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Volume 4, Issue 2 June 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
 
The Federal M&A Market: Covered in Teflon - Does the federal sector M&A have enough Teflon to protect it from the stock market upset and the rising cost of capital?
CEO Interview - Cliff Cooke, Chairman and CEO, SYS Technologies, Inc.
The Federal Deal - An introspective look at L-3 Communications after Frank Lanza
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 30 5 7 42
YTD 2006 28 9 4 41

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 June 12 of 2005 and 2006.

For the list of M&A transactions closed in the sector since January 1, 2005, email paulserotkin@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.


The Federal M&A Market: Covered in Teflon

Does the federal sector M&A have enough Teflon to protect it from the stock market upset and the rising cost of capital?

For the near term, at least, it appears so.

In fact, the federal M&A market continues to remake itself, based on events even since the last edition of the Federal Growth Report.

Witness these:

SPACs Succeed

When two federal market special purpose acquisition corporations (SPACs), otherwise known as blank-check companies, raised considerable sums in initial public offerings (IPOs) in 2005, skepticism arose.

SPACs must have signed a letter of intent to acquire a company within18 months of raising capital, or offer the money back to investors. The initial transaction must be priced no lower than 80% of the then available assets in the SPAC. Operationally, the SPAC must induce company owners to not only sell the company but instantly serve as senior executives in a public firm, as the SPAC shares have been publicly trading since the funds were raised.

Enter the Federal Services Acquisition Corporation (FSAC), which announced May 23, 2006 that had it had entered into an agreement to acquire Advanced Technology Systems, Inc. (ATS), with $105.4 million in revenue in its most recent fiscal year. FSAC is paying 9.04 x adjusted trailing 12 months EBITDA for ATS, a reasonable multiple for this size company with ATS' characteristics.

Though a universe of one, the SPAC vehicle delivered on its core message: mid-tier federal contractors can sell their companies while taking public stock for upside potential and gaining a platform for further growth.

Not to be outdone, Fortress America Acquisition Corporation, a SPAC that raised capital last July, announced June 6 it is acquiring VTC LLC. VTC is doing business as Total Site Solutions and Vortec.

Fortress America was formed to acquire companies addressing homeland security markets. It is paying $38.5 million for the VTC, which had $58.6 million in revenue in its most recent fiscal year.

As we got ready for press, TAC Acquisition Corporation (TAC), another 2005 SPAC, announced June 12 it was acquiring AVIEL Systems, Inc., a provider of IT and program management consulting solutions to the federal government in areas critical to national security, transportation and defense.

According to the terms of the agreement, TAC will acquire by way of merger all of the outstanding capital stock of AVIEL for approximately $60 million, and will assume an estimated $40 million of AVIEL's existing debt, which will be repaid following closing.

AVIEL was formed earlier this year to serve as a holding company for OPTIMUS Corporation and Performance Management Consulting, Inc. (PMC). AVIEL had $76.5 million in pro-forma revenues and approximately $11 million in pro-forma EBITDA.

TAC was formed to acquire an operating business in the following technology-related sectors: software, IT services, media, telecommunications, semiconductor, hardware, internet and technology-enabled services.

Interestingly, all three SPACS were able to execute their anchor transactions within a 9–12 month period from the date of the IPO.

The New M&A Elite

Just three years from its FFRDC status, Alion Sciences and Technology has truly emerged as one of the lead deal makers in the federal sector.

Having transacted 9 deals since then, Alion attained a new level of deal maturity by announcing June 7, 2006 it was acquiring certain assets of Anteon.

The contracts underlying those assets were deemed to be subject to conflict-of-interest under the proposed acquisition of Anteon by General Dynamics. Acquired revenue is understood to be in the $200 million range, accelerating Alion's pace to reach $1 billion in revenue and enhancing its option of floating an IPO if it wishes.

An Emerging Player in the Mid-tier M&A Market

Netco Government Services (Netco), a network communications company that provides enterprise communications services to federal government agencies, announced June 3 it has acquired Multimax, a provider of enterprise information technology services.

The new company, more a merger of relative equals than most deals in the federal sector, will have revenues of over $300 million and more than 1,000 employees.

