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Volume 4, Issue 1 April 2006

Welcome to the Federal Growth Report, the newsletter published by Minuteman Ventures LLC, an investment bank that focuses on mergers and acquisitions.

Our newsletter addresses issues of importance to leaders in the federal contracting sector. These people build companies and increase equity value.

Regards,

Paul Serotkin
President
Minuteman Ventures LLC


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in this issue
 
Buyer Diversity Underpins Federal M&A Strength - Q1 Deals back up broad interest
The Private Equity Recapitalization - Arlington Capital's Michael Lustbader reviews this attractive option for many entrepreneurs
CEO Interview - Dr. Bahman Atefi, Chairman and CEO, Alion Science and Technology
Price-to-Win… An Integrated Approach to Offer Development - ifour's Robert E. Lentz, addresses the thorny issue of government bid pricing
The Federal Deal - QinetiQ Subsidiary Apogen Technologies, Inc. Acquires Ocean Systems Engineering Corp. (OSEC)
Contract Central - Highlighted are key recent contracts to federal contractors
Daily Deals - Check out the latest sector M&A deals
Minuteman Ventures LLC News

The Minuteman Federal Deal Meter
  Purchase price  
  Under $50m $50–100m Over $100m Total Deals
YTD 2005 19 5 3 27
YTD 2006 19 5 0 24

The Minuteman Federal Deal Meter covers M&A transactions of services firms principally serving federal agencies. Transactions covered are those announced from January 1 through April 7 of 2005 and 2006.

For the list of M&A transactions closed in the sector since January 1, 2005, email Chuck Chappell, Director of Washington Operations, at charleschappell@minutemanventures.com.


Minuteman Ventures LLC advises company owners on the sale of their businesses, and assists corporate and private equity buyers in strategic acquisitions and divestitures. Our team consists of experienced entrepreneurs and business executives who founded or operated companies and corporate divisions.

We specialize in companies that sell services, products, and solutions to federal government clients. We pride ourselves in being the investment bank for entrepreneurial companies in the federal sector.


Buyer Diversity Underpins Federal M&A Strength

There has been much teeth-gnashing over the disappearance of the federal services mid-tier sector, with its presumed dampening impact on M&A activity.

While true that many viable would-be buyers and sellers have disappeared in recent years via sale, the market remains loaded with acquirers looking to enter the federal sector or grow their existing federal portfolio.

Witness the first three months of 2006. With 23 transactions announced or recorded, 2006 is shaping up similarly in terms of deal flow as 2005.

Most instructive is the diversity of buyers, showing interest in the sector remains strong across various groups. We categorized the 2006 buyers into various sub-groups. Let's review the sub-groups and their respective players:

Large Public Federal Companies, namely L-3 Communications and IAP Worldwide Services, continued to acquire.

Public Federal IT Pure-Plays CACI and SI International remained on the M&A hunt.

Major International Public Companies, QinetiQ and Pearson plc, acquired this quarter, as did Homeland Security Capital Corporation, Celtron International and BVR Systems, all Small Public Companies.

The Federal Private Mid-Tier, represented by Alion Science and Technology, MacAulay Brown, Schafer Corporation and Stanley Associates, continued to step up to the M&A plate. ITS Corporation, a Mid-tier Company Backed by Private Equity, also continued its acquisition shopping.

Commercial Public Company KForce used M&A to gain more federal traction.

Smaller Private Contractors SiloSmashers and BCF Solutions leveraged M&A resources as well, while a MBO created Aveil Systems from Optimus.

With funds still flowing into the federal sector, we expect to see sustained interest in this market from a variety of buyer types, as the early 2006 results suggest.

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The Private Equity Recapitalization

Michael Lustbader, a Principal at Arlington Capital Partners, has been heavily involved in the firm's government services and aerospace/defense investing efforts. Arlington Capital Partners (www.arlingtoncap.com) is a Washington, DC-based private equity fund with over $1 billion of committed capital focused on middle market buyout investment opportunities in growth industries. Over the last three years, Arlington has completed seven transactions in the government sector, including the leveraged recapitalization of Chandler/May, Inc. (CMI) and the successful sales of NLX Corporation to Rockwell Collins and of Apogen Technologies to QinetiQ, Inc.

He writes below on some of the ways private equity buyers can partner with founders to enable them to share in their firm's future success.

Many entrepreneurs wrestle with the decision of when to sell their company. In that decision process, entrepreneurs weigh external factors such as the valuations of competing firms and internal dynamics like how close the corporation is to achieving its growth initiatives. In a total sale of the business, the owner relinquishes the ability to reap the benefits of the company's next phase of expansion. In contrast, partnering with a private equity firm can allow an entrepreneur to monetize a portion of his stake, while retaining a significant economic interest in the business' future growth and success.

A partnership with a private equity firm can take many different forms depending on the objectives of the entrepreneurs. Some entrepreneurs may not have the energy or expertise to take their firms to the next level. Others desire to continue to operate the business, but want to improve the likelihood of successful growth by bringing in outside capital, leadership and contacts, or simply achieve certain estate planning objectives. Fortunately, private equity can structure transactions to satisfy the entrepreneurs' objectives in all of these scenarios. In a leveraged recapitalization transaction, a private equity firm can back existing management or bring in outside executives. In either case, the entrepreneur can take some of his chips off the table, while retaining an equity stake and potentially realizing a larger second payday in a few years.

