Sylvest adapts its business to new procurement reality

Sylvest Management Systems Corp. is repositioning itself to take advantage of - and not be stranded by - the federal government's rapidly changing procurement practices and has added personnel in such high-growth areas as the Internet to help smooth its transition.

Sylvest, which specializes in providing Unix-oriented solutions, is already one of the most successful 8(a) firms in the federal market, with $62 million in federal prime contract activity last year and about $84 million in revenue overall.

In recent months, the company has added about 30 employees to its roster, which now totals 150 people. Sylvest plans to hire an additional 25. The hiring spurt brings new integration expertise in such areas as the Internet, intranets, networking and imaging. The added expertise should help Sylvest weather recent changes in the federal market, including the widespread use of multiple-award, governmentwide contracts and consolidation among the large systems integrators, said Gary S. Murray, president and chief executive officer of Sylvest, Lanham, Md.

"The consolidation at the top of the market [among integrators] is going to trickle down," Murray said. "Some small players have to get bigger, or they will be squeezed into smaller niches."

A reseller for Hewlett-Packard Co. and Sun Microsystems Inc., Sylvest focuses on Unix-oriented solutions, but it also provides networking and other integration services. Last week the company was named a reseller for Cisco Systems Inc.'s networking products.

Earlier this year Sylvest picked up its biggest vehicle yet with a $100 million piece of the National Guard Bureau's overhauled Reserve Component Automation System. The company is providing prime contractor Boeing Information Services with PCs and servers from Compaq Computer Corp.

As a rule, however, such vendors as HP and Sun use Sylvest to handle medium-size federal projects that fall below their own thresholds but require the kind of integration services Sylvest can provide.

"Sylvest is an excellent partner to work in that middle area," said Lou Antonucci, manager of reseller development for the Workstation Division at HP. HP does most of its General Services Administration schedule business through Sylvest, according to Antonucci.

But this traditional role has become less of a certainty in recent months, as agencies have come to rely on multiple award, governmentwide contracts to buy products and services. This change has thrust the company into a rough-and-tumble procurement environment, where competition continues even after contract award.

In this environment, even the product buys have a stronger services flavor, Murray said.

"The provinces that used to be just for the service providers and [just for] product providers are getting meshed," Murray said. "We are seeing larger competitors in small [market] spaces and smaller competitors in larger spaces."

This more modular approach to procurement translates into an imperative for change, said John Leahy, group manager for government affairs at Sun Microsystems Federal, Vienna, Va. "You want to be positioned for that stuff, or you will be pushed out by the larger integrators," Leahy said.

Service Expansion

Murray said he believes the company is well-positioned to ride out these changes in the market. Already Sylvest has expanded its business among civilian agencies, which now account for about half of its revenue. It has already seen a couple of major wins with strong services components.

For example, Sylvest recently developed a system for the Justice Department for analyzing voting districts. This system, based on commercial off-the-shelf technology, involves overlaying geographic information system software with census information from the Commerce Department.

Just this month, the company won a $13.4 million contract to maintain the Navy's automated payroll operations, providing hardware and software support, from installation through maintenance and trouble-shooting.

Additionally, the commercial market - which includes state and local governments - makes up about 20 percent of Sylvest's revenue, up from less than 10 percent several years ago. In fact, much of the company's work in the Internet, intranets, networking and imaging comes from the commercial space.

Murray expects Sylvest's growing commercial business to feed back into the federal market.

"We see ourselves selling solutions that are replicable across our customer bases," he said. At the moment, the company "is somewhat constrained by the ability to get people fast enough," he added.

However, in the long run, Murray believes the diversity will make Sylvest a stronger vendor in the federal market. "We see ourselves growing into a more significant federal player," he said.


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