Deltek to buy FedSources for $26 million

Friday - 4/1/2011, 1:15pm EDT

By Jason Miller
Executive Editor
Federal News Radio

Deltek is cornering the federal market analysis business. Just six months after buying Input, Deltek announced today it will buy FedSources, FedSources Consulting and the Washington Management Group for $26 million in an all-cash deal.

Deltek had been rumored since last winter to be interested in buying FedSources and Washington Management Group (WMG). The two sides reached agreement just recently bringing 900 clients and 20,000 users in to Deltek.

FedSources has been Input's main competitor in providing analysis on federal technology spending and highlighting upcoming contract opportunities. Deltek bought Input in September for $60 million. Deltek also bought mySBX, which runs GovWin, in December 2009 for an undisclosed sum.

WMG, which runs FedSources and the Coalition for Government Procurement, provides consulting services for companies trying to work in the federal market.

"This is a fantastic opportunity for both organizations to build solutions that will help the business development community in the government industry thrive," said Kevin Plexico, Senior Vice President, Operations at Input, in an interview with Federal News Radio. "I think we both bring some unique sets of capabilities. Input has network of users and is strong in the state and local markets. FedSources has the consulting and analytics side that will bring power to both when combined."

Plexico said Deltek expects the acquisition to add about 500 new customers.

Larry Allen, president of Allen Federal and former president of the Coalition for Government Procurement, said the acquisition makes the most sense for FedSources because the competition had been toughest on them.

"By combining the assets of the two companies, hopefully they can create an economy of scale and will not have to be particularly pernicious with each other on pricing," Allen said. "There certainly was overlap in terms of customers. But companies were using them as commodities where they would buy one for two years because got the best deal and then do the other for two years. There was no brand loyalty."

Mark Amtower, president of Amtower and Associates, said by adding FedSources, Deltek is shoring up its position as the dominant player in providing information and services to government contractors. Amtower hosts a show on Federal News Radio.

"I do not think they are done buying," he said.

In fact, Plexico said Deltek recently completed the merger of GovWin and Input into a new Deltek Information Solutions group in March.

GovWin provides enterprise software for the business development community.

Plexico said bringing together Input, GovWin and now FedSources will provide more potential services for the federal business development community.

Allen said one big question that will need to be answered is what will happen to the Coalition for Government Procurement, a trade association with more than 300 industry members.

"Technically speaking, the coalition is largest client of WMG and all the employees of the coalition are employees of WMG," he said. "On paper, WMG could continue to manage the association, but it really depends whether Deltek wants to have a subsidiary manage a trade association."

Allen added that the Coalition could end up as a standalone entity, could merge with another association such as the Professional Services Council or could be affiliated with a law firm.

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