SRA International, now owned by private equity, restructures

May 27, 2012

SRA International, now under private equity ownership, is cutting jobs and reorganizing its internal structure in an effort to be more competitive and meet market demands, according to the company’s new president and chief executive.

The moves come as many government contractors, facing shrinking budgets and an increased government focus on price, are revamping to be more efficient and to pursue areas of work they expect to grow.

William L. Ballhaus, who took over shortly after Providence Equity Partners bought SRA last year for nearly $1.9 billion, said in a written response to questions that the company has shifted from two sectors — civil and health, and national security — to four business groups: civil government; defense; health; and intelligence, homeland security and special operations.

The company has also established capability centers focused on specific issues, such as cloud computing, mobile IT and cybersecurity.

“[W]e are laser-focused on what SRA has historically done well – delivering IT solutions and professional services to our federal government clients,” he wrote. “At the same time, we’re looking realistically at the marketplace and responding.”

According to Ballhaus, SRA is also merging its human capital management group — housed within its civil government unit — with its Touchstone consulting business, which SRA acquired in 2005. The combined unit will have more than 230 employees, which Ballhaus wrote would improve the company’s strategic management consulting practice to “optimize our change management capabilities.”

SRA’s realignment has cut positions — which previously numbered about 6,300 — but Ballhaus said the reduction is less than 2 percent.

Most of SRA’s leadership team before the buy remains in place, including Timothy J. Atkin, the company’s chief operating officer, and Richard J. Nadeau, its chief financial officer. Ballhaus noted that SRA has added Deborah H. Alderson as executive vice president for strategic development. Alderson left McLean-based Science Applications International Corp. following problems with a New York contract called CityTime, though SAIC said there was no evidence she was personally involved.

Still, Ballhaus emphasized that SRA is returning to its fundamentals. He noted that the company divested two units, including contract research organization Global Clinical Development, last year.

The moves are “about aligning our business to improve our competitive position in the marketplace,” he said. “We’re refining a structure that is lean and efficient, and will help us grow in our target markets.”

Mitchell Martin, a principal with the investment firm McLean Group, said it’s typical to see companies remake their structures once private equity gets involved.

To buy the company, private equity has “to be pretty convinced that they can add value and they can pretty quickly increase cash flows,” Martin said. “The reality is most of the time the quick changes are going to be on the cost side.”

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