The newly united companies presently serve as a prime contractor on the U.S. Air Force NETCENTS contract and the largest network engineering and support subcontractor on the U.S. Navy Marine Corps Intranet (NMCI) contract.

While the new firm will undergo a digestion period, at it current size it immediately jumps to the 'A' list in becoming a possible mid-tier acquirer in the federal market

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CEO Interview

One block at a time.

That's the way defense industry veteran Cliff Cooke is building San Diego-based SYS Technologies, Inc. (AMEX:SYS), with a revenue run rate of $60 million. That reflects nearly 6x growth since he assumed the CEO role in 2001.

Joining SYS from his position as an entrepreneur and former Executive Vice President of Titan Systems, Cooke found SYS with $8M in revenue and an undefined strategy.

Following a period of organic growth, SYS in 2004 embarked on an aggressive program of acquiring small, complementary businesses. Now, with seven transactions in the last 26 months, it sits as one of the most active acquirers in the defense sector. SYS reported $49.7 million in 2005 revenue.

The company's strategy is focused on three markets — Military C4ISR, public safety and security and industrial markets.

Having seen M&A as both buyer and seller (he started and sold two companies, including VisiCom to Titan), Cliff's observations hold particular merit.

Paul Serotkin, President of Minuteman Ventures LLC, spoke recently with Cooke.

For the full interview, click here.

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The Federal Deal

FGR offers analysis of M&A transactions involving government services contractors. The analysis is written by Stuart McCutchan, president and CEO of InfoBase Publishers, Inc. © and editor of the Defense Mergers & Acquisitions, a premier source for information on defense/aerospace M&A. Opinions expressed below are those of InfoBase. All rights reserved. For more on InfoBase Publishers' services, contact Bill Burton (410-820-6821, wkburton@infobasepub.com ).


The King is Dead… Long Live the King?

The recent passing of Frank Lanza, the most prolific and most successful dealmaker ever covered by this service, came as a shock to the industry — and, perhaps, to the company itself. It seems clear that Mr. Lanza took steps to disguise the fact that he had cancer, and that the company's early actions indicate the absence of a serious succession plan. L-3 Communications, is, for the moment, a ship left rudderless in a sea of change.

Any analysis of the company's options must necessarily begin with a look at the outsized strengths and weaknesses of its founder. Frank Lanza was of course a man with an unmatched flair for acquiring companies in mulitudinous niches, and making them run profitably. The rap on Mr. Lanza was that his greatest skill was in squeezing the companies he acquired for cash — and that he had much less interest in assembling a company which made operational sense. The whole didn't need to be worth more than the sum of its parts, so long as the parts were each worth more under Mr. Lanza's leadership.

It was a reputation which was largely deserved early in Mr. Lanza's career. The old Loral Corp. was less a company than 40-plus profit centers operating in close formation. Small wonder that Lockheed Martin, when it acquired the company, soon moved to shed 10 of the divisions which didn't fit. Mr. Lanza's decision to put himself at the head of that castoff assemblage of dissimilar businesses was a gutsy move, but also a shrewd one. From the beginning L-3 was a company strategically positioned to expand in the growing vacuum left by consolidation of the industry's primes.

Because the need for a merchant mezzanine supplier was everywhere apparent, the expansion of L-3 Communications had a diverse aspect to it. The company made dozens of "one-off" acquisitions in areas as diverse as air traffic control systems, vehicle modifications, and medical electronics. But the bulk of its acquisitions came in groups, building market presences in areas such as training and simulation, aircraft modification and upgrades, homeland security, naval systems, and electro-optics and infrared systems (the last was a specialization harking back to the roots of the old Loral Corp., which got its start as an electronic warfare specialist).

It was through these deals that L-3 built the rebuttal to its critics. This was a company which was about something more than picking up corporate castoffs and acquiring firms from their retiring founders. You don't get to be half again larger than the old Loral Corp. by indiscriminate buying — at least not if you want to build a long-term success story. No, you stake out targeted areas with strategic buys, and then you fill in gaps with tactical acquisitions. And that is exactly what L-3 Communications did under Mr. Lanza.

