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BTG Pulls the Plug on Deal
Systems integrator BTG Inc. called off its acquisition of Micros-to-Mainframes Inc. Feb. 13, with BTG officials conceding that the company's large-scale acquisition strategy "could not be accomplished in the near term."

BTG of Fairfax, Va., offered to buy New York-based systems integrator MTM almost five months ago for $25 million in an effort to build its presence in the commercial information technology market.

The cancellation of the merger came the day after BTG completed the sale of its government reselling business to Government Technology Services Inc., Chantilly, Va. - a tumultuous deal that consumed much of BTG management's time over the past month. BTG officials told Washington Technology that the sale to GTSI and the cancellation of the MTM deal were unrelated events.

SAIC Forms NEW Company
Science Applications International Corp., San Diego, has spun off several commercial units to form a wholly owned subsidiary to go after the information protection and electronic commerce markets.

The new company, called Integrity Solutions International, will be based in McLean, Va., and headed by Allen Herskowitz. The new company will leverage SAIC's background in developing, installing and maintaining secure networks for the Department of Defense and intelligence agencies, Herskowitz said.

SAIC pulled together the commercial units because separately they were not focused and could not keep up with demand, Herskowitz said. In 1998, Integrity Solu-tions is expected to have about $40 million in revenue. Herskowitz said he expects revenues to double annually for several years.

EDS Negotiating Sale of Reseller Unit
Electronic Data Systems Corp.'s decision to unload its reselling unit is not surprising, analysts said.

The model of using hardware sales to garner more services business "has been pretty thoroughly discredited," said Thomas Meagher, an analyst with the investment firm Ferris Baker, Watts, Baltimore. "Just because you are selling them the hardware, doesn't mean you are going to get to do the systems integration."

EDS spokesman William Ritz said the Plano, Texas-based company is in negotiations with "another entity" but would not comment further. Government Micro Resources Inc., Manassas, Va., is the company most often rumored to be the possible buyer. GMR spokeswoman Sharon Ennis said GMR is negotiating with several companies about possible acquisitions, but would not say if EDS is one of them.

Don't Leave Home Without It
Six credit card companies won contracts with the General Services Administration to provide credit card services to the government. Three sets of contracts were awarded, one set for general purchases, one for travel-related services and a third for fleet card services.

American Express, Citibank, First National Bank of Chicago, Mellon Bank, NationsBank and US Bank all won general purchase contracts. American Express, Citibank, NationsBank and US Bank won travel-related services contracts. Fleet card services contracts were awarded to American Express, Citibank and US Bank.

GSA estimates that about $100 billion in charges will be processed during the 10-year contract.

Public Housing Gets NC Network
The city of Oakland, Calif., has signed a $1.2 million deal with IBM Corp. to install network computers in a public housing project.

Officials with the Armonk, N.Y.-based computer giant and the city of Oakland are hoping that welfare and low-income residents will learn computer and job skills through the network computers. The project is expected to be completed early next year, company officials said.

IBM will install a network computer in each of the 206 apartments in the Acorn I housing development in West Oakland, currently under renovation. A learning center will be built on the grounds of the housing project, where two IBM PC servers will run the IBM Network Stations, connected in a local area network.

Agenda Set for Joint Council
Work force development, capital formation and education are among the technology issues a new coalition of area business groups wants to address. The coalition is composed of the Greater Washington Board of Trade, the High Technology Council of Maryland and the Northern Virginia Technology Council.

The council met for the first time in late January and plans to meet on a regular basis to deal with technology issues that transcend the natural barriers among Washington, Maryland and Virginia. Education and broadband communications infrastructure and integration are other issues the group has set as priorities.

"We are not looking to create a new organization," said George Newstrom, a member of the joint council and corporate vice president of Electronic Data Systems Corp. "There is a lot of energy already focused on these issues. We simply want to chart our activity between the three organizations and make sure that we're not overlapping our efforts."

Pelletier Leaves His Post
After five years as executive director, Ray Pelletier is leaving the Northern Virginia Technology Council.

Pelletier, who will remain in his current position through the end of April, told the board Feb. 10 that he wants to pursue opportunities in the private sector.

Pelletier told Washington Technology that he has already accepted a position as chairman and chief executive officer of a company in the Washington region but declined to identify the company. "I will be giving out more information as the time nears."

Meanwhile, the council is forming a search committee to find a replacement for Pelletier.

McCleary Launches New Venture

Former Digex president and chief executive Christopher McCleary hopes to raise $1 billion in debt and equity capital and buy at least five or six companies in the growing Internet networking services space by the end of 1998.

McCleary launched his new company, USinternetworking Inc., Annapolis, Md., on Jan. 1. He said his company is targeting a services niche that helps organizations implement Internet technologies such as building intranets, extranets and customer interfaces. Companies often struggle with these technologies, he said.

An early acquisition target for USinternetworking is PSINet Inc., Herndon, Va., which turned down in late January McCleary's offer of $10 a share, or about $400 million. McCleary is still working on a deal for PSINet, but declined to comment further. "We are at a very sensitive point," he said.

He said he plans to start announcing acquisitions in the next 30 to 60 days. By the end of the year, McCleary said he hopes his roll-up strategy builds USinternetworking into a $200-million-a-year business.


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Manufacturers Overtake Resellers
on GSA Schedule
Resellers used to hold a clear edge over manufacturers when it came to selling on the General Services Administration schedule. But procurement reform has changed all that. In 1994, the top 10 resellers on GSA IT schedules had more than a 2-to-1 edge over the top 10 manufacturers selling on the schedule. But by 1997, the positions had nearly reversed, according to data from the market research firm IDC Government, Falls Church, Va.

Resellers vs. Manufacturers on the GSA Schedule
Resellers and Others Manufacturers
FY 1994 112.9 262.6
FY 1995 264.3 338.4 FY 1996 496.5 394.4 FY 1997 698.4 360.4
Source: IDC

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