On the Move
An inside look at a systems integrator making inroads into the federal technology market.
This year has been a particularly momentous year for one Washington-area technology contractor. In the past 13 months, systems integration firm SI International Inc. has gone public, won a series of lucrative and high-profile federal contracts and added one of the market's most seasoned players to its corporate roster.
SI International, headquartered in Reston, Va., the heart of the Beltway tech corridor, opened its doors in Oct. 1998 as a technology services company and has assembled a long list of commercial clients-drawn largely from the technology and education markets-as well as federal customers, including the State, Energy and Defense Departments. The company also works for the Bureau of Prisons, the Drug Enforcement Agency and the FBI, and counts nearly 20 independent agencies as clients.
SI has been moving at a fast clip in recent weeks. On Dec. 16, the company announced the hiring of Paul Brubaker as its chief marketing officer, a position SI created especially for him. Brubaker is one of the architects of the contemporary federal technology market. As a staffer to former Sen. William Cohen, R-Maine, he spearheaded a key 1996 law that required federal agencies to appoint chief information officers and helped set the stage for procurement and management reforms leading many tech-focused agencies to behave more like businesses than bureaucracies.
In addition to that legislation-the Clinger-Cohen Act-Brubaker helped craft a number of high-profile laws whose acronyms have become synonymous with an era of "businesslike" government, including the Federal Acquisition Reform Act , the Federal Acquisition Streamlining Act and the Government Performance and Results Act. He also served as deputy chief information officer at the Defense Department.
In his new position at SI International, Brubaker will "bring in a different level of marketing talent, to penetrate a broader range of market opportunities," said Brad Antle, SI's president and chief operating officer.
A sure sign of where those new opportunities lie, in SI's view, comes with the announcement-two days after Brubaker's hiring-that the company would acquire fellow tech contractor Materials, Communication & Computers Inc. (Matcom) of Alexandria, Va. Matcom may be best known for taking control of the Thrift Savings Plan automated recordkeeping system contract in July 2001 from the former prime contractor, American Management Systems Inc. The Federal Retirement Thrift Investment Board fired that company after spending four years and $50 million updating the system, with mostly failing results.
Matcom has been around longer than SI-it was established in 1983-and has a similarly wide base of customers. The acquisition gives SI more opportunities to cross-sell to agencies, and adds a roster of about 500 Matcom employees to SI's own ranks of 1,200 workers.
More evidence that SI has been on a roll in 2003: In November it won a slot on a $600 million Air Force contract helmed by Lockheed Martin Corp. The deal provides the Air Force Pentagon Communications Agency with classified voice, video and data service, including call center operations, classified systems support and program management. The agency provides technology services for about 7,500 Defense users in the Washington area.
In October, SI also landed a supporting role in building the $281 million Defense Integrated Military Human Resources System, under prime contractor Northrop Grumman. Also, on Sept. 11, SI announced the State Department had raised the ceiling on its National Visa Center contract by $28 million, to $88 million. SI supports the center, located in Portsmouth, N.H., which processes all approved American visa petitions.
All that activity, and more, comes on the heels of SI going public just over a year ago. On Nov. 12, 2002, the company launched an initial public stock offering of 4.35 million shares, priced at $14 a piece. Monday, the stock opened at $20.66, and analysts rate it as a strong buy.
Some analysts caution, however, that SI's dependency on government contracts could hinder growth. A review by investment banking group Stephens Inc., which holds a stake in the company, said, "Government IT budget cutbacks, though unlikely, could have a significant negative impact on defense IT companies."
"The defense IT services market is very competitive," the analysis continued. "The competition could escalate if new entrants are attracted by the industry's promising growth prospects, which is especially likely in light of the current depressed commercial market."