Looking Beyond the War Zones

Jet-lagged from a 10-day trip touring operations in Iraq and Afghanistan, Herbert J. Lanese was restless early one recent morning and decided to head over to his office at DynCorp International LLC in Fairfax.

It was only 3:30 a.m., but the talkative, kinetic executive said he had lots on his mind, but mainly: What next for his company?

When Lanese took the helm of the government contractor in July, it had been a public enterprise for less than two months. Much has happened since. DynCorp finished moving its headquarters from Texas to Northern Virginia. It retreated from some of its business opportunities, lowering revenue projections. And it began a company-wide streamlining.

"What DynCorp is like long term is something we're in the process of figuring out right now," Lanese said.

DynCorp, which has 14,200 employees around the world, is among a growing number of defense firms that don't make weapons or even write software, but rather provide expertise to the military and to take over jobs once reserved for soldiers.

Its roots date to a 1940s aircraft maintenance company, but DynCorp has collected a hodgepodge of contracts since then, such as maintaining aircraft at Andrews Air Force Base (including those used by the first lady and Cabinet secretaries), training police forces, and protecting U.S. and foreign officials around the world. (It has provided personal security to Afghan President Hamid Karzai.) It is training people to remove land mines in Cambodia, and it is in charge of an effort to revamp Liberia's military.

DynCorp is one of several companies bidding on a multibillion-dollar Army contract to provide logistical support, such as constructing bases, cooking meals and sorting mail.

The company is one of the largest government contractors in Iraq and Afghanistan, with 1,500 employees in each country. Its largest contract is for training the Iraqi police force, bringing in $600 million in revenue in the past fiscal year, and putting it at the center of the Bush administration's plans for rebuilding the country.

"Do you remember that show 'MASH'? In today's military most of the characters in that show would be contractors like DynCorp," said Erik R. Olbeter, an industry analyst for Stanford Group Co. "And in our view, long term, that is a good place to be."

That kind of work should help DynCorp boost revenue 40 percent this year to $2.1 billion, from $1.4 billion in 2004, Lanese said. Yet, DynCorp's stock price has lagged behind those of its defense industry peers as investors wonder what more it has to offer. "The challenge is to diversify their base," Olbeter said.

DynCorp's transformation into a public company began in 2002 when the firm, then employee-owned and based in Reston, was sold to Computer Sciences Corp. California-based Computer Sciences quickly sold part of DynCorp's operations to New York-based Veritas Capital. Veritas took the company public this year but retained majority ownership.

The task of transition to an independent public firm has been substantial, requiring the firm to develop a corporate structure, its own legal and human resources departments, and internal auditing capabilities, Lanese said.