DynCorp chief remaking the services contractor


Steve Gaffney, Chairman of DynCorp International, in his office at headquarters in Fairfax, Va. (Jeffrey MacMillan/JEFFREY MACMILLAN FOR WASHINGTON POST)
October 15, 2012

Since going private more than two years ago, Falls Church-based DynCorp International has kept a low profile.

Purchased by Cerberus Capital Management, the contractor is based in Fairview Park, home to well-known companies like Northrop Grumman and General Dynamics. But as a contractor that works closely with the military on the battlefield, DynCorp has shied from the spotlight.

Steven F. Gaffney, who became chairman, chief executive and president shortly after DynCorp went private, recently spoke with Capital Business. What follows are excerpts from that conversation.

How has going private changed DynCorp?

Instead of trying to satisfy the investors on a quarterly basis, we can actually talk to them about our long-term plans. What that allows us to do is be patient and invest in the things that we need to invest in versus trying to satisfy the short-term view of the markets. That sometimes causes bad behaviors [and] wrong decisions. There are types of companies that should be private, and services companies are one of them.

Why should they?

Services companies basically have a portfolio of government programs. Programs start up, programs end, programs have transition points, so the various puts and takes cause the business to be generally lumpy. If you were a factory just producing widgets out the back door, it’s very consistent output. But our programs start and stop and peak and valley. All normal and all expected, but hard to explain to analysts.

What have you been focusing on?

It really comes down to: Do you have the right people doing the right things? Are you organized the right way? And the business systems that you have in place — are they strong enough to support the pressures of the business? About 90 percent of our top three levels of leadership are either new to the company or they’re new in position. In two years, we’ve restructured twice around getting to the right market-focused, customer-focused type of organization. We stood up a new business development organization, and we were able to move our win rates from the low teens to close to 50 percent of everything that we bid.

What did you change in business development?

The [company] had a distributed business development function down into the two operating divisions that we reported. You generally use that technique when you’re a multi-industry type of organization servicing different markets with different needs. We are pretty much a pure-play services company so a common business development process should be used. In the services world, winning new business probably outranks just about everything we do. We bid on over 200 proposals a year; we’re literally looking at four proposals a week. We put in a very structured process. I chair a weekly business development meeting that lasts pretty much the entire morning, and we go through every element of the new business pipeline to make sure we have the right teammates, the right strategy.

What’s your strategy as the wars in Iraq and Afghanistan wind down?

I joined the company knowing full well that the changes were going to happen in Iraq and Afghanistan. In fact, many of the programs that we have today — the goal is really to put yourself out of a job. In 2003, when we became one of the largest trainers of police in the Middle East, we knew that the goal was to train a country so that they could perform the function themselves. We’ve been thinking about this issue around what’s next for some time, and that’s why we’ve been working to rebalance our portfolio since I got here. Our aviation business, for instance — today it’s a third of our revenues and half of our earnings. That wasn’t the case two short years ago. A couple months ago, we made a small acquisition in the aviation business to fill a gap that we had, not for the business that we have today but to compete for business two years from now and also get us into the commercial space.

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