And then, perhaps with the premonition that time was running short, Mr. Lanza began raising the profile of his senior management team with Wall Street, and imposed some order on the company's sprawling "Specialized Products Group". The rapid-fire string of management appointments speaks for itself:

— May 2006: Craig P. Coy named head of L-3's new Homeland Security Group

— May 2006: Mark D. Simon named head of the Power and Control Systems Group.

— May 2006: Lt. Gen. Paul Cerjan (Ret.) named head of L-3 Government Services, Inc.

— Jan. 2006: Dr. William Johnson promoted to head Advanced Systems division.

— Dec. 2005: Arthur A. Morrish, Ph.D., named head of L-3's Products Group

— Nov. 2005: James D. Benham is named to the newly created position of president of the Electron, Microwave and Power Devices Group within the corporation's Products Group.

— Sept. 2005: Robert McGill named president of L-3 Displays Group (a new group within the Products Group)

— Aug. 2005: A. Anton Frederickson named head of newly created Titan Group, which consists of several strategic components of the company's recently acquired L-3 Titan subsidiary.

In all, L-3 now has eleven COOs — an unusual circumstance, and ample tribute to both the diversity of L-3 and the desire by its management for the whole to exceed the value of the sum of its parts.

Where Do We Go From Here?

L-3 Communications will top $10 billion in revenues this year — and in typical L-3 fashion, it will overshoot that mark by a full two billion dollars. For just about any other company, hitting $12 billion in revenues would be enough to forestall any talk about a sale of the company on its leader's death. But then, L-3 isn't just any other company. Frank Lanza wasn't just its chief, but its founder (and how many founders lead their firms above the $10 billion threshold?). Organizing efforts notwithstanding, the House that Lanza Built covers a lot of waterfront at a time when Wall Street prefers companies with simpler stories. While he lived, Mr. Lanza was the story. His ability to get the job done could be taken to the bank, even when he departed from his classic acquisitions formulas (becoming willing to pay more for companies he wanted, for instance).

With the decision to appoint chief financial officer Michael Strianese to the post of interim CEO the company has done the right thing — put an experienced hand at the helm, with the assurance to Wall Street that the company will remain on a stable financial footing. Mr. Strianese, in turn, points out that the company's operational picture remains in the hands of its eleven COOs.

So the company has bought some time, even if a whiff of less-than-full-disclosure hangs over it. Mr. Lanza said his surgery was for an acid reflux condition. But the hospital where he died says he had esophageal cancer. According to published reports, his health had been deteriorating for months. What did the board know about Mr. Lanza's health, and when did it know it?

And what are we to make of comments made to the Wall Street Journal by L-3 co-founder Robert LaPenta? Mr. Lapenta says that he expects an outsider to be named to Mr. Lanza's post, but in the next breath acknowledges that "it's an unwieldy structure for an individual not indoctrinated in the L-3 culture." Hardly a hearty slap on the back for the three-person executive search committee charged with hiring a replacement for Mr. Lanza. And definitely a red flag for any person considering the post.

L-3's opaque inner workings aside, we don't see the company as being quite at the end of the road yet. The company's organizational structure, while not as flat as it used to be, will certainly need some tweaking to accommodate the absence of Mr. Lanza. But its acquisitions-driven approach to growth, while no longer fashionable among the industry's primes, is still working at the mezzanine level. The company is still superbly positioned to prosper in an industry which is still somewhat top-heavy from overconsolidation. The post plainly calls for an acquisitions guru. The industry can offer plenty of these — and with acquisitions slipping somewhat from favor as the strategic tool of choice, it's hard to imagine any practioner of the deal turning down a posting at L-3 Communications, red flags and all.

Should, however, the company opt for a caretaker CEO, the choice would turn naturally to a sale/breakup scenario for L-3 Communications. The first choice in that regard is BAE Systems — and it's not hard to see why. As we have observed recently, BAE Systems and L-3 Communications are in some respects reverse images of one another. While BAE Systems has been making inroads into the U.S. marketplace, L-3 Communications has been building bridges overseas. The two strategies are, in essence, the same: building structures to facilitate the free flow of technology and exports between the U.S. and the rest of the world. Europe has long excelled in marketing to the emerging economies of Asia, and we're convinced that Lanza's strategic vision sought ways to leverage these connections for L-3.

