Contracting CEOs still see spot for mid-tier firms as budget shrinks
By Marjorie Censer,
Capital Business last week sat down with four local government contracting executives to talk broadly about the industry — from the role of mid-size companies to the recent round of dealmaking. Here are excerpts from that conversation:
On being a mid-size contractor:
John Hillen, president and chief executive of Herndon-based Sotera Defense Solutions.
“We recently were one of four winners on an about $1 billion dollar [contract vehicle] for the [improvised explosive device] defeat organization. The other three winners [were] very reputable, well-known, multibillion dollar companies; we were a bit of a surprise winner. ... [But] the first four task orders fell right back to the incumbents, so we felt that the door opened enough to show skills and capabilities enough to get on the contract but still even after that’s done, there’s still a lot of work to do if you’re a mid-size company.”
On teaming with other contractors:
Donna Ryan, president of Fairfax-based CGI Federal.
“People who 10 years ago were competitors are now very, very good partners. I’d almost say it’s a friendlier environment. If you bring two, three companies together as partners on a deal ... you don’t have a learning curve. The government can’t afford a learning curve.”
On whether the potential market is shrinking:
“We’re not in the weapons construction or aerospace [businesses]; we’re in the services business. ... [Information technology] is part of the solution in this constrained budget environment.”
Ted Davies, president of Unisys’s Reston-based federal systems business.
“If you’ve got huge market share and the market’s going down, it’s kind of tough but I think in the size we’re all at, there’s still plenty of opportunity.”
On the decision between going public or being private equity-owned:
Leonard E. Moodispaw, president and chief executive of Hanover-based Keyw.
“I’d much rather have 1,000 shareholders ... than have one private equity firm. One of the private equity firms which owned a large company around here kept telling me, ‘We’re not intrusive.’ I [talked to the company’s CEO] and he said, ‘Well, I get four or five e-mails a day from them and every Friday I spend an hour and a half on the phone giving them a summary,’ and I’m thinking, I want to have one e-mail a year from somebody.”
On deciding whether to pursue cloud computing work:
“The investment to become a cloud provider is just so enormous that even though we’re a $4 billion company, we’re just not going to have the same kind of pocketbooks as the Googles or the Amazons. We’re now more of a cloud facilitator. We’re helping organizations move to the cloud and manage the cloud.
“We did the investment. We’re not doing big cloud, we’re doing things that are smart cloud, and the pipeline growth has been exponential.”
On the role of acquisitions:
“I don’t think any of us do acquisitions for its own sake. Every great company in the space over 30 years — their trajectory was changed when they won a big contract. That’s what marks their differentiation, when they took their company to a whole new level, not when they did a deal.”