Technology services firm ManTech International moved Monday to extend its reach into the federal government, announcing a $180 million deal to buy Bethesda-based IT firm InfoZen.
InfoZen specializes in moving traditional computer systems to the cloud, something that is a stated goal of the White House Office of American Innovation, headed by Donald Trump’s son-in-law and senior adviser, Jared Kushner. The company holds large contracts with the Department of Homeland Security’s Transportation Security Administration. It also holds IT contracts with NASA, giving Herndon-based ManTech more access to the civilian side of government.
“They’re very well known for having migrated applications into the cloud successfully, something that is a worry for government agencies,” ManTech president Kevin Phillips said.
The deal comes as government contractors are busily repositioning themselves for work under a new presidential administration, looking for growth opportunities as budget priorities shift. On Monday, for instance, defense contracting giant Northrop Grumman announced that it will purchase aerospace giant Orbital ATK for $7.8 billion. Two weeks ago, United Technologies offered to buy aerospace manufacturer Rockwell Collins for $30 billion.
Robert D. Kipps, an investment banker with KippsDeSanto, described the market for government contractors as “red hot,” even in the civilian sectors that have seen some uncertainty under Trump.
“People are looking past the threat of debt ceilings and sequestration in the federal market, and they’re very bullish,” Kipps said.
ManTech became major service contractor to the Defense Department during the rush of federal contracting activity that came during the George W. Bush administration’s wars in Iraq and Afghanistan. But its fortunes took a turn under then-President Barack Obama, when congressionally imposed spending cuts mandated as part of the so-called sequestration process reduced revenue across the industry. The company reported revenue of $413 million in the most recent quarter, down from $752 million for a quarter at its peak in 2011.
ManTech’s stock has recovered somewhat in the past year, thanks to new contract wins in the civilian sector. But its stock price remains about 30 percent below where it peaked in 2008.
By investing in a cloud-computing company, ManTech is following in the footsteps of others in the government contracting space. Late last year, Booz Allen Hamilton paid $250 million to acquire Aquilent, an information technology firm with deep roots in the civilian health-care market. Another major buyout came in April when government services firm ECS Federal bought an IT firm called InfoReliance for an undisclosed sum.
“There’s clearly an acceleration of interest” in IT modernization, Phillips said. “The movement and shift within the government is real in terms of their need.”