Would BAE Systems be interested in L-3? We wonder. Buying L-3 would instantly make BAE Systems one of the top five players in the U.S. marketplace. But L-3 has been moving into marketplaces — Canada, Germany, the U.K. — from which BAE Systems has been exiting. And L-3 is heavy with subcontracting and hardware businesses — and once again these are the kinds of businesses which BAE has been selling, not buying. Buying L-3 would move BAE backward toward the days before it decided to make "Systems" a part of both its name and its long-term strategy.

Other potential suitors would have similar problems in digesting L-3. When you've built a company which is sui generis — which bucks the conventional wisdom in its pursuit of acquisitions-driven growth — you're going to have a hard time rounding up enough bidders to make an auction interesting. Lockheed Martin has been focused on niches like IT and vehicles. Northrop Grumman has allowed stock buybacks and dividend payouts to eclipse its M&A program. Boeing hasn't bought a defense business in two years, and it's been three years since Raytheon spent more than $100 million on a defense buy. Which leaves General Dynamics as the last U.S. defense company with an acquisitions program big enough and broad enough to stand forth as a credible buyer of an L-3 Communications.

But when you've got one credible bidder and one fully-valued property, chances of an outright acquisition of L-3 Communications appear remote. A more likely scenario is hinted at by the recent abortive attempts by various combinations of industry players and private equity houses to acquire Computer Sciences Corp. (NYSE: CSC). These efforts have failed in large part because CSC is perceived to be a business of uneven quality — and nobody wanted to be stuck with the company's laggard commercial business.

L-3 Communications, on the other hand, is just the kind of company that PE buyers go for: well managed, with strong, predictable cash flow. Were one or more PE houses to acquire L-3 in combination with an industry player, the former would provide the latter with the time and financial breathing room needed to engage in a deliberate sell-off of assets which it didn't want to keep. Such a piece-by-piece sell-off would interest active buyers as diverse as Rockwell Collins, United Technoloogies, DRS Technologies, Eaton, Parker Hannifin, Curtiss-Wright, and many others. Under such a scenario, with such a list of potential buyers, an old-fashioned buying frenzy is not outside the realm of possibility.

Copyright 2006, InfoBase Publishers, Inc. All Rights Reserved.

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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.


U.S. DoD Taps Aptima for Innovative Research

The Department of Defense, including the U.S. Army and the U.S. Air Force Research Laboratory (AFRL) (Rome, NY), awarded Aptima, Inc. (Woburn, MA) five Small Business Innovation Research (SBIR) Phase II awards worth an approximate value of $3.74 million.

The five contracts include:

— The Department of Defense awarded Aptima a contract of undisclosed value and duratioan for Simulation of Cultural Identities for Prediction of Reactions — 'SCIPR' is a simulation tool to predict the reactions of culturally diverse groups, such as insurgents, political factions, or civilian populations, to U.S.-based events or adversarial actions. By modeling responses and behaviors to 'what-if' scenarios such as reconstruction or military intervention, SCIPR helps to gauge the effects of alternative courses of action on the identities and belief systems of friends, foes, and ambivalent groups.

— The Department of Defense awarded Aptima a contract of undisclosed value and duration for the Ersatz Brain Project — A computing architecture based on human neurology, to enable future software applications such as natural language understanding, concept-based internet search, natural human-computer interfaces, cognitively based data-mining, and image analysis. The architecture is based on the future use of massive parallel computing employing approximately a million simple CPUs.

— The Department of Defense awarded Aptima a contract of undisclosed value and duration for TRACE-SE — A resource to help engineers better design and incorporate 'cognitive' capabilities into newly designed systems. By improving the fit between humans and technology, rather than attempting to 'train away' problems downline, TRACE-SE will help create battle systems that better support the warfighter's ability to understand, react, and make fast-paced combat decisions.

— The Department of Defense awarded Aptima a contract of undisclosed value and duration for WorkRITE — This research supports the challenge of how to organize the flow of information and the tools used as the military moves to an increasingly network-centric architecture requiring faster response times across distributed environments. WorkRITE will help to ensure that the right people do the right tasks at the right time in changing, real-time workflow collaboration environments.