A few real life examples will demonstrate how private equity can structure transactions by bringing in new managers or by backing the existing management team. The founders of ITS Services, Angela Mason and Ram Prasad, began the Springfield, Virginia-based federal IT services company on a shoestring budget and had given every ounce of their time to assist the business in its growth to a $60 million government contractor. The company had a very strong corporate culture, and was competing head-to-head with the Tier I primes. While Angela and Ram believed that the company's best days were still to come, neither of them wanted to remain active in the business.

By partnering with Arlington Capital, the founders of ITS Services were able to transition the leadership of the company to veteran operating executives with a track record of organic and acquired growth. Ram and Angela received a partial realization upon the initial private equity transaction and retained a meaningful continuing equity position. Within three years, the company, through organic growth and acquisition, had more than tripled in size and saw substantial growth in its business with the Department of Homeland Security. When the company was sold in 2005 to QinetiQ, Ram and Angela received a second payout. Because QinetiQ did not have its own US Federal IT services operations, the management of the former ITS has retained operational control and Ram and Angela's culture endures.

In contrast to Ram and Angela, the objectives were different for Jay Chandler and Jesse May at CMI when they partnered with Arlington. The executives at CMI, who were each in their early 40s, wanted to continue operating their businesses and were looking for the strategic advice, operational discipline and the financial clout that private equity could provide. The company's end-markets were experiencing tremendous growth and a partnership with Arlington offered the requisite resources and capital to better serve existing customers and to grow both on an organic basis and through acquisitions. While valuations were strong in CMI's unmanned aerial vehicle (UAV) marketplace, the company's growth trajectory was still steep indicating significant future value in the business. As a result, founding management did not desire a complete sale. Instead, they sought a leveraged recap that enabled them to have a partial realization, while retaining significant ownership in their firm. While Arlington will assist the company through its position on the Board, day-to-day management remains in the hands of the founders. Jay Chandler and Jesse May continue to grow CMI and look to sell their remaining stake once the company has executed on its strategic growth plan.

As these examples demonstrate, there are numerous benefits in partnering with a private equity firm in comparison to trying to grow on your own or selling entirely to a strategic acquirer. Partnering with a private equity firm preserves the corporate culture that the entrepreneur founder has created over the years. Private equity will often turbo charge the growth of the company by providing (often for the first time) access to capital to pursue acquisition-based growth. A strong private equity firm will often build a strong Board of Directors to assist the company in accessing new customers and partners, source new acquisition opportunities, provide capital markets advice, possess strong relationships with lending institutions, demonstrate financial acumen and creative structuring, and even provide corporate governance and integration advice. The leverage utilized to structure these transactions enables both the private equity firm and the entrepreneurs to enhance their equity returns as the company uses free cash flow to pay down the acquisition debt.

In selecting the right partner (whether it is a financial sponsor or a corporate buyer), entrepreneurs should treat the decision with the proper amount of attention. Executives wouldn't consider hiring a new employee without conducting reference calls, and yet in many sales entrepreneurs don't conduct the reverse due diligence to know what it will be like for them and their employees under new ownership.

Entrepreneurs should determine their financial and operational objectives, understand those of their merger/acquisition partner, and work jointly to achieve the economic and non-economic rewards.

Mr. Lustbader, based in Washington, DC, can be reached at 202-337-7500 and mlustbader@arlingtoncap.com . This is a copyrighted article written by Mr. Lustbader.

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CEO Interview

Dr. Bahman Atefi, Chairman and CEO, Alion Science and Technology

You could call Dr. Bahman Atefi the quiet giant in the Defense M&A services world.

Chairman and CEO of Virginia-based Alion Science and Technology, Inc. ("Alion"), he shepherded the company's formation in December 2002. At that time some 1600 employees of the Illinois Institute of Technology Research Institute (IITRI), founded in 1936, purchased substantial assets of IITRI, creating a 100% ESOP company known as Alion.

Leveraging the IITRI heritage of technology excellence, Alion grew to $370 million in FY 2005, with substantial growth projected for this year. Almost 90% of its revenue is derived from DoD clients. The term "Alion" speaks to the operational identity of the firm — combining 'alliance' and 'align.'

Acquisition has played a key role in Alion's growth. In just over three years, the firm has acquired eight companies, most notably $100 million John J. McMullen Associates, Inc. (JJMA) in April 2005.

Paul Serotkin, President of Minuteman Ventures LLC, spoke recently with Dr. Atefi on Alion's strategy and growth plans.

DM&A: Alion lists many "products'" on its web site, yet goes to market as a 'services' firm. How does that reconcile?

BA: We have an extremely technology-centric culture, which translates to great innovation. Indeed, we primarily sell our capabilities as a service, yet place tremendous focus on true R&D, a major differentiator for our firm and a prime reason for our rapid growth.

By example, each of our seven core competency areas maintains its own laboratory facilities, over 175,000 square feet of R&D space in total.

Our model typically entails investing several hundred thousand dollars of our capital into something cutting edge, then exposing our customers to this proof of concept or prototype.

