CACI builds on recent successes
- By Margret Johnston
- Aug 22, 1999
CACI International Inc. closed the books on the company's best-ever fourth quarter and fiscal year earlier this summer, counting two large information technology contract recompete wins and other federal business among the reasons for its recent success.
But before the Arlington, Va.-based systems integrator had time to bask in its record-high $441 million annual revenue and record-high $14 million annual profit, company chairman and chief executive officer J.P. London was talking new strategy and announcing changes in personnel. Recent moves include tapping Ken Johnson, a federal market veteran, as head of CACI Inc., which handles government business.
CACI International's successful year and fiscal fourth quarter, which ended June 30, was tied closely to federal contracts. From April to June, the company racked up a record $126 million in revenue, 38 percent more than its fourth quarter revenue in 1998, and a record net income of $4 million, 24 percent more than the profit tallied in fourth quarter 1998.
The $64 million Air Force Technology Task Order Engineering Service (TTOES) contract, the $49 million Navy Readiness-Based Sparing (RBS) services contract and other Defense Department business accounted for 57 percent of the growth in quarterly revenue. Another 29 percent of the growth came from rising civilian agency revenue.
CACI has held the TTOES logistics and engineering systems support contract with Tinker Air Force Base in Oklahoma since CACI bought Sunset Resources Inc. in 1996, but the contract has more than doubled from the $30 million it was worth back then, London said.
The recompete of the RBS services contract, which deals with the management of critical spare parts for the Navy's surface fleet, is CACI's third recompete of that contract, which London takes as a sign of the Navy's satisfaction with the job CACI has done. In fulfilling both contracts, CACI maintains a "constant flow of refreshment," including new modeling and management technology, London said.
On the civilian side, CACI this year was named as one of several vendors on the $250 million General Services Administration Program Safeguard blanket purchase agreement, and the company won an $11 million BPA from the Commerce Department as the prime contractor to replace outdated procurement systems.
The Safeguard BPA is designed to provide services to help agencies develop plans to protect their critical information systems, ranging from continuity and contingency planning to protecting an agency's physical infrastructure. The Commerce contract calls for CACI to supply its Standard Automated Contracting Systems software to manage the entire procurement process at Commerce.
SACONS, which supports all procurement activities, provided the foundation for a new product, Comprizon.Buy, that CACI announced this month. Comprizon.Buy adds more than 170 features and improvements and is the first in an initiative designed to extend CACI's electronic commerce business in government and commercial markets.
Given the company's best-ever balance sheet and all the activity in the federal market, it seemed somewhat incongruous that CACI also announced a realignment of its management team, including Johnson's appointment.
But as CACI rises to where the air is thinner, a greater emphasis on business development is necessary to compete against heavies like Computer Sciences Corp. and Science Applications International Corp.
Johnson, a West Point graduate and Vietnam War veteran with 25 years of experience in the federal IT marketplace, including stints as president of Cordant Inc. and as senior vice president of PRC Inc., replaces Ronald Ross as president of CACI Inc., but Ross' position as chief operating officer remains open. London has no plans to appoint a COO, but he said a senior operations officer, executive vice president John Davis, who has been with CACI for 18 years, will support Johnson.
Johnson's arrival is a "big plus [that] speaks well for the company and what we intend to do," London said. "We want to look at our business development model as the first order of business."
As he settles into his new position, Johnson said he will aim to focus on bringing all of CACI's capabilities to bear on any business opportunity.
"We are going to spend a fair amount of time on the executive management team to focus our time not just on larger business opportunities but those more focused on the capabilities we have," Johnson said.
With the company pushing $500 million in annual revenue, CACI needs to coordinate how it positions all the capabilities it brings to the table, he said.
"When you are that size and you swing the bat in the league you now play in, you have to make sure those opportunities take advantage of the breadth and depth the organization has," Johnson said. "It sounds very simple, but it's certainly a complicated strategy."
The management reorganization placed primary responsibility for mergers and acquisitions with Stephen Waechter, executive vice president and chief financial officer.
London acknowledged that acquisitions have helped lift CACI to the height it is reaching and said that CACI will continue at the same pace, looking for organizations that want to affiliate with a larger entity.
Asked whether the emphasis on mergers and acquisitions means the company might be a target, London said the board's formal position is that the company is not for sale.
But, he added, "We think that by continuing to build the company and continuing to put value into it, we also become a more attractive target. From a shareholder viewpoint, that is one of our main objectives. If approached...I'm sure the board would be very careful in looking at the details."