— The Department of Defense awarded Aptima a contract of undisclosed value and duration for PERFORM — A predictive tool that helps determine the relationship between simulator design and training effectiveness. It will aid training designers in determining what knowledge and skills can effectively be trained within simulators of varying levels of fidelity, such as modifying the degree of realism and feedback from the simulation technology.

Aptima CEO, John Shaw, offered, "The 100% win rate on five Phase II awards is a validation of Aptima's unique human-centered approach to solving the complex problems faced by the military today. We have enjoyed a very strong relationship with AFRL over the past 10 years, and look forward to supporting them in these mission-critical areas.


NASA Picks Kay & Associates for DFRC Support Services Contract

The NASA Dryden Flight Research Center (DFRC) (Edwards, CA) awarded Kay & Associates, Inc., Buffalo Grove, IL) a five-year, $21 million, cost-reimbursement, IDIQ contract to provide aerospace ground equipment support services.

Under the contract, the company will provide maintenance, modification, repair, documentation and operation services for multiple pieces of ground equipment. The equipment includes aerospace and space flight ground support items, automotive and special purpose vehicles. The services include Dryden research programs and general center support.

The contract contains a three-year base and one two-year option that, if exercised, could increase its total cumulative value to $21 million and extend the period of performance through May 2011 (estimate).

The contract was competitively procured through solicitation NND05108039R, which was issued on October 28, 2005, and called for competition limited to small businesses only (NAICS 336413). Proposals were due on February 8, 2006.

The procurement is considered a follow-on effort. The incumbent was Kay & Associates, which performed the work previously under a $12.3 million contract (NAS4-99030) awarded in October 2000.


NAVFAC Inks Eastern GCR LLC JV for Pax River BOS

The U.S. Naval Facilities Engineering Command, Washington (NAVFAC) (Patuxent River, MD) awarded Eastern GCR LLC joint venture (Coasts, NC) a five-year, $42.9 million, firm-fixed price, IDIQ contract (N40080-05-D-3002) for base operating support services at the Patuxent River Naval Air Station (NAS) and its tenants at Webster Field and Solomons Annex.

Under the contract, the company will perform base operating support (BOS) services including grounds maintenance, custodial, transportation maintenance, pest control, street sweeping, and snow removal services. Work will be performed in Patuxent River, MD.

The term of the contract is not to exceed five years with an expected completion date of January 2012. Contract funds will expire at the end of the current fiscal year.

This contract was competitively procured through solicitation N40080-05-R-3002, which limited competition to small businesses only (NAICS 561210). A total of 88 offers were solicited and six were received.

The procurement is considered a follow-on effort. The incumbent was CO-STAR III, which performed the work previously under a four-year, $36.6 million contract (N62477-00-D-0085) awarded in October 2001. CO-STAR III is a joint venture of SEAIR Transport Services (transportation services), S.C. Jones Services (grounds maintenance), and Capitol Hill Building Maintenance (custodial services). Four Winds Services, Inc., was a subcontractor.


NSWC-IHD Inks Dynamic Animation Systems for Support of Training Devices

The U.S. Naval Surface Warfare Center, Indian Head Div. (NSWC-IHD) (Indian Head, MD) awarded Dynamic Animation Systems, Inc. (Fairfax, VA) a five-year, $40.4 million, cost-plus-fixed-fee, IDIQ completion service contract (N00174-06-D-0025) for development, manufacturing, and technical support of training systems and devices.

Under the contract, the company will provide assistance in manufacturing and engineering services to provide requirements analysis, design, development, fabrication, modification, test and evaluation, installation, and program management for virtual interactive training systems, computer-based trainers, in-service systems, training equipment and support equipment. Work will be performed in Fairfax, VA.

The contract contains a one-year base (worth $7.6 million) and four one-year options that, if exercised, could increase its total cumulative value to $40.4 million and extend the period of performance through May 2011. Contract funds will not expire at the end of the current fiscal year.

The contract was competitively procured through solicitation N00174-06-R-0001, which was issued on November 3, 2005, and called for competition limited to 8(a) businesses only (NAICS 541330; $23 million). Proposals were due on December 5, 2005. A total of 17 offers were solicited, but only one was received.