From that operating style has emerged 25–30 software and hardware products. We use these products as door openers to get development work, then procurement dollars from our customers.

For the full interview, click here.

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Price-to-Win… An Integrated Approach to Offer Development

by Robert E. Lentz, President, ifour LLC

One of the bidding processes/tools that has become increasingly prevalent as competitors seek to improve their chances of winning critical bids is "price-to-win" analysis. Setting the price point plays a critical role in the successful pursuit of a government contract, but doing this well in an increasingly competitive market requires a more sophisticated, broader and integrated approach to price-to-win (PTW).

PTW Too Disconnected From Capture to Achieve Optimal Results

A typical PTW approach engages an analyst who acquires (or already has) relevant rate data and some understanding of similar procurements and their outcome. This individual, either alone or with some financial or pricing professionals, goes off and using some "proprietary" (largely unknown and undocumented) process comes up with a number or set of numbers as the price target. Done in this manner, PTW often:

  • lacks a strong connection with the competitive intelligence resident in the capture team
  • is not iterated on over time as that intelligence or the targeted offering evolve
  • does not provide a range of target prices linked to different potential offerings that could potentially provide "best value" to the customer

A fully integrated approach that marries PTW with broader offer development is much better able to craft a "best value" solution for the customer by forcing more discipline around the broader question of "what will it take to win?", thereby enabling optimization across all dimensions of the offering.

Optimizing Price-to-Win through Integrated Offer Development

Integrated Offer Development is not an alternative to price-to-win analysis; rather it is a broader approach that maximizes the potential of price-to-win by linking it tightly with the ongoing evolution of the offering. The concept and process was created as an attempt to thwart the natural inclination of capture teams to make decisions about teaming, solutions, risk, and cost/schedule as if they were each independent actions and decisions. In doing so, a series of decisions that start as optimal may end up suboptimal because the latter decisions are made in the presence of constraints imposed by the earlier ones. Some decisions, once made, have implications not easily reversed.

The concept ifour developed attempts to "force" the capture team to lay out a series of possible approaches across all dimensions of the offering, rather than the usual approach of addressing them sequentially. This has a number of important benefits: the Capture Team:

  • Is more likely to consider all the feasible solution sets and pick the best.
  • Is more likely to be able to explain and strongly defend (to management and to customers) why they selected this approach over others considered.
  • Will be more likely consider price as an independent variable in its considerations of approach ("design to price") rather than a dependent variable that results from the set of technical and other decisions (including teaming).

Integrated Offer Development is an iterative process that runs through Capture to develop and iterate on an overall offering (including price) to develop an overall approach that has the greatest chances of winning. It flows from some foundational activities designed to understand the customer and the key variables of the offer, through the definition of optional approaches, and ultimately the selection of the strongest approach.

For the complete paper, please click here.

About ifour

Based in Vienna, Virginia, ifour, LLC is a management consulting firm that helps companies identify, pursue and win business in the Federal IT, Homeland Security, DoD, Aerospace and O&M markets through superior market and competitive intelligence, business development support, and strategy consulting.

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The Federal Deal

QinetiQ Subsidiary Apogen Technologies, Inc. to Acquire Ocean Systems Engineering Corp. (OSEC)

Apogen Technologies, one of QinetiQ's (LSE: QQ.L) principal U.S. subsidiaries, signed an agreement to acquire privately held Ocean Systems Engineering Corp. (OSEC).Carlsbad-based Ocean Systems Engineering Corp (OSEC) is a leading provider of research, design, development, and integration of advanced information technology systems to key defence agencies. Founded in 1990, OSEC provides software and engineering services to several U.S. Department of Defense (DoD) customers including the Marine Corps Systems Command, with which it has a 10-year relationship, and the Space and Naval Warfare Center which has been a customer since 1990.

Apogen president and CEO Paul Leslie stated: "OSEC's experience and reputation in mission-focused defence systems represents an area we have been looking to grow into for some time. OSEC's custom software applications, engineering services and hardware products, combined with Apogen's IT integration and management expertise, will create a strong, diversified company capable of competing to enterprise-wide projects."

OSEC CEO Pat Moneymaker stated: "The combination of complementary capabilities and shared corporate values made it obvious that Apogen was the right company to help take our solutions to a broader market. Our team is excited to begin tapping into the resources of Apogen and the wider QinetiQ capabilities to expand our service to our customers."

Terms

On April 4, 2006 Apogen Technologies, Inc., a subsidiary of QinetiQ plc, announced it had agreed to acquire Ocean Systems Engineering Corp. for a cash consideration of $53 million.

The acquisition is expected to close by the end of June 2006, pending U.S. government approvals. OSEC is currently owned by its founder and majority shareholder, managers and staff.

OSEC reported revenues of $48.2 million, EBITDA of $4.8 million and earnings of $2.7 million in calendar year 2005. Upon regulatory approval, OSEC will become a wholly-owned subsidiary of Apogen Technologies.

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Contract Central

FGR presents briefs on selected technology services contracts awarded by the U.S. government to federal contractors during the last two months. The briefs are compiled by InfoBase Publishers, Inc. ©, a leading provider of competitive intelligence for the worldwide defense/aerospace industry. All rights reserved. For more on InfoBase Publishers' services, contact Bill Burton (410-820-6821), wkburton@infobasepub.com or click http://infobasepub.com.


