Volgenau is one of the founding fathers of the modern government contracting industry. He started his career in the Air Force, where he served for 20 years, including a stint analyzing weapons systems and command structures at the Pentagon as one of Robert McNamara’s “whiz kids.” He was, literally, a rocket scientist, helping to develop boosters and satellites and teaching astronautics. He capped his government career with two years as director of enforcement at the Nuclear Regulatory Commission.
Volgenau launched SRA International from his home in 1978. The company provided analysis, advice and information technology solutions to both military and civilian agencies. Although it has had a reputation for aggressively pursuing new contracts and earning above-average profits, Volgenau always considered the work he and his colleagues were doing to be public service, for the good of the country. His commitment to “honesty and service,” as corny as it may sound today, has always been genuine and is hard-wired into the company culture. SRA grew rapidly not in spite of it but because of it, winning the loyalty of both customers and talented employees (for a decade it was on Fortune’s list of 100 Best Companies to Work For).
By the time Volgenau stepped down as chief executive in 2005, intending to spend his time giving away his fortune, SRA had become a public company with more than $1 billion in sales, 6,400 employees and an unbroken record of profitability.
(Full disclosure: Volgenau is rector, or chairman of the governing board, of George Mason University, where I will be a professor starting in the fall.)
It was perhaps inevitable that SRA’s growth trajectory would slow after Volgenau kicked himself upstairs to the chairman’s office. SRA had been growing by 30 percent a year during the outsourcing boom that followed 9/11, but it was unlikely that any company that size could maintain such a growth rate once those contracts were complete. Indeed, as the decade wore on, it began to dawn on investors that federal spending would need to be reined in, leading to slower growth and tighter profit margins. SRA stock, which had been trading above $32 per share in 2006, fell to $12 in late 2008.
But it wasn’t just the economy, the weak stock market and looming budget cuts that dimmed SRA’s prospects. Two sizeable acquisitions near the top of the market — one in the health-care area, another in air traffic control — proved so unsuccessful that the company is now in the process of selling them off or shutting them down. Around the same time, SRA suffered the loss of major contracts with USAID and the National Guard, giving a black eye to a company that prided itself on customer service.