Pentagon's Leading R&D Contractors

E-Rate Brouhaha

The jury is still out on whether changes to the way the Federal Communications Commission administers its education rate program will save the controversial project to connect schools and libraries to the Internet. A Democratic staffer on the Senate Commerce Committee, who asked not to be identified, said last week's revamping of the $2 billion program by FCC Commissioner William Kennard should appease Republican lawmakers who attacked the program.

But a Republican staffer on the committee, who also asked not to be named, said the committee had not seen Kennard's order revamping the e-rate program. A decision on the next move by the committee, chaired by Sen. John McCain, R-Ariz., will be made after Kennard's order is reviewed this week.

The e-rate program subsidizes Internet and other communications access for schools and libraries and was part of the 1996 Telecommunications Act.

The congressional ruckus started when telcos such as AT&T and MCI said they would add 5 percent surcharges to long-distance bills to cover their contribution to the Universal Service Fund, which pays for the program.

Kennard modified the program's funding calendar, revised the way money is distributed and froze funding at $325 million a quarter.

Said Kennard: "My grandfather made sure my father received an education, and that resulted in education and opportunities for me. E-rate is about providing our children an education that will unlock opportunities in the future."

Outsourcing Project Delayed

Congressional objections to a $1 billion outsourcing project involving the Army's logistics operations have stalled the project but industry is not sitting on its hands.

Officials from the Information Technology Association of America, the Professional Services Council and Federal Sources Inc. planned to meet June 19 to formulate a two-pronged counteroffensive, said Bert Concklin, president of the Professional Services Council.

A request for proposals for the project had been planned for release in July but the Army put the project on hold earlier this month to address congressional concerns.

In a letter to Jason Spiegel, acting assistant secretary of the Army, from Rep. Floyd Spence, R-S.C., chairman of the House National Security Committee, the lawmaker cited the potential loss of 500 jobs in Chambersburg, Pa., and St. Louis. He also said the Army's Logistics Systems Support Command, St. Louis, should be allowed to bid on the contract.

Industry officials are mounting a campaign to save the outsourcing contract and planning a long-term education and lobbying effort on the benefits of outsourcing.

Microdyne Snags Four Firms

Microdyne Corp. of Alexandria, Va., announced plans June 15 to buy four companies for an undisclosed sum to bolster its telemetry and remote monitoring business.

The privately held companies are: Apcom Inc., Gaithersburg, Md.; Celerity Systems Inc., Cupertino, Calif.; Acceleration Systems Inc., Bowie, Md.; and Digital Telecom Inc., Damascus, Md.

The acquisitions are expected to close by the end of July, pending requisite approvals.

It All Comes Back to Washington

Teleglobe Inc. of Montreal said June 15 it will buy Excel Communications Inc. of Dallas, the fifth-largest long-distance telecom company in the United States, for $3.1 billion in stock.

The deal is of special significance to the Washington market. Teleglobe has more than 250 employees and its headquarters for Teleglobe International Corp. and Teleglobe USA Inc. in McLean, Va. Those operations, begun in 1996, marked the Canadian company's foray into markets outside of its home country.

And Excel established its presence in the Washington area by purchasing Telco
Communications Group of Chantilly,
Va., last summer for $1.2 billion. At the time, Telco was one of the largest "dial around" long-distance businesses in the country.

Infotex on Buying Spree

Infotex Holdings Ltd., a Springfield, Va.-based systems integration company, is buying Comptech Resources of New York for an undisclosed amount of cash and stock.

Infotex, which does 40 percent of its business with federal, state and local governments, has made three other acquisitions in the last six months and plans to make another six by the end of the year.

Comptech, an IT consulting company with revenues of $10 million in 1997, specializes in working with banking and finance companies.

Infotex, which is traded on the over-the-counter market, had revenues of $7.1 million in 1997. The Comptech deal is expected to close in late June.

SBA Finalizes HUBZone Rules

The Small Business Administration has published its final rules for promoting federal contracting in historically neglected business zones in urban and rural areas.
The first HUBZone contracts could be awarded by December, SBA officials said last week.

To qualify, a small business must have
its principal office in a HUBZone, and
at least 35 percent of the employees must
live in the zone. There are about 7,000
urban HUBZones and 900 rural ones,
according to the SBA. Each zone is a
census tract with between 2,000 and 8,000 people.

Baan Plan Under Way

The first phase of Baan Investment's entree into the Washington technology market got under way last week when the Dutch company with substantial software holdings opened the doors of Baan Institute Americas in Herndon, Va.

The new operation is one of three educational facilities run by Baan. The others are in the Netherlands and India. A fourth institute is set to open next year in Germany.

The U.S. facility, which is prepared to train 500 people a year, is a sort of continuing education effort for Baan employees, customers, channel partners and recent college graduates.

Baan Investment first announced plans to locate facilities in Northern Virginia last October, when the company bought a 281-acre farm outside of Leesburg. The campus eventually will house as much as 2.5 million square feet of office and educational training space. Furthermore, Marvin Newell, head of the company's America's division, said at the time that Baan may consolidate its dual headquarters from Putten, Netherlands, and Menlo Park, Calif., into one central headquarters at the Virginia site.

Pentagon's Leading R&D Contractors

Research and
development
spending for fiscal year 1997

* Now owned by the Boeing Co.

** Aerospace and defense divisions
purchased by Boeing