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Contracting Pioneer at Ease

Ernst Volgenau Steps Away From SRA International's Daily Grind

By Ellen McCarthy
Washington Post Staff Writer
Monday, November 1, 2004; Page E01

Ernst Volgenau was there at the beginning, when the Pentagon's Vietnam-era "whiz kids" helped create Washington's government contracting business. The founder of SRA International Inc. watched in the late 1990s, when many of his company's engineers and technicians left for fatter paychecks and stock options in the dot-com world.

And he was there for the success of recent years, when the tech bubble burst, the dot-com defectors streamed back and Wall Street discovered the allure of contractors like SRA.

In May 2002, Dick Grasso, left, who was New York Stock Exchange chairman, and Air Force Gen. Richard B. Myers, right, joined Ernst Volgenau to mark SRA International's stock-trading debut. (New York Stock Exchange Via Bloomberg News)

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"I think government contracting has improved a great deal in that time period. It's . . . much more like the commercial world than it was in the 1980s," Volgenau said in an interview Friday, a day after announcing that he was stepping down as chief executive. Volgenau said he will remain involved with Fairfax-based SRA as chairman, but he will step back from day-to-day operations of the company he founded in the basement of his Reston home in 1978.

After a 20-year career in the Air Force and two years directing the inspection and enforcement activities of the Nuclear Regulatory Commission, Volgenau's course as an entrepreneur was set by an assignment at the Pentagon.

Volgenau, a passionate technologist who earned a doctorate in electrical engineering during his military service, spent several years in the 1960s working under Robert S. McNamara and a team of tech-savvy aides who were nicknamed the "whiz kids." They became known, and blamed by critics, for their role in managing the expanding war in Vietnam. But the group's immediate mission was to use computers to make military dollars go further.

In 1970, five members of that team, including Ivan Selin and Charles O. Rossotti, founded American Management Systems Inc., a pioneer in defense contracting that helped inspire younger entrepreneurs, including Volgenau.

When Volgenau decided to start his own company, venture capitalists weren't clamoring to invest in Washington's government-oriented businesses. Volgenau's start-up capital was the money he had saved while working for the government and supporting a family with three daughters, and loans he took out against the family's home.

To build a track record, SRA started out offering consulting services as a subcontractor. Its first contract came from Volgenau's old mentors at AMS.

"My contracts were small contracts of $10,000 or $20,000 each. Our objective was to do a good job on a little job and then maybe the customer would give us some more," Volgenau said. At the end of its first year, SRA had six employees.

By the mid-1980s it began bidding on, and winning, its own contracts with the government. Volgenau said he cannot recall the details of those first contracts, but he remembers what big events they were for the company.

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