Power purchasing

A hearty appetite for acquisitions helped push Northrop Grumman Corp. to the top of Federal Computer Week's annual ranking of federal systems integrators.

Ranked fourth on last year's list, Northrop Grumman garnered $913.4 million in integration contract activity, according to Eagle Eye Publishers Inc.'s analysis of fiscal 2001 procurement data. The company replaces Science Applications International Corp., which enjoyed a brief stay at the top based on its fiscal 2000 performance.

Now ranked second, SAIC nearly maintained the top spot with $913.1 million in federal integration activity.

Northrop Grumman's rise can be attributed, in part, to a series of acquisitions dating to the mid-1990s. The company's purchases include Logicon Inc., Federal Data Corp., Sterling Software Inc.'s federal group and Litton Industries Inc.

"Northrop Grumman is starting to realize the benefits and synergies of its acquisitions," said Paul Murphy, president of Eagle Eye Publishers. He said those purchases have accelerated the company's penetration of the information technology service market.

Steve Carrier, vice president for business development and strategic planning for Northrop Grumman Information Technology, credits the company's strategic plan for acquiring and integrating other firms. "Our goal was to be top-tier, No. 1 in the IT services space," he said.

The pending acquisition of TRW Inc. could solidify Northrop Grumman's hold on first place. The companies announced a $7.8 billion merger agreement in July; the deal is expected to close by the end of the year.

This year's list also is notable for a few newcomers. Affiliated Computer Services Inc. is the leading example in that category, debuting at No. 6 with $374.1 million in federal integration sales. Dallas-based ACS is perhaps best known as a provider of outsourcing solutions in the commercial sector, but it has made a push into the federal market in recent years by acquiring companies such as Computer Data Systems Inc.

However, merger activity is not the only pattern reflected in the fiscal 2001 numbers. The data also illustrates a trend among product-oriented companies to boost their services revenue. Computer Associates International Inc., for example, increased its integration revenue by a factor of nearly six from fiscal 2000 to fiscal 2001, according to Eagle Eye Publishers. And Oracle Corp. has nearly doubled its integration dollars since fiscal 1999.

Product resellers have also made a shift toward services. Murphy notes that GTSI Corp. has seen an increase in integration revenue since fiscal 1999.

And the professional services group at PlanetGov Inc. does prime contracting and subcontracting for such customers as the Securities and Exchange Commission and the Defense Department's medical community, notes Brian Nightingale, PlanetGov's senior vice president of sales and marketing. Help desk, network administration and voice over IP are among the services offered.

"Service is where most of the margin is," he said.

Moore is a freelance writer based in Syracuse, N.Y.


  • Government Innovation Awards
    Government Innovation Awards - https://governmentinnovationawards.com

    Congratulations to the 2021 Rising Stars

    These early-career leaders already are having an outsized impact on government IT.

  • Acquisition
    Shutterstock ID 169474442 By Maxx-Studio

    The growing importance of GWACs

    One of the government's most popular methods for buying emerging technologies and critical IT services faces significant challenges in an ever-changing marketplace

Stay Connected