Maximus' federal arm breaks the $1B mark in GD call center deal
- By Ross Wilkers
- Nov 20, 2018
Maximus on Friday closed its $400 million acquisition of a network of contact and citizen engagement centers from General Dynamics’ IT services business in a deal first announced in October.
And during Maximus’ fiscal fourth quarter and year-end earnings call Friday, CEO Bruce Caswell peeled back more layers on the newfound scale for its federal services business, plus what the company is getting and what it aspires for now that the deal has closed.
The federal services business recorded $478.9 million in revenue for Maximus’ fiscal 2018 ended Sept. 30, down 12 percent from FY 2017. With the addition of the citizen engagement centers, Caswell told analysts that Maximus is “getting the book (of business) over $1 billion” in federal services.
At that threshold, Caswell said “we become a very credible bidder as a prime and are open to new opportunities with other federal agencies.”
That characterization adds Maximus to the list of government services companies buying into the notion of scale, where having a wider base of revenue to spread costs around puts the business in better position to win larger contracts.
The network of contact centers Maximus has acquired predominantly consists of those that help handle inquiries related to Medicare claims and getting insurance under the Affordable Care Act, plus others that support the 2020 Census.
And given the fact that the federal government is “the largest customer in the world,” Caswell said that “is a market where we think we can have a bigger presence and should have a bigger presence.”
When my editor Nick Wakeman spoke with Maximus’ federal lead Tom Romeo in October to discuss the transaction, Romeo noted that the company is getting from GD a technology platform that is FedRAMP-certified and is looking to add in machine learning and artificial intelligence tools.
As Romeo pointed out, the business Maximus is acquiring fits into its “business process driven” portfolio, where the company uses “a lot of technology but it really is to drive the business process.”
Maximus’ contract mix changes significantly with the deal. Caswell said the contract with the Centers for Medicare and Medicaid Services to handle inquiries out of the citizen engagement centers now becomes the largest in Maximus’ portfolio. He also noted that the centers are running at peak operations given that it is currently the middle of the 2019 open enrollment period for the federal health insurance exchanges.
The CMS contract has another four years to run before Maximus has to rebid it. On the other hand, the Census contract runs through to June 2021. Caswell said that contract will peak in calendar year 2010, but then Maximus will “start to see the ramp down and the revenue will go away.”
Caswell also peeled back the layers on its selection earlier this month as the first vendor for the General Services Center’s new contact center services acquisition special item number, which connects access to automated contact center offerings through GSA’s IT Schedule 70 vehicle. This SIN is intended as a centralized mechanism to acquire artificial intelligence, robotic process automation and other similar tools to handle citizen inquiries.
Contact Center SIN is the replacement for the USA Contact vehicle that was first awarded in 2008 and expired in August of this year.
“This vehicle actually broadens the types of solutions that are available under the contract to really reflect many more of the technologies that are prevalent in call center operations these days compared to back when USA Contact was acquired,” Caswell said. “It makes this vehicle a much more attractive vehicle for any federal agency that's seeking not just to do kind of standard contact center operations, but to infuse some of these new digital technologies and capabilities into what they're doing.
“I hope (agencies) see through this vehicle opportunities for agencies that historically haven't seen the business case for contract center operations going through the vehicle now to become a more attractive vehicle for them.”
Ross Wilkers is a senior staff writer for Washington Technology. He can be reached at firstname.lastname@example.org. Follow him on Twitter: @rosswilkers. Also find and connect with him on LinkedIn.