Tech Insider: A tale of two markets

If you want a good lesson in what distinguishes the government's technology business from its commercial counterpart, consider the case of Aquilent, the firm formerly known as Commerce One E-Government Solutions. Aquilent makes its official, though much-anticipated, debut today, leaving the nest of its former parent, Commerce One, the Pleasanton, Calif., business software firm that has seen its stock price plummet in the past three years. Paul Brubaker led Commerce One's team for such high-profile federal clients as NASA, the Postal Service and FirstGov, the government's one-stop portal for online government information. The e-government division specialized in scientific computing, building Web-based applications and portals and constructing electronic procurement systems. The problem with that, says Brubaker, is that those core elements were totally out of line with where Commerce One wanted to go. Government work is inherently customer-focused, and, although companies are still wedded to the bottom line, executives know that federal customers demand attention and a contractor that plans to stay around for the long haul. However, Brubaker said that his old company's message to his division was clear: If you're not focused on racking up software sales, you won't go very far in this firm. Management became concerned not with what Brubaker's group was doing, but with what it shouldn't be doing. "It was absolutely necessary that we split off," Brubaker says. So, over dinner one night last September, he and Commerce One CEO Mark Hoffman had "the talk," and ultimately decided to go their separate ways. This fundamental parting of the minds is a testament to how the federal market has become increasingly driven by relationships and services instead of hard product sales. Brubaker knows as well as anyone that the net gain of a cozy relationship with a government client isn't a warm feeling-it's cold cash. Business is cultivated over a longer period of time in the federal market than in the private sector, and, just as a tomato ripens the longer it's on the vine, the reward is often sweeter. If a company doesn't have either the deep pockets, patience or commitment to stick things out, it shouldn't get into the game, according to industry contractors. The birth of Aquilent marks the beginning of a personal crusade for Brubaker. "The business model is to help our government clients achieve the objectives of Clinger-Cohen," he said, referring to the 1996 law that helped revolutionize buying and selling in the federal market and made agencies more accountable for the way they use information technology. The act is dogma for acquisition and management reform advocates. Brubaker should know: He helped write it. Working for then-Sen. William Cohen, R.-Maine, Brubaker was instrumental in crafting the legislation, and then had the chance to oversee its implementation at the Defense Department, as deputy chief information officer under Defense Secretary Cohen. When Brubaker and his Rolodex changed sides from the public to the private sector, he was in a position to capitalize on his understanding of the peculiarities and shortcomings of federal agencies. But his angle wasn't simply self-serving. Rather, those who know Brubaker regard him as one of the "true believers." An ever-present figure at industry and government events and social functions, Brubaker might be one of the few people in the market who not only understands the way government thinks, but is determined to change it. Aquilent's customers seem to think so, as well. Upon news of Commerce One's impending split, Howard Stern, senior vice president for market development, said one agency customer candidly told him, "Thank God you guys are getting out." Some of Aquilent's customers felt that the Commerce One ideology had fenced in Brubaker and his associates to the point that they couldn't be as responsive as the agencies would like.

Ultimately, the break-up has been quite amicable, and Commerce One could continue to benefit from future Aquilent successes. Brubaker said the company will be Aquilent's preferred software provider. Commerce One can hardly afford to give its former partner the cold shoulder with its stock trading well below $2 a share. Brubaker is optimistic about the road ahead and has targeted growth at 22 percent a year. Aquilent has taken on a reported $9 million in debt from investors, mostly banks, to take the roughly 120 former Commerce One employees out of the mother ship. Eyeing a $45 billion technology budget in a booming wartime market, Brubaker remains realistic and, ultimately, disciplined about the work Aquilent has ahead. "We're going to focus on single agencies or groups of agencies and help them solve their problems," one at a time, he said. That's what successful firms have been doing all along.