The procurement is considered a follow-on effort. The incumbent was Dynamic Animation Systems, which performed the work previously under a $5 million contract (N00174-03-D-0007) awarded in November 2002.


MSC Chooses IAE Solutions for IT Support

The U.S. Navy Military Sealift Command (MSC) (Washington, DC) awarded IAE Solutions LLC (Reston, VA) a four-year, $134.7 million, firm-fixed-price, IDIQ contract (N00033-06-D-6508) to provide Information Technology Technical Support Services for MSC's Command Control, Communications and Computer Systems (C4S) Directorate (Code N6).

Under the contract, the company will perform IT services related to MSC's Financial Management System (FMS), Human Resource Management System (HRMS), Automated Information System, and Enterprise Data Warehouse. This technology support will be provided at three shoreside locations on the east coast and will affect ship and shore units for MSC operations worldwide. Work will be performed in Reston, VA (50%); Washington, DC (25%); and Norfolk, VA (25%).

The contract contains a one-year base (worth $31.5 million) and three one-year options that, if exercised, could increase its total cumulative value to $134.7 million and extend the period of performance through June 2010. A minimum quantity of $2 million for the entire contract period will be obligated at the time of contract award. Additional funding will be added to the contract upon the issuance of task orders. Contract funds will not expire at the end of the current fiscal year.

The contract was competitively procured through solicitation N00033-05-R-6508, which was issued on November 3, 2005, and called for competition limited to small businesses only (NAICS 541513). Proposals were due on December 9, 2005. A total of 100 offers were solicited, but only two were received.

The procurement is considered a follow-on to several previous IT support efforts. The incumbents were:

— IAE Solutions (N00033-05-P-6018).

— CACI, Inc. — Federal (Arlington, VA) (orders #509 and #5080 on Millenia-Lite contract (GS07T00BGD0058).

— WFI Government Services, Inc. (WGS) (San Diego, CA) (order #T0103BK2063 on GSA Schedule GS-35F-0209J).

— Seaworthy Systems, Inc. (Centerbrook, CT) and WGS (Task Order #1035 on contract N00033-03-D-8003).


NSWCDD Taps Trident Systems for Engineering Software Support

The U.S. Naval Surface Warfare Center, Dahlgren Div. (NSWCDD) (Dahlgren, VA) awarded Trident Systems, Inc. (Fairfax, VA) a $9.6 million cost-plus-fixed-fee, IDIQ contract (N00178-06-D-3023) to evolve and apply an Enterprise Collaborative Engineering Environment (ECEE) for open architecture software.

Under the contract, which is a Phase III Small Business Innovative Research (SBIR) effort, the company will implement an ECEE that provides for the integration, interaction, and configuration management of engineering and management tools and data sets used in the DoD system acquisitions. The development of an ECEE will enable the collaboration and sharing of engineering information within a tool-neutral environment.

Work will be performed in Fairfax, VA. The work is expected to be completed by May 2011. Contract funds will not expire at the end of the current fiscal year. This contract was not competitively procured. It was awarded on a sole-source basis. The procurement is a follow-on to Phase I SBIR and Phase II SBIR contracts performed previously by Trident Systems.


DDC Taps ODIN to Install RFID Equipment at DOD Distribution Centers

The U.S. Defense Distribution Center (New Cumberland, PA) awarded ODIN Technologies (Dulles, VA) a three-year, $14.6 million, IDIQ contract to install passive radio frequency identification (RFID) equipment throughout DDC's global distribution network.

Under the contract, the company will purchase and install passive RFID tag readers and other supporting equipment, as well as printers able to produce labels with embedded passive RFID tags. ODIN Technologies will begin assessing DDC sites for the installation of passive RFID equipment immediately.

The DOD policy for the use of passive RFID tags within the military supply chain requires that distribution centers be able to read the data on incoming passive RFID tags as manufacturers begin tagging their products in compliance with DOD acquisition regulations. Each passive tag carries a small amount of data that acts as a "license plate" to uniquely identify the contents of the container to which it is attached, providing opportunities for improved asset control. As each tag passes through the readers in the distribution centers, the tag's data is uploaded to DDC's distribution and warehousing system.

