contracting revenue.
"At least 80 percent of its business is for the military now, and that
is doing very, very well," said Paul Nisbet, an analyst at JSA Research Inc.
in Newport R.I. Raytheon reported that operating income for government and
defense increased 30 percent in 2004.
Even past troubles with the company's aircraft division continue to
dissipate. The company reported that renewed interest in its Beechcraft and
Hawker aircrafts and an overall improvement in the aviation market are fueling
the recovery. NetJets Inc., a
fractional business jet ownership company, in 2004 ordered 23 Hawker 800XP and
24 Hawker400XP jets worth more than $300 million, Raytheon officials said.
Defense work is Raytheon's big earner, but company officials are upbeat
about civilian work as well. Raytheon Technical Services Co., with Computer
Sciences Corp., landed a task order contract with the Patent and Trademark
Office. Under the contract, the two companies will compete for work to maintain
and modernize PTO's systems, officials said.
And defense work will continue to be the biggest factor determining the
company's future, Nisbet said.
For its missile systems, Raytheon reported sales of $3.8 billion in 2004.
The company delivered the Exoatmospheric Kill Vehicle payloads that entered
, according to company documents.
Raytheon is also involved in the Defense Department's Global
Information Grid project, designed to provide communications and data systems
that allow real-time meetings for both warfighters and business users.
Raytheon is planning to bid on a component of DOD's
Transformational Communications Satellite system, which will offer
Internet-like capability to troops anywhere in the world. Raytheon and its
partners are working on the software environment for the TSAT system's
integrated ground stations and networks, officials said.
The TSAT Mission Operations System project is one of Raytheon's top 10
projects, said Trip Carter, advanced programs manager for Raytheon's
Intelligence and Information Systems unit. "It is a growth area for us with
this DOD customer," Carter said.
Essential to the TSAT Mission Operations System is ensuring that
bandwidth is available at the right places at the right times, Carter said.
Raytheon is the prime contractor overseeing AT&T Corp., Boeing Co. and
General Dynamics Corp., bringing its mission planning and software-intensive
development expertise to the project, Carter said.
"In the past, we have been known more as a subcontractor with that
particular customer, and now we're stepping up into a prime role as well,"
Another key aspect of the project is that it addresses DOD's goal of
interoperability among all Pentagon systems. The architecture Raytheon is
developing for the TSAT project fits well with this goal, Carter said.
Calling the TSAT Mission Operations System "the ultimate communications
enabler" and "a construct for all these other networks to tie into,"
Carter said the program is absolutely central to Raytheon's objectives with
The winner will have 30 days from the Oct. 28 contract
award date to deliver that architecture. Raytheon plans to submit a proposal in
July, said Chuck Corwin, infrastructure manager for the company's Intelligence
and Information Systems unit.
Raytheon is competing with Northrop Grumman Corp. and Lockheed Martin
Corp. for the contract, company officials said.
TSAT Mission Operations System, an 11-year, $2.1 billion
program, is being built around IP Version 6, which will
replace today's IPv4, Corwin said.
"This backbone is really transformational, in that we are really leap-frogging
the IP technology in use on the Internet today and providing it to the Defense
Department," he said.
Raytheon officials also said aspects of the company's work for the
Patent and Trademark Office could have further applications. PTO is interested
in developing a secure system to let employees work from home, said Carla
Dempsey, business area manager for Raytheon Information Solutions.
"That is leading-edge technology, that if we do it for PTO, it would be
leveraged very easily for other agencies," Dempsey said.
The PTO system would have to be the highest level of security possible to
protect commercially viable secrets. The contract with PTO awarded to Raytheon
and CSC is potentially worth $251 million.
"PTO has many, many systems that have been developed and
are performing adequately on the existing systems," Dempsey said.
"However, they have a huge backlog of patent applications, and they
have more and more applications coming down the train track at them."
Raytheon officials will look at how PTO receives patent applications and
data, and seek out and evaluate opportunities to enhance existing systems or
develop new ones to automate the process.
"The desire is to go to a completely electronic process," said Bob
Bascom, a program manager at Raytheon's Systems Development and Integration
Improving search capabilities at PTO is another area that
likely will have applications at other government agencies.
In a demonstration exercise, Raytheon officials used search technology to
create a model of what the al-Qaida network looks like. Based only on
unclassified, open-source data, a surprisingly accurate picture of the terrorist
group was created, Bascom said.
Technology developed for other agencies will likely be applied to PTO,
and new technology developed for PTO could be used elsewhere.
In PTO's case, the sheer amount of data is the challenge. The office
was established at about the time the
was founded, so the amount of data it has accumulated is immense. Any
improvements in searching will reap significant returns, Bascom said.
"Search is important to PTO, because it addresses two of its key needs:
to enhance quality and productivity," Dempsey said. "PTO is already very
sophisticated in the area, and we hope to bring an additional level of
By Tania Anderson
Dell Federal has an image
problem. Even though the
division, based at the company's headquarters in Round Rock,
, brought in more than $2 billion in federal contracts last year, executives
said the company can't get away from being known as simply a PC maker .
Dell is so much more than that,
company executives said, and it's been a challenge to change the view of
"The one thing we're working to
change is the perception that Dell just sells PCs," said Troy West, vice
president of Dell Federal, who took the job earlier this year after heading up
the company's state and local division.
"We offer a diverse innovative
technology portfolio, we provide 24/7 tech services and support for most remote
geographic areas, and we offer professional services to help customers plan and
implement IT projects," he said.