NAWCAD Taps Oregon Iron Works for SeaScout UAV

The U.S. Naval Air Warfare Center-Aircraft Div. (NAWCAD) (Lakehurst, NJ) awarded Oregon Iron Works, Inc. (OIW) (Clackamas, OR) a $25 million, not-to-exceed, IDIQ contract for a Phase III Small Business Innovative Research (SBIR) program contract (N68335-06-D-0005) for Topic N04-044 entitled "Airdroppable High Speed, Low Signature Craft."

Under the contract, the company will provide services and materials for engineering tasks, including research and development (R&D), prototype and testing of the SeaScout unmanned aerial vehicle (UAV).

Work will be performed in Clackamas, OR, and is expected to be completed in April 2011. Contract funds in the amount of $1.7 million will expire at the end of the current fiscal year.

This contract was competitively procured using SBIR Program Solicitation under Topic N04-044. A total of 25 offers were received.


ATK Thiokol Taps Andrews Space for Engineering Services

ATK Thiokol (Corinne, UT) awarded Andrews Space, Inc. (Seattle, WA) a contract of undisclosed value and duration for engineering services.

Under the contract, Andrews Space will provide engineering services to ATK on a variety of Department of Defense (DoD) and NASA programs.

Dave Little, Senior Vice President, Programs, said, "Andrews is pleased about the relationship between ATK and Andrews Space. It is a great opportunity for Andrews to work with a respected Aerospace industry leader on a multitude of programs."

Rick Hoskin, Director of Advanced Launch Systems for ATK Launch Systems, said, "As ATK continues to increase its foundation as a prime system integrator and provider for NASA and the DoD it is imperative that we utilize small, innovative companies such as Andrews that provide unique approaches and ideas."


Navy FISC Taps Isometrics for MTVR Special Purpose Bodies

The U.S. Navy Fleet Industrial Supply Center (FISC) (San Diego, CA) awarded Isometrics, Inc. (Reidsville, NC) a $5.3 million, firm-fixed-price delivery order (0001) under contract (N00244-06-D-0025) for Medium Tactical Vehicle Replacement (MTVR) special purpose bodies, as required by the Naval Facilities Expeditionary Logistics Center, Port Hueneme, CA.

Under the contract, the company will design, fabricate, text, provide logistics support and deliver MTVR Special Purpose Bodies (SPB) and associated equipment.

Work will be performed in Reidsville, NC., and work is expected to be completed by March 2011. Contract funds will not expire at the end of the current fiscal year.

This contract was competitively procured as a small business set-aside through solicitation N00244-05-R-0057 (NAICS 336399). A total of two offers were received.


Navy SPAWAR Names WareOnEarth Communications to Support High-Performance Computing Networks

The U.S. Naval SPAWAR Systems Center Charleston (SSC-C) (Charleston, SC) awarded WareOneEarth Communications, Inc. (North Charleston, SC) a 10-year, $222.6 million, cost-plus- fixed-fee, IDIQ contract (N65236-06-D-8847) to provide high- performance computer security support services to SSC-C.

Under the contract, the company will perform engineering and integration applicable to Information Technology (IT) equipment, support in the development, installation and maintenance of the DoD's High Performance Computing Modernization Networks and the Army's Test and Evaluation Centers, as well as network and security engineering support to other Navy, Civilian and other DoD requirements, and provides technical guidance and performs test, evaluation and validation of Information Systems. Work will be performed in Hampton Roads, VA (60%); Charleston, SC (30%); Arlington, VA (5%); and San Diego, CA (5%).

Subcontractors include:

— Booz Allen Hamilton, Inc. (McLean, VA).

— AT&T Government Solutions (Vienna, VA).

— Centurum, Inc. (McLean, VA).

— Fuentez Systems Concepts, Inc. (FSC) (Charleston, SC).

The contract contains a one-year base (worth $19.2 million) and eight one-year award terms that, if earned, could increase its total cumulative value to $222.6 million and extend the period of performance through April 2016. Contract funds will expire at the end of the current fiscal year.

The contract was competitively procured through solicitation N65236-05-R-0514, which was issued on December 1, 2005, and called for competition limited to small businesses only (NAICS 541330). Proposals were due on January 3, 2006. Only one offer was received.

The procurement is considered a follow-on effort. The incumbent was WareOnEarth Communications, which performed the work previously under a five-year, $50 million contract (N65236-02-D-7838) awarded in May 2002. According to SPAWAR, the size of the job has increased significantly since then.


NAVFAC SWDIV Taps Systems Application & Technology for Program Management of ATFP

The U.S. Naval Facilities Engineering Command, Southwest Div. (NAVFAC SWDIV) (San Diego, CA) awarded Systems Application & Technologies, Inc. (Oxnard, CA) a $50 million, cost-plus- fixed-fee, IDIQ contract (N62473-06-D-3033) for program management and logistics services in support of the Navy's Anti-Terrorism Force Protection Ashore program at naval installations worldwide.