DDC expects to have passive RFID capabilities at all 26 sites worldwide by the end of 2007, with the 19 distribution centers within the continental United States outfitted by the end of September.

The contract contains a 12-month base period (worth $7 million) and two one-year options that, if exercised, could increase its total cumulative value to $14.6 million and extend the period of performance through May 2009.


Navy FISC Taps Epsilon for Naval Berthing Barge Repair and Upgrades

The U.S. Navy Fleet Industrial Supply Center (FISC) (San Diego, CA) awarded Epsilon Systems Solutions, Inc. (San Diego, CA) a four-year, $22.9 million, firm-fixed-price contract (N00244-06-C-0024) to repair and upgrade naval berthing barges.

Work will be performed in San Diego, CA (60%); Pearl Harbor, Hawaii (15%), Puget Sound, Bremerton, Wash. (10%); Sasebo, Japan (5%); Yokosuka, Japan (5%); and Guam (5%).

The contract contains a one-year base (worth $5.7 million) and three one-year options that, if exercised, could increase its total cumulative value to $22.9 million and extend the period of performance through May 2010.

Contract funds will expire at the end of the current fiscal year.

The contract was competitively procured through a solicitation that limited competition to 8(a) companies only. A total of seven offers were received.


NSWCDD Taps Lakota for Development of Software

The U.S. Naval Surface Warfare Center, Dahlgren Div. (NSWCDD) (Dahlgren, VA) awarded Lakota Technical Solutions, Inc. (Laurel, MD) a $10 million, cost-plus-fixed-fee, term and completion, IDIQ, phase III small business innovative research (SBIR) contract (N00178-06-D-3004) for development of open architecture-compliant combat system functionality software.

Under the contract, the company will further the development of the sneak circuit identification process, a methodology that can be applied during system development, to ensure product will be free of sneak circuits.

Work will be performed in Laurel, MD, and is expected to be completed by April 2011. Contract funds will not expire at the end of the current fiscal year.

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


USAF ASC Chooses 10 Small Businesses for $850M CAPS Program

The U.S. Air Force Aeronautical Systems Center (ASC) (Wright-Patterson AFB, OH) awarded 10 parallel, six-year, firm-fixed-price, time-and-materials, cost-reimbursement, IDIQ contracts, worth $850 million collectively, for Consolidated Acquisition of Professional Services (CAPS).

The recipients were:

— Business Technologies & Solutions, Inc. (BTAS) (Beavercreek, OH) (FA8622-06-D-8500).

— Centech Group, Inc., The (Silver Spring, MD) (FA8622-06-D-8501).

— HMR Tech/HJ Ford, Small Business Administration Joint Venture, LLC (Arlington, VA) (FA8622-06-D-8502).

— Innovative Logistics Techniques, Inc. (INNOLOG) (McLean, VA) (FA8622-06-D-8503).

— Innovative Technologies Corp. (ITC) (Dayton, OH) (FA8622-06-D-8504).

— LOGTEC, Inc. (Fairborn, OH) (FA8622-06-D-8505).

— Madison Research Corp. (Huntsville, AL) (FA8622-06-D-8506).

— PESystems, Inc. (Fairfax, VA) (FA8622-06-D-8507).

— Sumaria Systems, Inc. (Danvers, MA) (FA8622-06-D-8508).

— TYBRIN Corp. (Ft. Walton Beach, FL) (FA8622-06-D-8509).

Under the multiple-award program, these companies now will compete for task orders to provide advisory and assistance services (A&AS) for customers at Wright-Patterson Air Force Base, OH. Each contract provides for the following range of technical/management support at Wright-Patterson Air Force Base, OH: acquisition logistics, financial management, cost estimating, schedule analysis, earned value management, contracting support, engineering, manufacturing, configuration/data management, administrative support, security management, acquisition management, test and evaluation, government furnished property management, and litigation support required in the capabilities planning/pre-acquisition, acquisition, development, production and sustainment of various equipment and weapon systems.

The work will be complete April 2012. The Air Force can issue delivery orders totaling up to the maximum amount indicated above, although the actual requirement may be less. At this time, $50,000 has been obligated.

