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Retired General Brings Military Expertise to Firm's Contract Unit

By Renae Merle
Washington Post Staff Writer
Monday, December 13, 2004; Page E01

HNTB Cos. has recruited retired Gen. Barry McCaffrey, the former commander of the U.S. Southern Command, to serve as non-executive chairman of its federal government operation in Washington.

It's part of a push by the Kansas City, Mo., engineering firm to increase its share of federal contracts, especially in defense and homeland security. In the past year HNTB has hired eight senior executives with extensive military and government experience, including Lt. Gen. Robert B. Flowers, former chief of engineers and commanding general of the Army Corps of Engineers.

Retired Gen. Barry McCaffrey is also a commentator for NBC News. (Stew Milne -- AP)

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McCaffrey works as a commentator for NBC News and is the former director of the White House Office of National Drug Control Policy.

"People who are successful in commercial business, they understand how the free market works," said Brett Lambert, a defense consultant at research firm DFI International Inc. "The government is not a free market. You have to have the expertise of people who have been on the other side of the table to make any headway into that market. You want to hire a salesperson who looks a lot like the customer."

HNTB is going after the market for federal engineering and design services, betting that spending by the Pentagon and the Homeland Security Department will continue to grow for such infrastructure projects as strengthening bridges against attacks and designing the traffic flow around border entries to increase security while accommodating increased traffic.

The company expects to receive $16 million in federal-government-related work this year, up from $8 million last year, but a fraction of what it estimates is a $100 billion-a-year market.

The company wants to capture $300 million of the market within 10 years, nearly doubling the size of the overall company, said Flowers, chief executive of the federal business.

The market "will be significant and grow to be extremely large and will stay steady for 10 to 15 years," McCaffrey predicted.

But it's an increasingly competitive market, and other firms are employing similar strategies, industry analysts said. While HNTB might face five or six competitors when it bids on a city contract for a new convention center, they said, twice as many competitors are likely to bid for a federal project, including larger firms such as Bechtel Group Inc. and Parsons Corp.

"Industry firms are positioning themselves to get more in this market. It's on every firm's radar screen," said Janice L. Tuchman, editor of industry magazine Engineering News-Record. "Everybody's thinking about security in a way they haven't before."

For HNTB, the push into the federal market also may help offset sluggish demand for transportation-related projects, including designing bridges, highways and airports.

Such work accounts for 88 percent of the firms' $499 million a year in revenue. Many states are postponing decisions on long-term projects until a federal transportation funding bill that has been stalled for the past year is passed, a HNTB spokeswoman said.

McCaffrey said he will focus on helping the firm develop strategy and will retain his positions at NBC and on several other boards.

During his time in government, McCaffrey said, he "had an enormous amount of dealings with Congress." He said his experience gave him a "good perspective of how the country works, how policy gets made."

Staff researcher Richard Drezen contributed to this report.

© 2004 The Washington Post Company