Contractors in Growth Niches Top $100 Million: BGOV Insight

Tuesday - 7/3/2012, 11:42am EDT

Brian Friel, analyst, Bloomberg Government

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By Brian Friel

(Bloomberg) -- Companies specializing in health technology, surveillance and services for military special operations bucked the decline in federal contract spending last year. Their success shows that some agencies and purchasing categories still hold promise as federal budgets shrink.

Thirty-six companies won $100 million or more in federal contract awards for the first time in fiscal 2011, according to a Bloomberg Government analysis. A majority increased their federal contract revenue by double-digit percentages in fiscal 2011 compared with fiscal 2010. The analysis excluded fuel providers and joint ventures.

Thirty-two of the fast-growing companies don't yet win enough prime, unclassified contract dollars to join the ranks of the BGOV200 government contractors with the most federal contract revenue. Nearly two-thirds of fiscal 2011's $532.6 billion in federal procurement went to the BGOV200, according to the June 7 Bloomberg Government Study "BGOV200: Federal Industry Leaders 2012."

The 32 fast-growing companies, including Acentia LLC, a Falls Church, Virginia-based health technology vendor, and Blackbird Technologies Inc., a Herndon, Virginia-based cybersecurity and asset-tracking company, are building their presence in agencies and buying categories that are growing or stable as total contract spending decreases.

Health Technology

Acentia's federal sales grew 179 percent to $157.7 million in fiscal 2011 from $56.5 million in fiscal 2010, according to Bloomberg Government's proprietary federal procurement database.

The company won $118.3 million, or three-quarters of its fiscal 2011 federal revenue, through a contract called TriCare Evaluation, Analysis and Management Support, or TEAMS. The 22 companies on the multiple-award contract compete for orders from military health system buyers. Defense health spending will grow 5.7 percent to $33.5 billion in fiscal 2013 from $31.7 billion in fiscal 2011, the Pentagon's fiscal 2013 budget request estimated.

Acentia also competes for orders on multiple-award contracts managed by the Health and Human Services Department. HHS contract spending would increase $3.3 billion to $23.7 billion in fiscal 2013 from $20.4 billion in fiscal 2011, President Barack Obama's fiscal 2013 budget request projected.

Vecna Technologies Inc., another company on the TEAMS contract, also surpassed $100 million in federal contract awards for the first time in fiscal 2011. The Cambridge, Massachusetts-based health technology company won most of its fiscal 2011 federal work from the Veterans Affairs Department. The VA's budget is protected from automatic spending cuts slated to take effect in January.

Other health-related companies surpassing $100 million in contract awards in fiscal 2011 were Companion Data Services LLC, a Columbia, South Carolina-based health technology company, and Luke & Associates Inc., a Merritt Island, Florida-based health care staffing company.

Surveillance and Space

Another growth area for federal contracts is intelligence, surveillance and reconnaissance, or ISR, which includes radio communications, asset tracking and sensor technologies. The value of unclassified ISR contracts more than doubled to $13.2 billion in fiscal 2011 from $5 billion in fiscal 2001. Those figures don't count classified intelligence agency contracts, which are not publicly reported.

Blackbird Technologies' unclassified contracts grew 48 percent to $130.4 million in fiscal 2011 from $88 million in fiscal 2010. The Navy's purchases of asset-tracking equipment made it the company's biggest customer for unclassified work in fiscal 2011.

Blackbird Technologies also provides cybersecurity services, including electronic security software for the U.S. Special Operations Command. Defense Secretary Leon Panetta has said that Special Operations Command may grow during the next 10 years, even as the Pentagon budget is reduced.

Other ISR and cyber companies that surpassed $100 million in prime, unclassified contracts in fiscal 2011 were: Neany Inc., a Hollywood, Maryland-based unmanned aerial vehicle maker; Six3 Systems Inc., a McLean, Virginia-based ISR and cybersecurity company; and Govplace, a Reston, Virginia-based technology reseller that sells cybersecurity products to the Homeland Security Department.

Space Exploration Technologies Corp., the Hawthorne, California-based commercial space launch company, also broke the $100 million barrier in fiscal 2011. Commonly known as SpaceX, the company docked a private supply ship at the International Space Station in May, making it a likely go-to contractor for the National Aeronautics and Space Administration.

Read the Bloomberg Government Report: BGOV200: Federal Industry Leaders 2012

(BGov.com is a paid site and requires a subscription for access.)

(Brian Friel is a federal business analyst for Bloomberg Government. The views expressed are his own.)

To contact the analyst: Brian Friel in Washington at bfriel1@bloomberg.net

To contact the editor responsible: Anne Laurent at alaurent7@bloomberg.net