CACI Chief Charts Bold Acquisition Strategy

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CACI Chief Charts Bold Acquisition Strategy

Jack London plans to boost company revenues to $660 million by 2000

By Nick Wakeman
Staff Writer

As a plebe at the U.S. Naval Academy, J.P. "Jack" London was peppered with questions as part of hazing rituals to teach the 18-year-old midshipman about pressure.

Some of those lessons are still paying off 40 years later as London steers his company, CACI International Inc., Arlington, Va., on an ambitious path that includes acquisitions and revenue growth.

His goals over the next four years include boosting current revenues of $245 million to $660 million by 2000. A third of that growth will come from acquisitions, he said.

"We are looking right now, today," said London, who holds weekly meeting to discuss the systems integrator's acquisition activities. CACI has two or three acquisitions in the works, he said.

London kicked off an acquisition strategy in 1995 with the goal of adding $30 million to $60 million in revenues each year from acquisitions. "I decided to shoot like that because I wanted to push the organization a bit," he said. "If we only did a third or half of that, I'd be satisfied."



Jack London, CACI's chief executive, says federal work will remain the company's bread and butter.

Last month the company purchased SPA Field Force Planning Ltd., a software engineering firm, for $2.4 million. In September CACI bought Sunset Resources Inc., San Antonio, for $5.3 million. The company provides logistics and engineering support services.

Future CACI acquisitions are likely to involve larger companies, said William Loomis, an analyst with Ferris Baker Watts, Baltimore. "They have been cutting their teeth on several small ones," he said.

Besides acquisitions, CACI is striking strategic alliances to expand its commercial business. CACI joined with PKS Information Services in September to pursue year 2000 work. Omaha, Neb.-based PKS does data center outsourcing and integration.

With its RENovate software package, CACI also hopes to capture a share of the federal work on the year 2000 date change. Federal work, especially contracts with the departments of Defense and Justice, will remain CACI's bread and butter, London said.

Moshe Katri, an analyst with Oppenheimer & Co., New York, praised the company's profitability and strength in the federal market. "CACI is one of the players," he said. The company has racked up an impressive recompete record, Loomis said. "I don't know of any major one that they have lost," he said.

CACI has a long-standing relationship with the U.S. Navy and the Justice Department. The company has long provided the service systems to manage ship configuration and inventory. It also has supplied Justice with litigation support services for many years, London said.

"We've had a very successful run of recompetes," he said. In November CACI won a recompete of the Justice contract Mega I, which could bring in $200 million in revenues over five years.

London singled out this contract as a good example of the company's expertise. "What we do is manage huge databases, and the error rate has to be minuscule," he said.

Justice uses the system as an aid in deciding what litigation to pursue. "We are part of multimillion dollar decisions," London said.

Loomis said customer service has been a key to the company's success in winning recompetes. "CACI is very competitive on pricing and they've delivered high customer satisfaction," the analyst said.

As London directs the company's drive to be even more competitive, he must also fill the void created by the departure of Ray Oleson. CACI's chief operating officer left the company, formed in 1962, late last year to pursue other opportunities.

Besides serving as acting COO, London is overseeing the company's federal business, which accounts for about 75 percent of revenues, and is leading the search effort for Oleson's replacement.

"We've been out talking to people, and we're also looking internally," he said, adding that he hopes to have someone hired by the end of February.

Oleson had been chief operating officer since 1990 when the company made about $100 million. He announced his resignation in October and left the company in November.

Oleson said he wanted to be a chief executive officer and knew that opportunity didn't exist at CACI. "I left on marvelous terms," he said. After taking some time off, he is now looking for a new position.

London puts the best face on his added responsibilities. "It has been kind of refreshing," he said. "I've been able to step back into an old, familiar role." He was in charge of operations until 1990 when Oleson came on board.


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