Despite the image problem, Dell moved
up five slots from No. 13 in 2004 to No. 8 on this year's Washington
Technology Top 100 list. Federal prime contracting revenue grew by more than 100
percent between 2003 and 2004 from $855 million to $2 billion, making Dell the
only hardware company in the top 10.
Unlike many government contractors,
the company does not have a physical presence in the
area. It brings in a large portion of its federal revenue from sales of
PCs, particularly laptops and servers, in addition to income from its
The bulk of Dell's government
revenue, which is about 5 percent of the company's total revenue, is generated
by its presence on the General Services Administration schedule. That brought in
$1.5 billion in sales for the company in 2004, according to Input Inc., a market
research firm in
But Dell also is seeking some new ways
to focus on its government customers, which include the Navy, Air Force and
Army. The company sees potential growth in four areas: enterprise solutions from
storage to computer clusters; professional services; imaging and electronics;
Dell recently entered the television
market, saying the government is the perfect customer for this segment because
of its need for closed circuitry television. West said he doesn't expect these
emerging markets to expand the company's government customer base.
"The challenge is less for them to
acquire new customers than it is for them to broaden [delivery of] their suite
of services to existing customers," said Payton Smith, an Input analyst.
West said the company's success in
the federal market is a result of Dell's direct sales model, which he
maintains has enabled government customers to do more with tightening technology
budgets. The direct model lets the company offer lower prices on products that
are configured specially for government agencies.
Other companies have tried to launch
direct models such as Dell's, but none have come close to its success, Smith
said. "No one has been able to do it to the extent of Dell," he said.
Smith said that what also makes Dell
unique is its ability to successfully target the government not only through the
direct model but also through indirect channels, such as subcontracts.
"Other companies may have had
strengths in one area, but they were not able to cover both channels like
Dell," Smith said.
What will help the company continue on
its path is not only its direct sales model but also its strong alliances with
large and small companies, West said.
Dell recently announced that it
partnered with 10 small-business government contractors to make Dell systems
available through their GSA schedules.
Several government contracts won in
2004 also helped move the company up on this year's Top 100.
Dell signed a $500 million, six-year
agreement with Microsoft Corp. in November that consolidates several license
agreements with the Air Force. Dell will supply more than 525,000 Microsoft
desktop Windows and Office software licenses, while Microsoft will provide core
server software, maintenance and upgrade support.
"It will allow the Air Force to
implement standard configurations of software that will be mandated across the
Air Force operations," West said.
He also noted Dell's win of the
Information Technology Enterprise Solutions procurement contract with the Army,
a long-time customer. Dell is one of four vendors providing hardware, software
and services, with a maximum value for each contract of $500 million.
West declined to discuss what types of
government opportunities the company will be pursuing in the coming year.
One contract that helped solidify
Dell's presence in the government market, particularly with the Navy, was the
Navy-Marine Corps Intranet contract, according to Smith.
Dell has spent the last four years
providing servers, workstations, desktops and notebooks for more than 400,000
seats and associated networks. The contract, awarded in late 2000 to prime
contractor EDS Corp., has a total value of $8.8 billion.
"Dell has taken the public sector
marketplace very seriously," Smith said. "They have done things to address
the needs of the federal agencies specifically."
Revenue throughout the company climbed
by 17 percent in 2004 to $41.4 billion, with a large portion of sales coming
from servers and storage solutions.
The revenue surge has come during a
time of change at Dell's top management level.
Not only did West come on as the new
head of federal after Tom Buchsbaum retired, but also Michael Dell, who founded
the company in 1984, stepped down as chief executive last March to serve as
chairman of the board. Kevin Rollins was named president and CEO.
By Lisa Terry
Booz Allen Hamilton Inc.'s
multiyear effort to complement
its management consulting capabilities with development and engineering
implementation skills was evident in its 2004 contract awards.
The move "has made us more
competitive and more readily viewed as a potential prime contractor," said
Dennis Doughty, president of worldwide technology business for Booz Allen.
The strategy helped the firm move up a
notch in 2005 to No. 9 on Washington Technology's Top 100 Federal Prime IT
Contractor's list, with about $1.8 billion in prime contracting revenue.
Overall, the company had $3.1 billion in government and commercial revenue.
The company was among the winners of
$9 billion in indefinite-delivery, indefinite-quantity contracts awarded by the
Air Force for its Network Centric Solutions program.
Contract awards such as this one
"change the way clients look at us in terms of how far along the lifecycle
Booz Allen can add significant value," as well as its unique approach to
addressing project challenges, Doughty said. They also enhance the company's
reputation in the eyes of potential teammates on future contract bids, he said.
The effort to bolster implementation
skills is likely to resonate first with customers, said Ray Bjorklund, senior
vice president and chief knowledge officer for Federal Sources Inc. of
"There is traction and a comfort level with their customer base that enables
them to expand their offerings," he said.
Fortunately for Booz Allen, said Larry
Davis, managing partner for Aronson Capital Partners LLC, the company "has a
very strong presence at very high levels" of government, giving it a wide
The 91-year-old firm, historically
regarded as a management consulting powerhouse, has bolstered skill sets such as
systems development and systems engineering, including the ability to bring
together point solutions in a results-oriented program.
The company's legacy in management
consulting leads it to take a view that is mission-oriented rather than one
steeped in integration. One way this philisophical bent evinces itself is in the
company's ability to recognize and separate the people problems from the
technology problems, Doughty said.
The strategy reflects the transition
of some government entities toward solutions purchasing and a results-oriented
focus, he said.
In the global health arena, the
strategy has enhanced Booz Allen's approach to public health infrastructure
engagements. The company has recast pieces of its commercial, public sector,
technology and health care infrastructure businesses into a cohesive practice.
