Perot Systems completes purchase of QSS

Perot Systems has completed its acquisition of QSS Group, a government information technology services provider based in Lanham, Md., for $250 million in cash.

The sale was announced last month.

With the integration of QSS into Perot Systems Government Services, the Plano, Texas-based company’s government contracting revenue will increase from 13 percent to 25 percent, said Peter Altabef, president and chief executive officer of Perot Systems.

Perot Systems Government Services will grow to more than 3,400 workers and is expected to report fiscal 2007 revenue of about $600 million, he added.

“We have been looking for several years in the government space for a company like QSS,” Altabef said. “They have remarkable information assurance skills,” he added, citing QSS’ work for the Army, NASA and the National Oceanic and Atmospheric Administration.

Altabef said combining QSS’ skills with Perot’s core competencies in IT heath care safety and homeland security will allow the expanded company to make well-rounded offers to customers.

“This transaction does put us in a position where we can successfully bid for larger contracts than we have before,” he said.

Altabef said Perot Systems’ largest purchase in its history comes at a time of shrinking federal budgets. But he added that Perot Systems Government Services is basically an outsourcing company and is positioned well in a market of restricted spending. "One of the things [outsourcing companies] do is take best practices and efficiencies and lower costs, he said.

“The vast majority of our business is in the Department of Defense, homeland security, [intelligence], health care and education,” Altabef said, all areas in which the government is expanding.

Jim Ballard, president of Perot Systems Government Services, said the purchase will allow the company to pursue more work within the DHS Enterprise Acquisition Gateway for Leading Edge Solutions (EAGLE) contract, for which QSS is a prime contractor.

He also cited the business potential of other governmentwide acquisition contracts, such as the Army’s Information Technology Enterprise Solutions 2 and the Homeland Security Department’s Secure Border Initiative, a project potentially worth $2.5 billion or more.

“We really felt as if our portfolio of GWACs was not where it needed to be for us to be a major player for us to go forward,” Ballard said. The combined companies have a synergy in their DOD and homeland security work, he added.

“We’re going to be very active in the Homeland Security Department,” Ballard said. “In just DHS EAGLE alone, it looks like the dam may have finally burst.” He said the acquisition of QSS will permit the company to go after several large DHS and DOD contracts.

QSS, a midsize company, has more than 1,300 employees working on government contracts worth $600 million, said Dick Bishop, president and chief operating officer at QSS, whose main clients include the Army, Coast Guard, NASA, the Centers for Disease Control and Prevention, NOAA and the Internal Revenue Service.

Asked why a successful company would agree to be sold, he cited the growing number of companies that have been added to the GWACs in the last year or so. “All of a sudden, these GWACs got a lot more competitive than they were in the past,” he said.

“The more we talked [with Perot Systems], the more we saw the strategic advantages of joining together,” he said. “We are really a good strategic fit for Perot.”

About the Author

David Hubler is the former print managing editor for GCN and senior editor for Washington Technology. He is freelance writer living in Annandale, Va.

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