EYW seemed to fit the mold of a typical government contractor when it arrived on the scene in 2008. Its executives were contracting veterans who had sold their last company to Northrop Grumman and hoped to carve out a spot in the expanding field of cybersecurity. ¶
Just another acronym-named company in a government-gray industry. Its very initials suggested a what-me-worry approach to life, a play on Key West and its chief executive’s fondness for all things Jimmy Buffett. ¶
But what seemed a steady — even a little boring — line of business has proven to be anything but. The end of two wars, sequestration and, most recently, the government shutdown have roiled the contracting world, pushing some companies to look beyond the federal government in search of new avenues for growth.
After building its business on work with government intelligence agencies, Hanover-based KEYW earlier this month unveiled a cybersecurity platform called HawkEye, geared toward companies from financial firms to utility businesses.
With HawkEye, KEYW is attempting more than a customer shift; it also wants to make what is arguably an even tougher change: moving from a services company that provides staff to government agencies to a product company that sells technology.
Contractors don’t have the best track record when it comes to chasing new lines of business. Norman Augustine, the former chief executive of contracting giant Lockheed Martin, once famously said that defense companies’ efforts at moving into new sectors were “unblemished by success.”
But KEYW is betting the underlying cybersecurity challenges facing the government are not all that different from those facing private industry.
Readying for commercial
One of the reasons diversification is so difficult is that selling to the commercial world is much different than dealing with the government.
When a private company decides to buy something, it can simply do so. Government agencies, on the other hand, are typically required to put together a request for proposals that can include all sorts of mandated requirements, such as whether small or disadvantaged businesses should participate in a procurement. They must be prepared to defend their purchases should any losing bidder appeal, and they are subject to the whims of the congressional budgeting process.
Federal agencies “have a much longer procurement cycle ... because they have to go through all these different companies and reviews,” said Howard A. Schmidt, the former cybersecurity coordinator in the Obama administration who now runs a cyber consulting business. “Private sector has the ability to say, ‘Hey, this is good stuff. I want to go buy it.’”
There’s a certain reliability to government purchasing, but it can be difficult to speed up or to make highly lucrative deal. Selling to the private sector means more unpredictability about timing and profits, but the rewards can be far larger.
Richard A. Clarke, who has advised presidents on counterterrorism and cybersecurity, said the process of selling is also dramatically different.