Editor's Note

The Urge to Merge<@VM>Techtoons

Trish Williams

With pressure mounting to get bigger, Nichols Research Corp. became the latest mid-tier systems integrator to cash in and accept a stock swap deal from Computer Sciences Corp. that deepens consolidation of the federal information technology sector.

Read our page one story to find out what the Huntsville, Ala.-based integrator brings CSC besides a robust defense base and a headquarters that coveted defense customers as well as NASA's Marshall Space Flight Center call home.

Milton Cooper, president of CSC's federal sector, told Washington Technology that Nichols is a company that El Segundo,Calif.-based CSC coveted "for quite a long time." With the deal, CSC adds 3,000 employes and $455 million in revenue.

Washington Technology staff writer Nick Wakeman dialed up major industry players to find out what analysts and other insiders are saying about the deal and what it portends for other mid-sized players in the IT services arena.

With missile defense gaining an increasingly visible role in U.S. policy and outsourcing gaining momentum throughout government, especially in the military arena, the acquisition is a smart, strategic move for industry giant CSC.

Competitors chasing potentially lucrative outsourcing and missile defense contracts, such as Litton-PRC, Lockheed Martin Corp., Northrop Grumman's Logicon , Science Applications International Corp., and TRW, expect to see a lot more of CSC in the future.

And last week's announcement puts added pressure on other publicly traded systems integrators such as BTG, CACI and GRC, to follow Nichols' lead. Some analysts even bet there could be one or more such deals before year's end.

Trish Williams

williams @pnbi.com

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