DataStream

CSC Snags Hot Army Deal<@VM>SAIC Coffers Runneth Over<@VM>A Presidential Cyber Briefing <@VM>OTG Sees IPO in Its Future<@VM>Inacom Wants to Unload<@VM>Federal Agency IT Expenditures<@VM>No News Isn't for Muse<@VM>EDS Starts VC Fund<@VM>We've Only Just E-gun

Computer Sciences Corp. ended 1999 on the upswing, winning the 10-year Army Wholesale Logistics Modernization contract worth $680 million.

CSC, which beat out a team led by Lockheed Martin Corp. of Bethesda, Md., will provide the IT services needed to re-engineer and modernize the business processes the Army uses to supply its troops around the world.

CSC's Federal Sector Defense Group will lead a team that includes IBM, Bethesda, Md.; KPMG LLP, Washington; GRC International, Vienna, Va.; Metters Industries, McLean, Va.; and Signal Corp., Fairfax, Va.

The El Segundo, Calif.-based systems integrator has promised to hire government workers displaced by the contract. The Army contract has been in the works several years and had been threatened with cancellation because of congressional concerns about the loss of jobs.

Science Applications International Corp. of San Diego plans to sell off 6.7 million shares of its stake in Network Solutions Inc. of Herndon, Va.

With Network Solutions' stock trading at around $224 a share at the end of December, SAIC stands to haul in about $1.5 billion.

Even after the sale, SAIC will own 23 percent of Network Solutions, which is planning a 2-for 1 stock split after the offering.

SAIC spokeswoman Jane Van Ryan said the company cannot comment on its plans for proceeds from the stock sale. However, the $4.7 billion, employee owned systems integrator is regarded as an aggressive buyer in the government IT market, and the cash would only strengthen its purchasing power.
The Internet Policy Institute, a Washington research and educational non-profit focused on the worldwide development and use of the Internet, is preparing a set of white papers to brief the next U.S. leader on "What the Next President of the United States Needs To Know About the Internet and its Transformative Impact on Society."

The "Briefing the President" project (www.internetpolicy.org/briefing) offers the next president and other policy leaders, business executives and the public an understanding of the basics of the Internet and important public policy issues affecting its future.

Started in November 1999 and ending with the presidential election in November 2000, monthly briefing papers will be published by the institute on key matters of Internet policy.

OTG Software Inc. of Bethesda, Md., will be jumping into the public markets soon. A Dec. 23 filing with the Securities and Exchange Commission states that the company plans a public offering of stock.

While the pricing and IPO date have not been determined, the company expects to raise $69 million, according to SEC documents.

A maker of data storage management tools, OTG had $17.3 million in 1998 revenue. Through the first nine months of 1999, the company had $17.9 million. About 8 percent of the company's revenue comes from government customers.

Inacom Corp. of Omaha, Neb., wants to sell its $180 million-a-year government reseller business in Fairfax, Va., but that may easier said than done, sources said.

"If it gets sold, I'd expect bargain basement pricing," said one source. An alternative would be selling the inventory and phasing out operations, another source said.

Inacom, a $7 billion-a-year commercial reseller and information technology services provider, picked up the government business in February 1999 when it bought Vanstar Inc. of Atlanta. Inacom plans to dump the government business as part of a restructuring announced Dec. 14 by President G.A. Gagliardi, who took the reins in October 1999. Gagliardi wants the company to focus more on electronic commerce initiatives.

Companies such as Federal Data Corp. of Bethesda, Md., Government Technology Services Inc. of Chantilly, Va., and Intelligent Decisions Inc. of Chantilly, Va., are among the interested suitors, sources said.

None of these companies would comment on their interest in the Inacom business.

How the government pie slices
up over three years
Total of





























































































FY 1998FY 1999FY2000FY 2000
Department of Defense agencies$6.60B$6.72B$6.69B19.54%
Department of the Air Force3.283.083.259.50
Department of the Army2.892.853.189.28
Department of the Navy2.892.812.968.64
Department of Transportation2.112.072.677.80
Department of the Treasury1.991.931.885.48
NASA1.751.791.714.99
Department of Energy1.511.601.604.69
Department of Justice1.341.541.554.52
Department of Health & Human Services1.081.381.374.00
Department of Agriculture1.181.201.213.54
Department of Commerce878M 942M1.123.28
Department of Veterans Affairs8751.09B 1.113.25
Social Security Administration702701M610M 1.78
Department of Education400474586 1.71
Department of State19606528 1.54
Department of the Interior4595115191.52
Environmental Protection Agency4354014521.32
General Services Administration278271274 0.80
Department of Housing & Urban Development2762912610.76
Department of Labor1972152380.70
Corps of Engineers1601851880.55
Federal Emergency Management Agency114110112 0.33
Nuclear Regulatory Commission 69 65 580.17
International Assistance Program 67 48 540.16
Office of Personnel Management 64 58 530.15
Governmentwide totals$32.13B$32.94$34.22
Source: Office of Management & Budget

Muse Technologies Inc. of Albuquerque, N.M., has hired Josephthal & Co., a New York investment banking firm, to get the company more attention on Wall Street and advise it on acquisitions.

The company, which acquired Virtual Presence Ltd. of London Nov. 18 for about $2.5 million, plans to make more acquisitions in 2000, top officials said.

Muse develops perceptual computing products used to transform vast amounts of data into virtual reality environments. It boasts clients such as NASA and Goodyear Tire & Rubber Co., but no stock analysts track Muse.

Muse's shares have been trading in the $3 range for several months. The company had $6.2 million in 1998 revenue and is expected to reach the teens in 2000.
Electronic Data Systems Corp. of Plano, Texas, is getting into the venture capital business, forming what will become a $1.5 billion fund to invest in business-to-business electronic commerce and Internet companies.

The venture fund's first investment is in EDS CoNext, which EDS formed in December to pursue electronic procurement buisness. "EDS is investing its future on the Internet and, with CoNext, in management of the supply chains of major global corporations," EDS Chairman and Chief Executive Dick Brown said last month.The e-business wave is strong and has a long way to go before cresting, according to a new report by Legg Mason Wood Walker Inc. of Baltimore.

"This trend is going to be longer lived and broader than other trends we have seen" because it cuts across all industries and all business processes, said William Loomis, co-author of the report, "E-Business Solutions Providers: The Architects and Builders of On-Line Business."

The report focuses on commercial e-business trends, but Loomis said he expects governments to follow, perhaps with a year lag in implementing the most innovative solutions. Federal, state and local government spending on Internet services is expected to grow to $2.85 billion in 2003 from $311 million in 1998, an annual growth rate of 55.7 percent.

Industry officials expect state and local governments to be more progressive than the federal government in adopting e-business solutions, Loomis said.

While many specialized e-business solutions companies are moving aggressively into this market, traditional IT services companies, such as EDS Corp., Computer Sciences Corp. and IBM Corp. "have a much broader technical base to leverage simply by virtue of their years of experience," the report said.

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