Work will be performed at Naval installations in various worldwide locations, and is expected to be completed March 2007 (March 2011 with options). Contract funds will expire at the end of the current fiscal year.

The contract contains a base period (worth $10 million) and four one-year options that, if exercised, could increase its total cumulative value to $50 million and extend the period of performance through March 2011.

This contract was set aside for small business and competitively procured via the NAVFAC e-solicitation website. A total of seven proposals were received.


Army ACA White Sands Inks Wexford Group to Support Rapid Equipping Force (REF)

The U.S. Army Contracting Agency (ACA) (White Sands, NM) awarded The Wexford Group International (WGI). (Vienna, VA) a five-year, $94.3 million, firm-fixed-price contract (W9124Q -06-C-0123) to provide engineering services and support for the Army Rapid Equipping Force (REF).

Under the contract, which has an estimated level of effort (LOE) of approx. 100 labor-years per year, the company will support REF in the following areas:

in a system-of-systems approach requiring a dedicated sustainment structure to procuring a stand-alone device.

The REF was created in 2002 to help warfighters address urgent needs on the battlefield, augmenting the traditional lines of acquisition. The goal of the REF is to provide the best possible solution to the warfighter, while accepting that the 80% solution — now — is better than the 100% solution later.

To date, the REF has introduced over 87 different types of equipment, providing more than 15,000 items to Operation Enduring Freedom and Operation Iraqi Freedom units. REF solutions include: robots like the PACKBOT and MARCBOT for interrogating caves and suspicious packages for booby traps and improvised explosive devices; personnel and vehicle scanning systems; persistent surveillance systems; digital translators for Soldiers to communicate with locals in their own language; explosive material detectors; and much more. REF adaptive practices are at the forefront of Army modernization and serve as a catalyst and change agent for Army transformation.

Work will be performed at the REF Office at Fort Belvoir, VA (60%), at contractor facilities in Vienna, VA (20%), and at REF Office Forward Operating Bases in Iraq (20%).

WGI's subcontractors are:

— Reger Group (Stafford, VA).

— Ideal Innovations, Inc. (Arlington, VA).

— MTC Technologies, Inc. (MTCT) (Dayton, OH).

— Chenega Federal Systems, LLC (Lorton, VA).

— Philips, Philips & Allen, LLC.

The contract contains a one-year base (worth $17.9 million) and four one-year options that, if exercised, could increase its total cumulative value to $94.3 million and extend the period of performance through March 2011. Contract funds will not expire at the end of the current fiscal year.

The contract was competitively procured through solicitation W9124Q-06-USA-REF-SUPPORT, which was issued on December 20, 2005, and called for competition among service-disabled, veteran-owned small businesses only (NAICS 541330; $23 million). Proposals were due on January 18, 2006. A total of six offers were received.


Army C-E LCMC Awards Seven S3 Contracts

The U.S. Army Communications-Electronics Life Cycle Management Command (C-E LCMC) (Ft. Monmouth, NJ) awarded seven 10-year, IDIQ contracts, worth $19.25 billion collectively, for the Strategic Services Sourcing (S3) program.

The recipients were:

— Viatech, Inc. (Eatontown, NJ) (W15P7T-06-D-E407).

— CACI, Inc. - Federal, Mission Systems Businesss Group (Arlington, VA) ( (W15P7T-06-D-E402).

— USfalcon, Inc., formerly Mill City Connections, Inc. (MCCI) (Lowell, MA) (W15P7T-06-D-E406), which named John Black its S3 program director.

— CSC Federal Sector - Defense Integrated Solutions & Services (DISS) (Falls Church, VA) (W15P7T-06-D-E404).

— Booz Allen Hamilton, Inc. (McLean, VA) (W15P7T-06- D-E401), which is leading a team of more than 40 companies.

— Lockheed Martin Systems Management (LMSM) (Marlton, NJ) (W15P7T-06-D-E405), which is leading a team including fellow Lockheed Martin Information Technology (LMIT) (Seabrook, MD); Lockheed Martin Technical Operations, Inc. (LMTO) (Colorado Springs, CO); Lockheed Martin Integrated Systems & Solutions (IS&S) (Gaithersburg, MD); Lockheed Martin Systems Integration - Owego (LMSI-O) (Owego, NY); and Lockheed Martin Maritime Systems & Sensors (MS2) (Baltimore, MD). LMSM's team also includes the Tobyhanna Army Depot, 25 large business partners such as Accenture USA Government Practice (Reston, VA); Anteon Corp. (Fairfax, VA); CACI; CSC; SI International, Inc. (Reston, VA); and 25 small business partners such as High Performance Technologies, Inc. (Reston, VA); Innovative Management and Technology Services (Fairmont, WV); Knowledge Consulting Group (Reston, VA); Management Systems Designers, Inc. (Fairfax, VA); The Analysis Corp. (McLean, VA); and TKC Technology Solutions LLC (Anchorage, AK).