"The fact that we serve all of those
clients both in our commercial realm and our public sector realm, and are able
to help mediate those discussions, leads to some breakthrough thinking about
what can be done," Doughty said.
The firm has taken a similar approach
to its longstanding global transportation business, Booz Allen's first
practice area, dating from 1914. Both the health and transportation practices
are considered fully joint businesses across the commercial and public sector
portions of Booz Allen, and together total about $350 million in business.
The line between commercial and public
sectors continues to blur as the company applies lessons from one market to the
other, Doughty said.
The enhanced capabilities have been
built up in accordance with Booz Allen's grow-from-within philosophy. The
company's growth has been generated internally and through hiring rather than
"We call it quality growth,"
Doughty said. The firm's broad approach also makes it more difficult to locate
appropriate acquisition targets, he said.
Booz Allen's complex project
management skills make them more than capable of hiring and adding capabilities
successfully, FSI's Bjorklund said.
While transitioning to a complete
solutions strategy, Booz Allen has been careful to align internal structure with
client needs, using what the company terms horizontal integration.
"It's making sure we're not
fragmented in the way we approach solving client problems, and we take advantage
of our scale," Doughty said. That has included bolstering its technology
infrastructure with collaboration tools and re-engineering business processes.
"To us, one of the key
differentiators ? as opposed to companies specializing in implementation alone
? is that we can bring together concept and development. They've got to be a
team from day one," he said.
Among Booz Allen's contract awards:
February 2004 award to provide IT services to the landmark National Children's
Study for the National Institute of Child Health and Human Development, which
examines the effects of environmental influences on the health and development
of children from birth to age 21. The contract is worth $3.1 million for the
first year, and $13.2 million over five years.
engagement to provide transportation advice for the 2004 Summer Olympics in
, organizing the movement of 16,000 athletes, 5,000 VIPs and 22,000 media people
during the Olympics.
March 2005 multiple-award contract from the Federal Deposit Insurance Corp. for
IT application services that also includes IBM Corp., Lockheed Martin Corp. and
Pragmatics Inc. The 10-year contract, estimated to be worth more than $550
million, is for a broad range of IT services, including application development
and maintenance, organizational and management support, data management and
software process improvement.
Booz Allen did not prevail in its bid
for a U.S. Visit subcontract. What that failure suggests, Doughty said, is that
the company should have taken the prime position on the bid.
In November 2004, Booz Allen announced
a $133 million expansion project for its facilities in
The expansion created 3,700 new jobs.
The people part of the business is
clearly important to Doughty. One thing people may not know about Booz Allen, he
proudly noted, is that 60 percent of its employees volunteer regularly in the
communities in which it operates.
By James Schultz
Aircraft designers understand the
physical effects of turbulence and build jetliners accordingly. When a bad news
vortex sweeps the corporate boardroom, however, the impact is less certain.
Fortunately for the Boeing Co., there doesn't seem to be much of an economic
loss following the forced resignation in early March of President and Chief
Executive Officer Harry Stonecipher.
"None of the negative publicity
recently has really affected the company and its stock [price] significantly,"
said Paul Nisbet, principal at JSA Research of Newport, R.I. "Boeing is at a
point where the commercial side is beginning to return to normalcy. Its military
side is still going very strong. It has $50 billion in military sales that will
play out over a very long time."
Boeing's board of directors
dismissed Stonecipher after learning of an affair between the married CEO and a
female executive of the company who didn't report directly to him. The
dismissal was the latest in a series of corporate missteps plaguing Boeing over
the last two years, including the loss of $1 billion in the satellite launch
business after Boeing was found in possession of confidential information
belonging to rival Lockheed Martin Corp.
A $21 billion deal to supply the Air
Force with 767 airborne refueling tankers was nixed after Boeing admitted that
its chief financial officer had improperly offered a job to an Air Force
contracting officer. And following criticism from Sen. John McCain (R-Ariz.) of
Boeing's $15 billion participation in the Army's $120 billion modernization
program known as Future Combat
, the Army agreed to restructure the deal.
Boeing of Chicago also slipped in the
Washington Technology Top 100 rankings, falling from No. 4 last year to No. 10
this year, with about $1.7 billion in federal IT prime contracting revenue.
Boeing's corporate revenue grew by only 4 percent to $52.5 billion.
But the company pressed on, most
notably last summer when it consolidated its IT personnel, transferring 5,000
employees into a single, centralized organization led by Scott Griffin, vice
president and chief information officer.
In a related move, Boeing also
established an IT investment board and began an ambitious streamlining of its
business operations by creating common IT processes and systems across the
"Boeing has gone more to the systems
integration side, leaving the more mundane product efforts to its
subcontractors. It's selling off commercial production efforts and beginning
to outsource," said JSA's Nisbet. "It makes sense. It's become less
labor-intensive and, therefore, less volatile in terms of manpower."
Boeing said it hopes to
transform into a network-enabled enterprise with a design-and-build-anywhere
capability. It intends to reduce and eventually eliminate its thousands of
stovepiped legacy applications.
"We're looking at the legacy
systems acquired by Boeing during our mergers and acquisitions over the last 10
years," said Brian Nelson, Boeing IT communications director. "There's a
lot of underbrush that needed to be cleared. We're trying to rationalize the
Nelson said the initiative is intended
to push work toward employees independent of its location, as opposed to the
traditional practice of pulling employees to where the work is. He said the move
toward IT commonality will save the company $50 million in 2005 and $135 million
Savings will continue into the future
as the company becomes more efficient and takes advantage of the emerging
synergy among business units. Boeing executives expect the restructuring will
make the company more nimble in responding to new business opportunities.
