M&A

HDS Federal makes its big move with Brocade deal

Singapore-based chipmaker Broadcom’s acquisition of Brocade is set to close by October and regulators are requiring that Brocade jettison its classified work for federal agencies.

Into this development comes Hitachi Data Systems Federal, the Reston, Va.-based IT services contractor who announced Tuesday it will take in Brocade Federal’s cleared contracts and employees under a transfer and control agreement with Brocade. Terms of the deal were not disclosed.

This transfer represents the most “significant single action we’ve taken” since HDS Federal launched in 2013, its CEO David Turner told Washington Technology Tuesday.

HDS Federal is transforming itself from a traditional IT infrastructure-focused company to one that also offers agencies services in big data, analytics and the Internet of Things, Turner said.

“This capability fulfills a solution void for us in IP-based networking and software-defined architecture,” Turner said. “The networking component was a hole we were trying to fill from a capability perspective.

“We natively have the infrastructure, software and analytics pieces so this allows us to go to market with a full-service solution.”

The addition of Brocade's federal assets brings to HDS Federal an increased footprint with many intelligence agencies. Turner declined to name the agencies but identified them as those involved in functions of a "mission-critical nature."

On the employee front, Turner described the new Brocade staffers set to join HDS Federal as those on the “very high-end, upper echelon of the technology stack.” They will work with HDS Federal’s technical architects and focus on troubleshooting with customers to identify technical solutions, he said.

Where HDS Federal sees opportunity is in being that full-service provider for clients’ data centers as it already had a working relationship with Brocade, according to Turner. The demand signals from agencies, Turner said, center around being able to “harness the power of all of the data they have collected over the years.”

“You’ve got the legacy data already in these systems but then there is data we will be able to target that has not traditionally been a part of that data set,” Turner said. “That market demand around big data really was the driver for this activity.”

Brocade determined it could no longer perform classified work after review of its acquisition by the Committee on Foreign Investments in the United States. The company is carrying out the transfer to abide by regulations concerning foreign ownership, control or influence.

HDS Federal itself is also subject to FOCI regulations as it is a part of the larger Japan-based Hitachi conglomerate. The contractor performs classified work under a proxy agreement with the Defense Security Service.

About the Author

Ross Wilkers is a senior staff writer for Washington Technology. He can be reached at rwilkers@washingtontechnology.com. Follow him on Twitter: @rosswilkers. Also find and connect with him on LinkedIn.

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