TOP 100

Top 100: Inside Engility's strategy of building critical mass

With two major acquisitions under its belt since January 2014, Engility Inc. has nearly doubled its annual revenue. As a result, the Chantilly, Va.-based company is flexing its muscles and landing some impressive deals.

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The company, which was spun off from L-3 Communications in 2012, completed its $120 million purchase of Dynamics Research Corp. in January 2014 and wrapped up its $1.1 billion acquisition of TASC in February 2015. As a result, Engility is pursuing large consulting and support services contracts with added confidence.

Engility landed at No. 13 on the 2015 Washington Technology Top 100 with $1.9 billion in prime contracts.

The company’s leadership took stock of the competitive landscape two years ago and saw that the market was ripe for consolidation, said Engility President and CEO Anthony Smeraglinolo. “We said we were going to be a first mover,” he said, referring to the need for consolidation in a crowded field squeezed by sequestration and other budget cuts.

“The main thing that we’ve done,” Smeraglinolo said referring to the last 18 months, “is expand our capabilities and expand our customer base, and position ourselves to better compete in the coming years,” he said.

Like other large prime contractors, Engility has worked diligently to make its operations as efficient as possible so as to offer higher value to its government customers, Smeraglinolo said. Engility’s customers “were always getting high-quality people and processes, but now they will be able to get them at lower price points,” he said.

Engility observed a “more normal deal flow” in 2014 and 2015 after the turbulent budgetary events of 2013, Smeraglinolo said. But the award process is taking longer than historical averages, he said. Whereas in the past it might take three to six months for a major award, it now often takes nine to twelve months, he said. “Our customers are taking a more judicious approach to awards probably because of an environment of protest,” he said.
Moving forward, Engility plans to earnestly pursue specialized technical consulting projects for 21st Century IT, Big Data and cybersecurity, Smeraglinolo said. He said the company is keenly interested in helping government customers identify and install the best technology to meet their program needs.

“We help our customers get better insight into the problem space itself,” Smeraglinolo said, adding, “It’s about understanding the market even better than anyone else and helping our customer buy smarter in those areas.”

The two acquisitions have greatly enhanced Engility’s ability to expand its customer base and win services contracts, Smeraglinolo said. As an example of this, he cited a $31 million IT management and application services deal to support nearly 100 technology systems that Engility’s DRC subsidiary won with the Veterans Administration in October 2014.

Before the acquisition, DRC had some of the capabilities needed for the project, but lacked the critical mass necessary to deliver on everything that the VA needed on the project, Smeraglinolo said. “Combining their capabilities with our critical mass put us in position to go win a very major program that is helping the Veterans Administration buy smarter,” he said.

Engility’s DRC subsidiary also was among the winners announced in April of an IDIQ contract worth upwards of $960 million to provide a variety of IT services to the Air Force through its Network-Centric Solutions-2 Application Services Full and Open program.

In addition, Engility landed in March an indefinite-delivery, indefinite-quantity contract with a ceiling of $1 billion to furnish technical advisory services to the U.S. Agency for International Development as part of the continuation of the company’s work under the previous Water II IDIQ contract.

The company also was one of a number of companies awarded a spot in April to compete for task orders under a $7.2 billion IDIQ contract to furnish a wide range of global intelligence support services to the U.S. Army Intelligence and Security Command.

Engility may undertake additional acquisitions, even in the near future, if it wants to enhance specific capabilities, Smeraglinolo said. In the meantime, the company is content with its areas of focus and the composition of its customer base, he said.

“We are 50 percent DOD, 25 percent federal civilian and 25 percent intelligence,” he said. “That’s a nice mix for a services company.”

About the Author

William Welsh is a freelance writer covering IT and defense technology.

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