"We'll have much faster
startups," Nelson said. "All our engineers will be working with the same
toolkit. They won't have to relearn entirely new software. We think that will
have a significant impact on our ability to compete."
One new IT initiative Boeing hopes
will take off has been dubbed Connexion. Billed by Boeing as a way to provide
in-flight mobile information services and Internet connectivity, Connexion is
being pushed to commercial aircraft operators as well as owners and operators of
private and government executive jets. With Connexion, passengers could access
the Web, read e-mail, send and receive attachments and view entertainment
But perhaps Boeing's most promising
information-intensive pursuit is the 787 "Dreamliner" aircraft, scheduled to
debut commercially in 2008. The plane will be digitized and instrumented to
incorporate self-monitoring systems to detect structural anomalies and
maintenance requirements, and report them directly to ground-based computer
Although it will travel at speeds
similar to today's fastest wide-body aircraft ? roughly 650 miles per hour
? the Dreamliner's on-board sensors will track and direct fuel to let
the jet burn 20 percent less fuel than its similarly sized competitors.
The 787-8 Dreamliner and 787-9
airplanes will carry up to 223 and 259 passengers on routes of 8,500 and 8,300
nautical miles, respectively. The 787-3 will carry 296 passengers on routes of
3,500 nautical miles.
Boeing is developing and
building the plane at its
The Dreamliner could once again thrust
the company into global prominence, JSA's Nisbet said. "I see [Boeing]
regaining the No. 1 slot in both orders and sales at the end of the decade,
around 2009 or 2010," Nisbet said. "The 787 looks like it will be a market
phenomenon. I think Boeing is in a terrific position. It's ready to have a
good five years of earnings increases."
By Heather Hayes
Inc. has been on a buying
spree. After scooping up five companies in 2004, the defense and aerospace
contractor recently announced its intent to acquire United Defense Industries
Inc., manufacturer of the Bradley Fighting Vehicle, for $4.2 billion.
The move, said BAE Executive Vice
President Walt Havenstein, comes in anticipation of a major budgetary shift by
the Defense Department from force modernization and toward sustainment of land
The merger, expected to be completed
midsummer, will create within BAE
a $3 billion-plus business that will make the company "a fairly robust
player" in the global land systems and armaments markets and "a more
effective competitor globally," Havenstein said.
The announced merger caps an
exceptional year for BAE
, which grew by nearly 14 percent in 2004, captured 75 percent of its
competitive recompetes, delivered early the electronic warfare system for the
F-35 Joint Strike Fighter program and climbed
from No. 13 to No. 11 on Washington Technology's annual list of Top 100
contractors. The company netted more than $1.3 billion in Top 100 revenue, which
measures prime contracting IT dollars.
Bolstering the bottom line were last
year's five acquisitions, which, according to Havenstein, will post $250
million in added revenue forecasts for 2005.
The October 2004 acquisition of
DigitalNet Holdings Inc., a provider of managed network services and information
assurance solutions to the federal government, let the company create a $1
billion unit, called BAE
IT. This will not only make the company one of the larger IT providers within
the federal market, but will let it compete effectively for large federal
omnibus contract opportunities in 2005.
"If you're going to be
effective in that marketplace, size does make a difference," Havenstein said.
also enjoyed several significant contract wins in 2004, including the
five-year, $484 million Advanced Threat Infrared Countermeasures/Common Missile
from the Army. It also won the second phase of the Counter-Manpads
(Main-Portable Air Defense
) program for the
land Security Department, a $45 million program to develop, test and evaluate a
prototype system to protect commercial aircraft against infrared guided
The latter, Havenstein said, was an
important win, because the company can apply to the commercial world its
military experience safeguarding aircraft against hostile threats.
Other key wins for BAE
in 2004 included the five-year, $110 million Next-Generation Thermal Weapons
Sights contract from the Army's Communication and Electronics Command, and the
$110 million Flight Controls and Mission Subsystems work for the Air Force C-17
Havenstein said BAE
will continue looking for acquisitions in electronic systems, IT and technical
services that strengthen its core capabilities. But the biggest challenge for
2005 will be assimilating its most recent acquisitions, while pursuing
"As the economy recovers, we expect
to see much tougher competition for talented people," Havenstein said. "That
again goes back to our acquisitions to some degree, because we certainly want to
make sure that the people we've brought on will stay at BAE
By Heather Hayes
Titan Corp. not only survived a tough
year, it came out stronger.
After weathering a federal bribery
investigation, allegations that its contractors were involved in the Abu Ghraib
prison scandal in
and a failed takeover bid by rival Lockheed Martin Corp., the defense
contractor was able to shed its unprofitable business lines and position itself
"We have remained strongly focused
on our business," said Gene Ray, chief executive officer of Titan, which in
March settled charges brought by the Justice Department that some of its
overseas operations paid foreign officials for business favors.
"The issues that arose were
regarding international businesses that are no longer part of Titan," he said.
"As far as we're concerned, it's all in the past now, and we're looking
to the future."
Largely because of the investigation,
Titan has managed "to clean up some of its discontinued operations and ended
up with a business model that's pretty focused on national security solutions
without the distraction of commercial businesses and other far-flung
investments," said Jason Kupferberg, government IT services analyst for UBS
"We really like its business mix
now, because somewhere between 85 percent and 90 percent of its revenue comes
from what we refer to as the 'sweet spot' of government IT spending:
defense, intelligence and homeland security."
