DynCorp Replaces Chief Executive After 2 Years

DynCorp International, a Falls Church government contractor, yesterday announced that it was replacing its chief executive after just two years on the job.

Herb Lanese is retiring as president and chief executive to make way for William L. Ballhaus, 40, head of the network systems division at London-based BAE Systems and a third-generation defense industry executive. Lanese, 63, will remain on the company's board.

DynCorp Chairman Robert B. McKeon said Ballhaus's background in information technology and intelligence analysis is crucial for DynCorp as demand for those services increases and the hardware needs of the war in Iraq subside.

"Those are two of the areas that we want to try to build from our existing base of business," McKeon said. "It's part of a broader trend for government outsourcing. Increasingly, it's difficult for the government to recruit and retain the kind of people that do this work. It's just an inevitability they're going to be relying more on outside companies."

DynCorp historically has provided maintenance and logistics services for aviation and civilian law enforcement training but scored two important contracts in recent years that opened up new areas of business.

The first was a program worth up to $5 billion per year to assist the military with setting up facilities, supplies, maintenance and transportation, primarily in the Middle East. The second was a program worth as much as $4.65 billion to provide translation and interpretation services in Iraq. Under this program, DynCorp is hiring 1,500 U.S. citizens and 7,000 Iraqi civilians to provide translation services.

Company officials said Lanese was always viewed as a transition figure, but some analysts were surprised by the move.

"It was an unexpected move on the part of DynCorp that appeared fairly abrupt," said Myles Walton, an analyst at Oppenheimer. "Lanese had brought with him a level of street savvy that had given investors some degree of confidence, and DynCorp had captured some very nice business wins under his leadership."

Walton said the two contracts should "secure near-term growth," but added that as operations change in Iraq and Afghanistan, there is "the longer-term question of the role they have."

DynCorp was previously a part of Falls Church-based Computer Sciences when it was bought in 2005 by Veritas Capital, a New York private-equity firm specializing in homeland security and defense. A year later, Veritas took the company public and McKeon, the president of Veritas, asked Lanese to serve as chief executive.

McKeon, speaking about the upcoming change in leadership, said the company had long planned a transition and decided to move now after learning that Ballhaus had been offered a job by another firm. Before his current post at BAE, Ballhaus had run that company's national security and mission solutions division and was considered well suited for DynCorp, McKeon added.

"A guy like Bill is somebody who could be with the company for 20 years, who could build us into a world-class operation," McKeon said.

A spokesman for DynCorp said Ballhaus would not be available for an interview until after he officially takes over Monday.

DynCorp has 15,000 employees and did $2 billion in sales last year. It plans to report earnings May 29. DynCorp's stock closed down 25 cents yesterday at $16.63, a drop of about 1.5 percent.