The contract was competitively procured through solicitation FA8622-05-R-8500, which was issued on May 20, 2005, and called for multiple awards through competition limited to small businesses only (NAICS 541710; 1,500 employees). Proposals were due on July 5, 2005.


WHS Chooses Three Firms for Security Services at the Pentagon

The Acquisition and Procurement Office (A&PO) of the Washington Headquarters Services (WHS) (Arlington, VA) awarded three parallel, five-year, firm-fixed-price contracts, worth $101.2 million collectively, for security services.

The recipients were:

— DTM Corp. (Silver Spring, MD), which was awarded a $48.5 million contract (HQ0034-06-C-1002) for locations 1-3.

— Ares Group, Inc., which was awarded a $23.9 million contract (HQ0034-06-C-1014) for location 3.

— Frontier Systems Integrators, LLC, which was awarded a $28.8 million contract (HQ0034-06-C-1015) for location 5.

Under the multiple-award program, these companies will support the Pentagon Force Protection Agency (PFPA) by providing security services for the Pentagon Reservation and other DoD buildings and facilities under PFPAs purview in and around the National Capital Region (NCR). Some of the tasks associated with these contracts include: preventing unauthorized access to facilities; maintaining order in assigned buildings; deterring, recording and reporting criminal activity in and around all assigned DoD/WHS controlled facilities; access control (ID check); foot/area patrols; building and grounds security; and safeguarding classified Government information and materials located at DoD/WHS owned, leased, or controlled facilities throughout the Pentagon Reservation and the NCR. This requirement includes the services of both armed and unarmed security officers.

Work is expected to be completed by April 30, 2011. Contract funds will not expire at the end of the current fiscal year.

The contracts were competitively procured through solicitation HQ0034-06-R-1005 issued on December 21, 2005, which called for competition limited to small businesses only (NAICS 561612). Proposals were due on January 13, 2006. A total of 16 offers were received.

NOTE: In March 2006, Allied Protection Services, Inc. filed a protest with the U.S. General Accountability Office (GAO) on the grounds that the requirement that offerors have a secret facility clearance prior to the due date for proposals was unduly restrictive. The GAO denied the protest.

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Daily Deals

Closing/
announcement date
Buyer Seller Purchase Price Seller Revenue
June 12, 2006 Lockheed Martin ISX Corporation N/D N/D
June 12, 2006 National Technical Systems B&B Technologies N/D N/D
June 12, 2006 TAC Acquistion Corporation Aviel, Inc. $100m $76.5m
June 12, 2006 Argon ST San Diego Research Center, Inc. $41m N/D
June 8, 2006 EADS North America Dynamic Process Solutions N/D N/D
June 7, 2006 Alion Science and Technology Anteon Corporation (certain assets) N/D 900 employees
June 6, 2006 Fortress America Acquisition Corporation VTC LLC (Total Site Solutions/Vortech LLC) $38.5m $58.6m
June 5, 2006 Altarum Institute Health Systems Research N/D 65 employees
June 1, 2006 Netco Government Services Multimax N/D $120m
May 22, 2006 Alion Science and Technology Micro Analysis N/D N/D
May 1, 2006 Overwatch Systems Visual Learning Systems N/D N/D
April 20, 2006 Federal Services Acquisition Corporation Advanced Technology Systems (ATS), Inc. $85m $107.2m
April 19, 2006 Macquarie Infrastructure Trajen Holdings, Inc. $338.1m N/D
April 19, 2006 Zannett, Inc. DataRoad, Inc. N/D $5m
April 18, 2006 SAIC Geo-spatial Technologies, Inc. N/D 45 employees
April 17, 2006 Kenexa Corp. Knowledge Workers, Inc. N/D $65.6m

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Minuteman Ventures LLC News

Minuteman's Paul Serotkin was quoted in a recent issue of Washington Technology on rumors of a BAE bid to acquire CACI. Click here for the article… Mark your calendars for the annual conferences of the Professional Services Council and the Contractor Services Association, respectively, on Oct. 15–17 in Williamsburg, Va. and Oct. 11–12 in Washington, D.C. Both provide highly useful content and excellent networking opportunities for firms of all sizes providing services to federal customers.

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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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