Titan significantly bolstered its
presence in those business areas in 2004. In the intelligence arena, it won a
$200 million contract with the Air Force in
to provide intelligence analysis, planning support and other assistance to the
joint services in the European theater.
Although Titan dropped from No. 9 to
No. 12 on Washington Technology's 2005 list of Top 100 federal IT prime
contractors ? it has $1.2 billion in prime IT contracting revenue ? the
company overall grew by 17 percent to a record $2 billion. Of the contracts on
which it bid, Titan captured as a prime or subcontractor 13 of 18 contracts
worth more than $100 million.
The company teamed with Accenture Ltd.
to win the
land Security Department's high-profile U.S. Visit contract. It also won two
contracts, one worth $164 million, the other $173 million, to provide IT
services across the Northern Command for the U.S. Joint Task Force Civil
That success has continued into 2005.
In March, Titan captured a $125 million contract to provide navigation systems
to the Navy's Space and
. Shortly thereafter, it announced the acquisition of Intelligence Data
Inc., a fast-growing IT services company with major intelligence community
Still, Titan faces a few
uncertainties. For starters, the company is looking for a successor to Gene Ray,
who founded Titan in 1981.
And although the Lockheed Martin deal
fell through, other companies could still make a play for Titan. "It's
certainly a plausible scenario," Kupferberg said, especially as Titan derives
25 percent of its revenue from a product rather than a services business.
"That could have appeal for some of the big platform providers, he said.
Ray acknowledged that another takeover
bid is possible, but he doesn't worry about it. His goals for 2005 are to
continue to achieve double-digit growth and win every recompete.
"We're very pleased with where
we're at," Ray said."
By Cynthia Webb
Joseph Kampf has led Anteon
International Corp. since 1996 and has seen the IT services company grow from
$109 million in revenue to more than $1 billion.
"I have always been in large
organizations, controlled by one very, very wealthy individual. I learned a lot
of lessons from being close to those kinds of people," Kampf said. "We've
built a real company, and it's very well controlled ... but it also is not me.
It is hundreds of people across Anteon."
, defense contractor, which started in 1976, in March 2002 had a successful
initial public offering. But the company's expansion began taking off in the
mid-1990s. Anteon has acquired eight companies since 1997, including two in
"We started in 1996 with a strategy
of diversification. It was our opinion that the market was going to grow
robustly. We had just come off the
[administration] years where the defense budget had been squeezed," said
Kampf, president and chief executive officer at Anteon. The company decided to
focus on Defense Department and intelligence work.
This foresight helped spur Anteon's
development. The 9,100-employee company recorded 2004 revenue of $1.27 billion,
up from 2003's $1.04 billion. Net income rose from $36.2 million in 2003 to
$61.8 million last year.
The company ranks No. 13 on Washington
Technology's 2005 Top 100, moving up from No. 19 in 2004.
Competition for homeland security and
defense work is fierce, but Kampf said Anteon is "not a products house, so we
don't have to compete with thousands of companies that are trying to offer
niche products for a particular niche for homeland security."
Anteon specializes in building and
maintaining large-scale systems. It built and continues to manage the Federal
Emergency Management Agency's National Emergency Management
rmation System. Anteon also built and still operates NATO's intelligence
Anteon provides secure identification
and border-control card technology for the
land Security Department's Bureau of Citizenship and Immigration Services. In
August 2004, it received a $74 million surveillance-training contract for the
DHS' Customs and Border Protection group. Anteon is the prime contractor for
the Coast Guard's National Distress System and received a $48.5 million IT
contract for more Coast Guard work in March 2004.
Most notably, Anteon has been ramping
up its simulation and training work, including helping military forces train
with virtual software for urban combat missions in
. Anteon has started similar work with law enforcement agencies, state agencies
and the National Guard, Kampf said.
Michael Lewis of BB&T Capital
, said Anteon's simulation training has helped set it apart.
"Anteon has done a fine job of
positioning itself in an area that remains a high priority" for the Defense
Department, he said.
Anteon bought Simulation Technologies
for $15 million cash in July 2004, and Integrated Management Services Inc.,
, for $29 million in August.
The company anticipates continued
federal service marketplace growth. Eighty-nine percent of Anteon's 2004
revenue came from the Department of Defense.
"I see it growing unabated the next
three to five years," Kampf said. "My personal opinion is that the threat
has been validated, and it is widespread globally. [There's] no choice but to
spend money in spite of the budget deficit."
By Tania Anderson
IBM Corp.'s federal division has
long helped government agencies with complex problems such as upgrading air
defense systems or designing business intelligence software for revenue and
fiscal management. But the $97 billion company now is using its supply-chain
expertise to try something new: distributing AIDS medications to underdeveloped
The Armonk, N.Y., company is waiting
to hear whether it won a contract with the U.S. Agency for International
Development to distribute medicine to people with HIV in Africa. The contract is
part of President Bush's Plan for AIDS Relief, a five-year, $15 billion global
initiative to combat the HIV and AIDS epidemic.
While the government sees it as
a health crisis, IBM sees the solution as a supply-chain issue. The company
usually applies its expertise to human resources or financial applications. But
Anne Altman, managing director of the
, federal unit, said this is an example of business transformation outsourcing.
"You don't think of us as putting
an end-to-end supply chain together for people in need through the USAID,"
Altman said. "It's an area where we've taken some risk to say we
understand supply chain better than anyone."
IBM dropped in the Washington
Technology Top 100 ranks this year, from No 11 to No. 14, but its prime
contracting revenue rose to $1 billion from $910 million last year.
