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Contracting | Shifting From Tanks to Technology
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"As a services company, the revenue is driven by people we have on the job," said chief executive Phil Nolan. "We're more conservative, in terms of hiring people, to sit there and wait for new opportunities to come along."
SAIC, a big McLean contractor, has sought to win contracts to run government programs from start to finish, rather than targeting a more narrow slice of the federal pie.
"There are not as many new opportunities, so you have to broaden your aperture," said Arnold L. Punaro, a senior SAIC executive.
For instance, SAIC recently won a contract to direct the flow of tires headed for government vehicles worldwide by partnering with Michelin.
Companies and analysts say there are some signs the government might start to spend more heavily on services in 2008 and beyond. For starters, Congress has passed a fiscal 2008 budget. Civilian agencies, which have played second string to the Pentagon, may start to see new dollars flow.
"Having a budget for 2008 is going to be like cold water to a thirsty man," said John Slye, an analyst at Input Inc., an industry research firm.
In particular, several contractors are planning to bid on providing health technology, as pressure grows on Medicare and Medicaid, as well as on care for veterans.
"The health care space really is affected by better information and information sharing," said Stanton D. Sloane, chief executive of SRA International in Fairfax. "You really can't afford not to pay attention to that space."
Intelligence represents one area where many companies believe the intersection of national security and technology will make for good business opportunities.
CACI chief executive Paul M. Cofoni said the changing strategy in the war on terror and Iraq should drive dollars back to technology services contractors, like his own.
"It will turn to be less about bombs, tanks, airplanes, and more about collaboration among intelligence agencies, law enforcement and the military," he said.
CACI is working to provide technology that allows agencies to absorb intelligence in any form -- audio, paper, electronic -- then translate and convert it into electronic text, and tag it for analysts to review.
