Contractors Cash Out but Try to Stay Humble

In many ways, the region's newest millionaires are unlike the high-tech set that made extraordinary (if sometimes fleeting) amounts of money in the late 1990s. Government contracting is markedly sober, as are the executives leading it. It is a sector of security clearances, patriotism and rules of discretion so stringent they sometimes prevent executives from knowing exactly what their employees are working on. Unlike the dot-com kings -- who were in the gossip pages as much as in the business section -- most government contracting millionaires shun the limelight.

"The government market is a conservative market. . . . The people I see are still driving the same car they were before," said Bob Lohfeld, a consultant who advises companies on mergers and acquisitions. "This wealth sort of sneaks up on people."

But while contracting millionaires aren't flashing their wealth around town, they're not letting it sit idle. The local economy already benefits greatly from government contracts, and the money paid to individuals in mergers is a sort of premium on top of that. The money is recycled into the local real estate and retail markets, enriches the lawyers and consultants who set up deals, benefits local charities, and frequently is used to start new businesses.

For Howton, it's a bigger payoff then he dreamed of a decade ago when he maxed out 10 credit cards, racking up $200,000 in debt to start Gray Hawk Systems Inc.

Like many in the industry, Howton landed in government contracting by way of the military. Thirty years ago, when he was medically discharged as a Navy lieutenant, he went to work for Syscon Corp. for $24,000 a year, a good salary in those days, he said.

After stints with several larger firms, Howton decided to start his own company. In 1995, after a fallout with a partner who assumed control of his first start-up, he founded Gray Hawk in the basement of his Falls Church home.

The company marketed itself as a catchall technology and engineering shop, but growth was slow. Howton landed an initial subcontract with old friends at Syscon, yet five years into its existence, Gray Hawk was pulling in just $5 million in annual revenue.

Gradually, the company developed an expertise in software that could analyze large amounts of raw data. After Sept. 11, as intelligence agencies looked for tools to improve their data-mining ability, demand for Gray Hawk's services rose significantly. By 2003, Howton's company was bringing in $58.3 million in annual revenue, and its workforce topped 400 employees, 95 percent of whom had security clearances required to work on classified projects. Howton began getting weekly calls about a possible sale.

Last spring, Fairfax-based ManTech International Corp. bought Gray Hawk for $100 million in cash. At the time of the sale Howton owned 51 percent of the company, he said.

While the Howtons lived well before the deal with ManTech, it put them on a different plane.

"When you get a lot of money all at once, you do have an issue with what to do with it," he said.

There were a few luxuries, like a new Lexus for Howton's wife and a summer vacation to Italy. Trusts were set up for Howton's young daughters and his three grown children from a previous marriage. He gave money to his old high school, to the USO and to orphanages in Central America, among gifts totaling about $200,000 last year.