Although IBM reported 15 percent
growth in its government revenue from 2003 to 2004, the company didn't win the
big-ticket government contracts in 2004 that it won in previous years, in part
because there weren't as many high-dollar contracts in the back-office
business modernization space, Altman said.
But with more than $1 billion in
government revenue in 2004, IBM touts several contract wins, including building
supercomputers for the
. The new system is expected to run at a peak speed of 20 trillion mathematical
operations per second.
Altman said one of the biggest
challenges for government contractors is delays in awards. The company was
disappointed that it didn't win the
land Security Department's eMerge2, an agencywide resource management
information system. BearingPoint Inc. was named prime contractor on the $229
million blanket purchase agreement.
The company sees innovation as its
biggest strength in the government market. It spends $6 million on research and
is starting to bring some of those innovations closer to the customer by
building solutions centers across the country to showcase some of its
technologies. A federal client can visit a center to see demonstrations of
applications related to its own problems.
The centers let us "create a visual
impact to support the art of the possible for our clients," Altman said.
In addition to applying supply-chain
management solutions to new markets, IBM is investing resources in radio
frequency identification. The company announced in September 2004 that it would
invest $250 million and bring in nearly 1,000 consultants and developers over
five years in its sensors and actuator solutions business, which includes RFID
and similar technologies.
The Defense Department this year
selected the company to help manage and support policy development on the use of
RFID tags by 43,000 defense suppliers.
"RFID has huge growth opportunities
for how it applies to the government," Altman said.
By Doug Beizer
After examining lessons learned from
the first Gulf War, L-3 Communications Inc. knew that the Pentagon would be
spending a lot of money upgrading its aircraft, tanks and other weapons
"We believe modernization of the
legacy platforms is where the money is going to be spent, because the return on
investment is enormous," said Frank Lanza, the company's chairman and chief
So about five years ago, L-3 devised a
strategy that focused on modernizing and upgrading platforms such as the Bradley
Fighting Vehicle or the T-38C Talon aircraft, a supersonic jet trainer.
The results helped land L-3 at No. 15
on Washington Technology's Top 100 with $926.5 million in prime IT contract
"Look at the Bradleys and [M-1]
Abrams [tanks] we have today," Lanza said. "When you make them into digital
weapon systems and put precision weapons on them ? for both line-of-site and
beyond-line-of-site ? you've got tremendous fire power."
L-3 also has had success ? and
expects spending to continue to rise ? in simulation and training. Typically,
simulators are built for large platforms, such as aircrews training in a
helicopter simulator. Now simulators are being built for specific subsets to
train soldiers in all aspects of combat.
L-3 has worked on simulators for
driving a truck in a convoy. It teaches soldiers what dangers to look for and
how to defend themselves.
In 2005, L-3's Link Simulation and
Training division won a $27.4 million follow-on production contract to build
trainers for the Army. The Aviation Reconfigurable Manned Simulator suites are
housed in 53-foot trailers and have six simulators and a battle master-control
During an exercise, commanders can mix
and match aircraft as needed. Intelligent, semi-automated forces, both friendly
and opposing, populate the virtual battlefield. Radio frequency clutter,
communications degradation and adverse weather conditions can be added to the
Combat training isn't the only
growth area, Lanza said. L-3 is seeing an increase in demand in new areas such
as peacekeeping simulations and linguistics.
"We're getting a lot of emphasis
in the areas of marksmanship and leadership training," Lanza said, "areas
where we never really did a lot of training before in the
Lanza said unmanned aerial vehicles
will become even more profitable, as they are being used as everything from
weapons to communications tools.
"We're deeply involved in all this
secured communication that brings the information back to the warfighter,"
In 2004, L-3 won a contract with Bell
Helicopter Inc. to provide data links to support the Eagle Eye Vertical Takeoff
and Landing unmanned aerial vehicle. Used for the Coast Guard's Deepwater
Program, the vehicle provides real-time collection of intelligence, surveillance
and reconnaissance information. L-3 will provide the data link technology for
When the Army wanted to
speed repairs and upgrades of
its Humvees and other vehicles, ITT Industries Inc. borrowed a concept from the
split-second efficiency of Nascar pit stop crews.
, company developed a strategy that includes repair teams built around
particular tasks and preassembled kits for certain repairs and upgrades.
Logistics systems let the teams quickly get any spare parts that aren't in the
Crew performance is measured, and the
feedback helps crews improve their performance. Using the new crews, the repair
rate on vehicles moving through the repair shops at
, improved by 60 percent, company officials said.
The project is just one example of how
ITT, No. 16 on Washington Technology's 2005 Top 100, is melding its product
and services businesses to help its government customers solve problems, said
Henry Driesse, president of ITT's Defense Electronics and Services business,
which does the bulk of ITT's IT work. ITT pulled in $781.9 million in prime IT
contracting revenue during fiscal 2004.
The division has tripled its revenue
since 2001, growing from about $1 billion in 2001 to $3 billion in 2004, Driesse
said. About $1 billion of that growth came from ITT's acquisition of Eastman
Kodak's remote-sensing business in August 2004.
The acquisition broadened the types of
remote-sensing payloads that ITT can provide customers, such as the Defense
Department and intelligence agencies, by adding optical sensing capabilities to
ITT's infrared capabilities, Driesse said.
"We think that space is an
extremely important market moving into the future," Driesse said.
ITT also supports space initiatives by
FAA, the National Oceanic and Atmospheric Administration and NASA.
Part of ITT's space business
is providing software solutions for managing and analyzing the data that the
remote-sensing payloads gather, he said.
"You've gathered the information,
so how do you sort through it and provide it to the right user at the right
time?" he said.