— Sensor Technologies, Inc. (STI) (Red Bank, NJ) (W15P7T-06-D-E403), which is leading a team of AT&T Government Solutions, Inc. (Vienna, VA); Blackhawk Management Corp. (Houston, TX); Classic Edge Operations Inc.; Cooper Materials Handling, Inc.; Datatek Applications Inc.; David H.. Pollock Consultants Inc.; Dimensions International Inc.; DRS Tactical Systems, Inc. (Palm Bay, FL); Dynetics, Inc. (Huntsville, AL); EG&G Lear Siegler Services, Inc.; Engineering and Professional Services, Inc.; SRA International; Infinite Group Inc.; CACI; Innovative Logistics Techniques, Inc. (INNOLOG) (McLean, VA); isoterix, Inc.; Morgan State Univ.; MTC Technologies, Inc. (MTCT) (Dayton, OH); Northrop Northrop Grumman IT - Defense Group (McLean, VA); Omega Training Group, Inc. (Columbus, GA); Pennoni Associates Inc.; Plexus Installations, Inc., DBA Plexus Com/ Group; Science Applications International Corp. (SAIC) (McLean, VA); Scientific Research Corp. (SRC) (Atlanta, GA); SMH LLC International; Tecolote Research, Inc.; Wexford Group International (WGI) (Vienna, VA); Tobyhanna Army Depot; Unisys U.S. Federal Government Group (McLean, VA); VORTECHX Applied Technologies; Washington Group International; and Westar Aerospace & Defense Group, Inc. (Huntsville, AL).

Under the multiple-award program, these companies now will compete for task orders to provide engineering, logistics, and business operations services to support command, control, communication, computer, intelligence, surveillance and reconnaissance (C4ISR) systems. The task orders provide a range of information technology (IT) services ranging from research and development (R&D) through acquisition, fielding and sustainment of Army C4ISR systems.

Each contract contains a five-year base and one five-year option that, if exercised, could increase its total cumulative value to $19.25 billion and extend the period of performance through March 2011.

The contract was competitively procured through solicitation W15P7T-05-R-E401, which was issued on August 4, 2005, and called for full & open competition. The Army reserved two of the 10 awards for small businesses only, and a third award was set aside for an 8(a) company (NAICS 541330; $23 million). Proposals were due on September 7, 2005. A total of 30 offers were submitted by industry.

One of the most prominent losing bidder was Raytheon Network Centric Systems (NCS) (McKinney, TX), which led of team that featured IBM Business Consulting Services - Public Sector (Bethesda, MD), Boeing IDS - Logistics Support Systems (St. Louis, MO), Blackhawk Management, and JB Management, Inc.


NSWCDD Taps Coalescent Technologies for Engineering Support

The U.S. Naval Surface Warfare Center, Dahlgren Div. (NSWCDD) (Dahlgren, VA) awarded Coalescent Technologies Corp. (Winter Park, FL) a two-year, $39.1 million task order (FG03) on a previously awarded IDIQ contract (N00178-04-D -4141) to support the Army National Guard (ARNG) and other Department of Defense (DoD) services.

Under the task order, the company will provide engineering, research, development, testing, integration, and operational demonstration, and program management support services to assist the ARNG and other DoD services for meeting their modeling and simulation and training needs for the warfighter. Specifically, the contractor shall provide support in the areas of engineering to include systems analysis, design, test and evaluation, technical documentation, integrated logistics support, operational studies and technology demonstrations for instrumentation and simulation technologies.

The task order was competitively procured through solicitation N00024-06-R-3058 issued through NAVSEA's SeaPort Enhanced contracting vehicle that provides engineering, technical and programmatic support for Naval Surface Warfare Center (NSWC) activities. Competition was limited to the SeaPort-e small business contract holders in "Zone 2" only. No information is available on how many of these companies actually submitted a bid for this particular task order.


NSWCDD Taps D3 Technologies for Engineering and Logistics Support

The U.S. Naval Surface Warfare Center, Dahlgren Div. (NSWCDD) (Dahlgren, VA) awarded D3 Technologies, Inc. (San Diego, CA) a fifty-six month, $34.7 million task order (GM01) on a previously awarded IDIQ contract (N00178-05-D-4273) to provide engineering and logistics support to the various teams within the F/A 18 FST.

Under the task order, the company will provide assisstance in meeting requirements for systems and structural engineering, maintenance prototyping, Automated Maintenance Environment (AME) and Product Enterprise Team (PET) projects; performing impartial assessments of business practices, organizational structure, overall efficiency; and conducting strategic sourcing research, process modeling, and total quality management assessments to improve the quality, timeliness, and efficiency of cognizant systems support, products and services.

The contract contains a eight and a half month base and four one-year options that, if exercised, could increase its total cumulative value to $34.7 million and extend the period of performance through October 2010 (estimate).

The task order was competitively procured through solicitation N00024-06-R-3114 issued through NAVSEA's SeaPort Enhanced contracting vehicle that provides engineering, technical and programmatic support for Naval Surface Warfare Center (NSWC) activities. Competition was limited to the SeaPort-e small business contract holders in "Zone 6" only. No information is available on how many of these companies actually submitted a bid for this particular task order.


NAVSEA Taps Progeny Systems for Engineering Services for Technology Infusion on Navy Subs

The U.S. Naval Sea Systems Command (NAVSEA) (Washington, DC) awarded Progeny Systems Corp. (Manassas, VA) a $7.3 million, cost-plus-fixed-fee Small Business Innovative Research (SBIR) Phase III contract (N00024-06-C-6256) for engineering services for technology infusion on submarine platforms.

