Apogen reaches a turning point

Co-founder heads for new challenges, as company plans for growth

Apogen Technologies — a company with a name that is partly based on the word "apogee," the highest point of an arc — is approaching its second birthday with significant success behind it and what its founders believe is a bright future ahead.

One of those founders won't stay for the ride, however. Todd Stottlemyer, chief executive officer, is leaving early next year to become president and CEO of the National Federation of Independent Business. Paul Leslie, Apogen's president and co-founder, will step into the CEO role.

Leslie said he plans to keep the company on its present course.

"Our plan is not to change our overall strategy at all," he said. "Our growth strategy has been based on continuing to grow our business organically, as well as looking for acquisitions that will allow us to gain entry into new customers or allow us to broaden our capabilities or bring new capabilities that we may not have strength in today."

The company was formed in January 2004 through the merger of ITS Services of Springfield, Va., and Science and Engineering Associates, based in New Orleans. At the time, Stottlemyer was CEO of ITS and Leslie was its president and chief operating officer. The other firm's CEO, Bobby Savoie, became vice chairman but later left the company.

The new company adopted the name Apogen in June 2004 and began developing new business. In August 2005, it became a wholly owned subsidiary of QinetiQ North America, the American arm of British defense contractor QinetiQ.

Apogen joined Westar Aerospace and Defense Group and Foster-Miller, an engineering and technology development company based in suburban Boston, as part of QinetiQ's stable.

Leslie said that Apogen has become a competitive player in the federal information technology services market. For example, ITS held a place on the Internal Revenue Service's Treasury Information Processing Support Services-2 contract as a small business. This year, Apogen competed successfully as a large business for a spot on the contract's successor, TIPSS-3.

"We brought two small companies together and suddenly we're competing against the big players," he said. "What was important to us was to put in place some processes to allow us to run the business in a standardized way. It's just part of the process for a growing company."

"Anytime a smaller company can compete and win under full and open [competition] is impressive," said Stan Soloway, president of the Professional Services Council. "It demonstrates that their performance levels are high enough that they can play with anyone. For any company, that's a significant accomplishment. It's a critical milestone."

Apogen has won and held onto business from the Homeland Security Department and plans to bid on four of the five categories in the agency's upcoming Enterprise Acquisition Gateway for Leading Edge (EAGLE) solutions contract, Leslie said.

But a priority for the next few months will be fitting into the QinetiQ family, he said.

"Right now we're still very much a stand-alone entity," Leslie said. "I think the opportunity there will be as we move forward and get a better understanding of some of the other companies that QinetiQ North America has acquired and look for opportunities to bid for even larger proposals as partners."

Apogen will continue exploring new business opportunities, but many of them could be within agencies where the company has already established a beachhead, he said.

The EAGLE contract would allow Apogen to expand within DHS, already the company's biggest single customer, and TIPSS-3 opens new possibilities within the Treasury Department.

In addition, the Commerce Department, the Navy and the National Oceanic and Atmospheric Administration are attractive prospects, he said.

At agencies where the company does not already have a presence, acquisition and teaming arrangements can help open the door, he added.

Apogen has about 900 employees and is looking to fill 150 openings. Leslie said he would like to end the year with about 1,000 people on the payroll.

Stottlemyer said he believes he is leaving the company in good hands and is looking forward to the challenge at the National Federation of Independent Business, an advocacy group for small businesses.

"There's a great team of leaders and employees that have been responsible for Apogen's growth," he said. "The Apogen team — not Todd, or Paul, or Todd and Paul — has done a terrific job of growing the company. Anything that's happened is a testament to the team."

Soloway said Apogen's accomplishments are noteworthy. "By almost any measure, it's a success story," he said. "Paul was there at the beginning."

Leslie, Stottlemyer and Phil Odeen — who is now Apogen's chairman and QinetiQ North America's CEO — were the driving forces behind Apogen, Soloway said.

As the companies grow into the QinetiQ acquisition, they will provide additional resources for the parent company to expand its breadth and scope, Soloway said.

"For a relatively new company and a relatively small company, they now have a global presence," he added.

Katie Hirning, senior vice president of Jefferson Consulting Group, sounded a note of caution. She said that smaller companies find it easy to focus on a narrow niche, but as those companies grow, they must not let ambition run ahead of capability.

"As you grow and as your revenues get bigger and your desire for larger proposals and wins takes place, you have to start selling a broader solution," she said. "If you grow too big too fast, you are all over the map."


**********

One big family

When British defense contractor QinetiQ bought Apogen Technologies, it expanded an already big family of holdings.

QinetiQ had acquired St. Louis-based Westar Aerospace and Defense Group and the engineering and technology development company Foster-Miller based near Boston.

Foster-Miller in turn acquired Planning Systems, a technology company that performs systems engineering work for the federal government.

"When you combine the four entities, you have a technology research and development organization that's very, very strong," said Paul Leslie, president of Apogen (left). "You have systems engineering, and then you have [information technology] support and solutions in Apogen."

Apogen is working to create a proxy board of directors that will allow the companies to work together without QinetiQ's foreign ownership limiting their potential to do business with U.S. agencies, he said. The Defense Security Service must approve such proxy arrangements.

— Michael Hardy

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