Another growth area for ITT is its
support services group, which offers operations and maintenance services around
the world, primarily for DOD and NASA.
Some of the work is similar to the
repairs and upgrades of the Humvees and other vehicles that are deployed in
. Other work includes maintaining and upgrading communications systems
For NASA, ITT provides engineering
services for the eastern and western ranges in the
, which comprise
and Vandenburg Air Force Base in
ITT also runs the Deep Space Network
for the Jet Propulsion Lab.
"When the rover landed on Mars, it
was our people at the control center," Driesse said.
Under that $274 million contract, ITT
provides maintenance, operations and engineering support for the Deep Space
Network. If options are exercised, the contract would be worth more than $500
million. The network features antennas around the globe that support
interplanetary spacecraft missions, and radio and radar astronomy observations
for the exploration of the solar system and the universe.
ITT's technology business is split
almost evenly between product sales, such as radios and night-vision goggles,
and its services business. It is a good mix, Driesse said. "Our customers
don't just want technology, they want help solving problems."
By Alice Lipowicz
CACI International Inc. Chairman and
Chief Executive J.P. "Jack" London will always remember
April 26, 2004
That was the day a New Yorker writer
called to ask about allegations that CACI employees were involved in abuses at
's Abu Ghraib prison. Later that same night,
's first granddaughter was born.
"It was a day I'll never
has responded to those allegations, which ultimately focused on a single CACI
employee, devotedly and passionately over the last 12 months with numerous
interviews, Web site postings, investigations and presentations to employees.
Although no official charges have been
filed to date against CACI or its employees, the company faces several private
lawsuits related to the incidents.
said those lawsuit allegations are "baseless," and that the Abu Ghraib
firestorm is now mostly in the past.
"It kept us very busy responding,"
said. "We went through a period of hearings, investigations and inquiries,
but we've come out of it just fine."
2004 had two other major milestones
and CACI. It was
's 20th year as president and CEO of the
, defense IT contractor, and the first year CACI's annual revenue exceeded the
$1 billion mark. The company is topping that this year: On April 20, it reported
that revenue from all contract sources for the first nine months of fiscal 2005
totalled $1.19 billion, up 52 percent from the same period a year before.
CACI ranks 17th on Washington
Technology's Top 100 list for 2005, the same as last year even though its
federal IT prime contract revenue climbed to $736 million, an increase of 45
The company is on track to grow by
about 20 percent a year, with 12 percent to 15 percent organic growth and the
rest through acquisitions,
said. CACI, which gets about 67 percent of its work from the Pentagon, in April
won a $27 million contract to support battle command training for Army
Reserve units, and a $20.4 million contract to support the Military Sealift
CACI has been on a buying spree for
more than a decade, and last year it picked up American Management System
Inc.'s defense and intelligence group in
, for $415 million, adding $250 million in annual revenue. It also acquired CMS
rmation Services Inc. of
, and MTL
, both for undisclosed amounts.
The AMS buy "was one of our crowning
achievements of 2004, a very satisfying transaction,"
said. The purchase brought in 1,650 new employees, bringing the company's
total to more than 9,500 employees, with many hundreds
at CACI locations around the globe.
One of the major challenges for 2005
is to continue "integrating the units into our family of business
said. "We have people here with significant military and government
experience who share a commitment for the [government's] mission. ?While
trying to grow rapidly, we still have to make sure people share the viewpoints
we have. That message has to be repeated continually."
Having the Abu Ghraib accusations
hanging overhead complicated those integrations for a while, as incoming
employees to CACI often asked about it at introductory meetings,
said. His response, he said, was to be as forthright as possible.
"We're better off in some ways,"
said. "We're standing a little taller today."
By Roseanne Gerin
MCI Inc. has gone from un-loved to
MCI twice rejected offers from Qwest
in favor of Verizon's $7.5 billion bid to acquire the Ashburn,
, long-distance telephone company. But Qwest came back with a $9.8 billion
offer, giving MCI a deadline of April 29 to respond. MCI officials were said to
be seriously considering the offer, but a decision will be made after Washington
Technology goes to press with this issue.
Many analysts have said a Verizon-MCI
merger would create a viable competitor to challenge the pending $16 billion SBC
Communications Inc.-AT&T Corp. merger.
"Verizon-MCI would be a powerhouse
in everything," said Brian Washburn, principal analyst of business network
services at Current Analysis Inc.
A Verizon-MCI combination would add
the New York carrier's strong state government business to MCI's solid
position in federal government as well as offer Verizon's wireless assets to
give MCI more mobile services, said Eric Paulak, managing vice president of
network services for research firm Gartner Inc. of Stamford, Conn.
But MCI may not be able to resist
Qwest's huge offer.
That MCI is now a hot piece of
disputed property is a 180-degree turnaround for the company, formerly WorldCom
MCI remarkably managed to hold onto
its federal business, despite the General Services Administration's proposal
last summer to make the company ineligible for future government contracts. GSA
dropped its debarment review in January 2004 when MCI consented to a three-year
agreement for the federal agency to continue monitoring its conduct.
The debarment proceedings had a
"chilling effect to some degree," said Jerry Edgerton, MCI's senior vice
president of government markets, but MCI kept focusing on its clients,
emphasizing it was still there to meet their needs.
Looking ahead, MCI expects to post
sales of $18 billion to $19 billion in 2005, according to its published revenue
guidance. In 2004, the company reported $20.7 billion in revenue with a $4
MCI plans to bid on the $10 billion
Federal Technology Service Networx contract. The company is one of two
incumbents on the FTS 2001 contract, which expires in 2006 and will be replaced
by Networx. MCI also is mulling a possible bid on GSA's $50 billion Alliant
contract for IT services, which will be awarded in July 2006.