Under the contract, the company will provide engineering services, to include analyzing, design, fabrication and integration of hardware and/or software solutions for Technology Infusion Methodology for Commercial Off The Shelf (COTS) electronics based sub-systems that collectively provide Command, Control, Communication and Intelligence (C3I) functionality for delivery to U.S. Navy Submarine Platforms.

Work will be performed in Manassas, VA, and is expected to be completed by December 2006. Contract funds in the amount of $2 million will expire at the end of the current fiscal year.

The contract was not competitively procured. It was awarded on a sole-source basis.


USAF 11 CONS Inks Group 7 Associates to Support Large Services Acquisitions

The U.S. Air Force 11th Contracting Squadron (11CONS) (Bolling AFB, DC) awarded Group 7 Associates (Triangle, VA) a five-year, $20 million, firm-fixed-price, IDIQ contract (FA7014 -06-D-0008) for acquisition support services.

Under the contract, the company will support the Air Force Program Executive Office for Combat and Mission Support (AFPEO/CM) (Arlington, VA) by performing acquisition strategy and analysis; performance measurement analysis; training; policy review and analysis; technical analysis; additional field training; and pricing and cost anaylsis.

AFPEO/CM is responsible for managing all services acquisitions throughout the Air Force when the total estimated value exceeds $100 million or pursuant to an OMB Circular A-76 study involving 300 or more full-time equivalent (FTE) positions, or designated as special interest. Currently the office provides oversight on approximately 140 programs valued at $118 billion.

The contract contains a one-year base and four one-year options that, if exercised, could increase its total cumulative value to $20 million and extend the period of performance through February 2011. At this time, $1 million has been obligated.

The contract was competitively procured through solicitation FA7014-06-R-0005, which was issued on December 16, 2005, and called for competition limited to small businesses only (NAICS 541611).


NASA JSC Chooses Enterprise Advisory Services for Facility Operations and Support at White Sands

NASA Johnson Space Center (JSC) (Houston, TX) awarded Enterprise Advisory Services, Inc. (Houston, TX) a five-year, $305.2 million, hybrid, cost-plus-award-fee, fixed-price, and IDIQ contract for facility operations and support of the JSC White Sands Test Facility (WSTF) (Las Cruces, NM).

Under the contract, which begins May 1, 2006, the company will provide non-mission services, including facility construction, environmental services and operations of the White Sands Space Harbor. Enterprise Advisory Services also will support testing at White Sands to verify and improve spaceflight systems, capabilities and materials, and to ensure the safety of human spaceflight.

The contract contains a three-year base (worth $182.6 million) and two one-year options that, if exercised, could increase its total cumulative value to $305.2 million and extend the period of performance through April 2011.

The contract was competitively procured through solicitation NNJ05090307R, which was issued on June 29, 2005, and called for competition limited to small businesses only (NAICS 561210; $30 million). Proposals were due on August 15, 2005.

The procurement is considered a partial follow-on the Test Evaluation and Maintenance (TEAM) contract. The incumbent was Honeywell Technology Solutions, Inc. (HTSI) (Columbia, MD), teamed with L& M Technologies, Inc. (Albuquerque, NM), which performed the work previously under a $324 million contract (NAS9-99100) awarded in March 1999.


NASA Picks ADNET Systems for Sciences and Exploration Data Analysis (SESDA-II)

NASA Goddard Space Flight Center (GSFC) (Greenbelt, MD) awarded ADNET Systems, Inc. (Rockville, MD) a five-year, $220.9 million contract (NNG06EB68C) for Sciences and Exploration Data Analysis (SESDA-II).

Under the contract, the company will provide the development and use of scientific computer systems, engineering data analysis systems, engineering efforts that develop new technologies for scientific instrumentation, software application development and implementation, and computer system management for Science Exploration research at GSFC. The services required under this contract support a range of science disciplines, including solar and space plasma physics, astrophysics and astronomy, planetary studies, atmospheric science and climatology, oceanography, land processes, geodynamics, and solid earth geographics.

The contract was competitively procured through solicitation NNG05101107R, which was issued on July 22, 2005, and called for competition limited to small businesses only (NAICS 541710; 1,000 employees). Proposals were due on September 7, 2005.

The procurement is considered a follow-on effort. The incumbent was Science Systems and Applications, Inc. (SSAI) (Lanham, MD), which performed the work previously under a five-year, $104.5 million contract (NAS5-32350) awarded in September 2000. SSAI's subcontractors included:

— REI Systems, Inc. (Vienna, VA).

— Global Science & Technology, Inc. (Greenbelt, MD).

— Emergent Information Technologies, now part of L-3 Government Services, Inc. (GSI) (Chantilly, VA).


Army TRADOC Picks Six to Supply Distributed Learning Education and Training Products

On behalf of the U.S. Army Training and Doctrine Command (TRADOC), the Army Contracting Agency, Northern Region Contracting Center (ACA NRCC) (Fort Eustis, VA) awarded six parallel, five-year, firm-fixed-price, IDIQ contracts, worth $1.1 billion collectively, for the U.S. Army's Distributed Learning Education and Training Products (DLETP) program.