MCI serves all federal agencies except
the Environmental Protection Agency, which runs its own communications network,
Edgerton said. The company's major federal customers are the Agriculture,
Defense, Housing and Human Services and Interior departments, Federal Aviation
Administration, Social Security Administration and U.S. Postal Service.
"We're excited about where we are
now," Edgerton said. "We've gone through some of what I call dark times,
or some adversity. I think we're stronger for it. I don't wish to ever go
through it again."
By Lisa Terry
GTSI Corp. has been building
its technical muscle with
technology-specific practice areas it will use to drive further into state and
local markets as well as enhance its federal business. Progress is under way on
a strategic growth plan announced in July 2004 to double revenue, increase
margin and improve productivity.
Although 2004 did not bring major
prime contract awards, GTSI still chalked up a 13 percent increase in its
federal business, thanks in part to new technical practices in Linux, video
teleconferencing, satellite technology and physical security, as well as a
systems integrator solutions group and a leasing subsidiary.
Those practices "have given us the
technical depth and expertise to support customers on a broad level," said
Dendy Young, chairman and chief executive officer. "That's really the single
most important change."
The company hit $682 million in prime
contracting revenue, landing at the No. 19 spot on the Washington Technology
2005 Top 100 list of federal prime contractors.
Its customers increasingly will
include state and local governments, which represent about 5 percent of GTSI's
business but eventually will provide half its revenue, Young said. In addition,
"we find a number of our partners are building public sector organizations,
and our ability to work with them requires us to be able to work with both."
To reach that market, the company is
boosting its subcontracting activity with 8(a), service-disabled, veteran-owned
and other small businesses. GTSI brings its skills and contacts to the table,
and the small businesses deliver customers.
The company also has increased its
sales organization, introduced new processes to improve pricing and margin, and
boosted productivity. In April 2005, GTSI went live with a PeopleSoft enterprise
resource planning system.
"Our goal is to use that to make
sure our deliveries to customers are faster, and to ensure the customer gets
better service and support and access to information" via the Web, such as
order status and past orders, Young said.
2004 did not bring major prime
contract awards, but GTSI was a subcontractor on a NetCents contract won by
General Dynamics Corp. and Centech. GTSI's products, services and e-business
infrastructure will support the $9 billion, five-year Air Force NetCents
indefinite-delivery, indefinite-quantity contract. Such contracts reinforce
GTSI's relationships with suppliers because of the access it gives them to
NetCents customers, Young said.
Young is concerned about the future of
federal IT investment, particularly related to homeland security.
"My personal sense is that Congress
is losing its sense of urgency that it had after Sept. 11," he said.
is not a huge budget detractor, he said, because some of the spending diverted
there goes toward technical infrastructure.
Young said GTSI's core competencies
include its technology practices, its distribution and configuration center and
its wide array of vendor relationships. Combined with the customer relationships
gleaned from 22 years in business, he is bullish on GTSI's prospects.
"I think the opportunity is there
for us to do that," he said. "We're certainly growing faster than the
A key acquisition could help Motorola
Inc. win federal homeland security-related communications work this
The company bought MeshNetworks Inc.,
, for $169 million in November 2004. With technology from the acquisition,
Motorola can deploy wireless networks for cities, military facilities and border
Using MeshNetworks' solutions,
agencies "can create self-healing broadband networks that are capable of
operating under harsh conditions without existing network infrastructure,"
said Bill Turkaly, vice president and general manager of Motorola's U.S.
Federal Government Markets Division.
The acquisition also reflects
Motorola's strategy to expand beyond its roots in radio communications to
greater involvement in mobile computing and wireless network communications in
the federal market.
This year, Motorola moved up a rung up
on the Washington Technology Top 100 ladder to No. 20, with $638.8 million in
prime IT contracting revenue. The company's commercial, government and
industrial solutions group, which includes its federal government markets
division, accounts for 15 percent, about $4.5 billion, of its $31.3 billion
The company's government business is
growing at 15 percent annually, Turkaly said.
MeshNetworks was one of four buys
totaling $476 million that the company made last year. The other acquisitions
were Crisnet Inc. of Salt Lake City, Quantum Bridge Inc. of
, and Force Computers Inc. of
But MeshNetworks and Crisnet, which offers records management systems and
services for law enforcement, criminal justice and public safety agencies, are
the most relevant to the company's federal work, Turkaly said.
Motorola has contracts with all
branches of the military as well as civilian agencies that have asked the
company not to identify them for security reasons, he said.
The largest of four major deals the
company snared last year was a three-year, $294 million contract for data
communications for the Postal Service, Turkaly said. Under that contract,
Motorola will design, manufacture and support handheld scanning devices that are
an integral part of a next-generation, intelligent mail data acquisition system.
The new scanning devices provide an
integrated way of receiving data from all types of postal facilities and
distributing it to many different applications.
Motorola is vying for other
enterprisewide federal contracts, particularly joint procurements for
communications solutions by the departments of
land Security, Justice and Treasury.
"We are a huge company," Turkaly
said. "Being big and trying to act small and nimble for our customers is what
we are concentrating on."
The company was able to achieve this
objective on the Postal Service project, he said. "We listened, got out of the
box and developed the product in a six-month period," he said.
"People are beginning to understand
that in [voice and data communications], we are an incredibly strong wireless
integrator," he said. "We are more than just a box supplier. We are great
choice for being a prime on those core competencies that we have in the wireless