The recipients were:

— Universal Systems & Technology, Inc. (UNITECH) (Centreville, VA), which was awarded a $320 million contract.

— C2 Technologies, Inc. (Vienna, VA), which was awarded a $346 million contract.

— Intelligent Decision Systems, Inc. (IDSI) (Centreville, VA), which was awarded a $342 million contract.

— Logistic Services International, Inc. (LSI) (Jacksonville, FL), which was awarded a $338 million contract.

— Karta Technologies, Inc. (San Antonio, TX), teamed with 17 subcontractors including "Tier One" partners CACI, Inc. - Federal (Arlington, VA); SRA International, Inc., Defense Sector (Fairfax, VA); and IBM Global Government Industry (Bethesda, MD). Karta was awarded a $247 million contract.

— Planning & Learning Technologies, Inc. (Pal-Tech) (Arlington, VA), teamed with General Physics Federal Systems, Inc. (Fairfax, VA); Hampton Univ. (Hampton, VA); Information Systems Support, Inc. (ISS) (Gaithersburg, MD); L-3 Link Simulation & Training (Arlington, VA); Microsoft Federal Systems (Washington, DC); New Horizons; Pearson VUE; Research Triangle Institute (Research Triangle Park, NC); SphereCom Enterprises; Symantec Corp. (Cupertino, CA); and Virginia Polytechnic Institute and State Univ. (Blacksburg, VA). Pal-Tech was awarded a $219 million contract.

Under the multiple-award program, these companies now will compete for task orders to supply products that use the latest digital technology for developing Interactive Multimedia Instruction (IMI) web-based courseware to play in a standalone mode over the Internet, via CD-ROM, and DVD. The DLETP program is part of the Army's continuous effort to maintain high-quality training for all of its troops.

The contracts were competitively procured through solicitation W911S0-04-R-0010, which was issued on December 4, 2004, and called for competition limited to small businesses only (NAICS 339999; 500 employees). Proposals were due on February 15, 2005.

CACI issued a statement that estimated its subcontract with Karta is worth $25 million over the its five-year life. CACI's statement said it will play a key role in developing coursework, as well as in overseeing coursework developed by other subcontractors to ensure that content and method of delivery meet recognized standards. In addition, the company expects to help create interactive gaming simulations that will serve as a next- generation method of assessing student learning. CACI offers expertise in distributed learning gained from engagements with TRADOC's Reserve Officer Training Corps (ROTC) organizations, the Army National Guard, and other defense and commercial clients.

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Daily Deals

Closing/
announcement date
Buyer Seller Purchase Price Seller Revenue
April 6, 2006 SYS Technologies RBIS, Ltd. $9.5m $8.4m
April 3, 2006 Apogen Technologies Ocean Systems Engineering Corp. $53m $48.2m
March 27, 2006 CACI International AlphaInsight N/D $42m
March 21, 2006 IAP Worldwide Services, Inc. G3 Systems, Ltd. N/D N/D
March 20, 2006 Pearson Government Solutions Blueprint Technologies N/D $6m
March 9, 2006 Homeland Security Capital Corp. Viscom Systems N/D $9m
March 2, 2006 QinetiQ Graphics Research Corp., Ltd. $1.75m 14 employees
March 1, 2006 MacAulay-Brown Gracar Corporation N/D $10m
March 1, 2006 Westar Aerospace and Defense (QinetiQ) SimAuthor N/D N/D
February 28, 2006 BCF Solutions Program Management Associates, Inc. N/D N/D
February 27, 2006 Alion Science and Technology Washington Consulting, Inc. N/D $7m
February 22, 2006 BVR Systems, Ltd. Blue Ridge Simulation $5m N/D

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Minuteman Ventures LLC News

Minuteman Ventures hosted a successful event March 15 in Huntsville titled "Business Growth Strategies for Small and Mid-Size Aerospace, Defense and Technology Companies." Speakers addressed the defense M&A market, M&A deal process, accounting and legal issues helpful to growth and liquidity, business development for federal contractors, and wealth creation management for company owners. Copies of the speaker slides can be obtained by calling 781-750-8065… The National Defense Industrial Association will host its Third Annual National Small Business Conference May 8–10 in Newport, R.I. Titled' 'Meeting DoD/ DHS Mission Needs in the 21st Century,' the event brings together company executives and DoD/government leaders to address current issues and trends. See this site for more. Minuteman President Paul Serotkin sits on the NDIA New England Chapter Board of Directors, the host chapter for the event… Minuteman's Paul Serotkin will speak on "Defense Sector Consolidation: The Use of Merger and Acquisition as a Tool to Grow and Exit" before the Rhode Island Chapter of the National Contract Management Association (NCMA). The luncheon meeting will held May 16 in Newport, RI.

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About Us

Minuteman Ventures LLC advises company owners on the sale of their businesses, and assists corporate and private equity buyers in strategic acquisitions and divestitures. Our team consists of experienced entrepreneurs and business executives who founded or operated companies and corporate divisions.

We specialize in companies that sell services, products, and solutions to federal government clients. We pride ourselves in being the investment bank for entrepreneurial companies in the federal sector.

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