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Volume 3, Issue 1 April 2005

Welcome to the Federal Growth Report, the newsletter published by Minuteman Ventures LLC, an investment bank that focuses on mergers and acquisitions.

Our newsletter addresses issues of importance to leaders in the federal contracting sector. These people build companies and increase equity value.

Regards,

Paul Serotkin
President
Minuteman Ventures LLC

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Mastering the Merger

 

 

 


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in this issue
Mastering the Federal Contractor Merger - What sets apart successful acquirers in this sector? We apply the rules in a new M&A book to the federal market.
Executive Interview, John Forbus, PEC Solutions - Forbus discusses that firm's successful acquisition strategy.
The Federal Deal - Infobase reviews the recently announced acquisition of John J. McMullen by Alion.
Contract Central - Infobase highlights key recent contracts to federal contractors.
Deals of the Month - Check out the latest sector deals.
Minuteman Ventures LLC News

The Minuteman Federal Deal Meter
Purchase price  
Under $50m $50–100m Over $100m Total Deals
YTD 2004 17 2 3 22
YTD 2005 16 5 3 24

For more on this chart, click here.


Minuteman Ventures LLC advises company owners on the sale of their businesses, and assists corporate and private equity buyers in strategic acquisitions and divestitures. Our team consists of experienced entrepreneurs and business executives who founded or operated companies and corporate divisions.

We specialize in companies that sell services and product solutions to federal government clients. We pride ourselves in being the investment bank for entrepreneurial companies in the federal sector.


Mastering the Federal Contractor Merger


"Deal success in not random," assert authors David Harding and Sam Rovit in the new book Mastering the Merger.

That's particularly true for corporate dealmakers operating in the federal sector.

While study results differ, the authors cite one public survey that shows a mere 30% success rate among big company mergers. And, yet, virtually all Fortune 500 companies are the product of multiple deals.

So are the public federal services firms.

Several went public in 2002, using IPO capital to acquire aggressively. Other long-time buyers, such as Titan, rapidly built their portfolios through M&A as well.

So what do the authors cite as successful acquirer characteristics? They:

  1. …are active deal makers that make acquisition execution a core competence.
  2. …cut their teeth on small deals (relative to the buyer size) and graduated to larger ones. In fact, their research shows that the acquirers with the best shareholder returns typically bought firms no larger than 15% of their size.
  3. …succinctly define their core business, then invest in and defend it (liberally using M&A)
  4. …buy high growth assets. Seems obvious, but in practice this point is both controversial and stands popular business operation on its head. Responding to Wall Street, acquirer CEOs and CFOs insist that acquisitions be immediately or shortly 'accretive' to earnings, i.e., earnings per share (EPS) must increase as a result of the deal. The authors show such a standard is not even necessarily desirable; their survey indicate that true value is more often achieved by buying 'dilutive' targets (the opposite of accretive, in terms of the acquired firm's effect on the buyer's EPS) in that the latter companies are growing faster.

Several companies in the federal services sector epitomize this view of M&A excellence. Two that quickly come to mind are Anteon and CACI.

Both followed the authors' prescription for success.

Anteon (ANT:NYSE), which went public in Q1 2002, has acquired three firms since then — ISI, STI, and IMSI, with respective reported revenue of $130 million, $20 million and $30 million, well within the 15% seller-buyer ratio recommended.

Prior to that, as a private capital backed entity, the company had completed a series of transactions, one a year on average since its formation in 1996. With the exception of Analysis & Technology, at $170 million in revenue, it did not breach the 15% rule. In the case of A&T, the company added scale needed to thrust it into sector elite status, while deepening its core base in IT and engineering services in the Navy and other armed services branches.

The stock market liked all its post-IPO deals, with the stock price running to new plateaus in mid-2003 and mid-2004.

Similarly, CACI (CAI:NYSE) has been a remarkably disciplined acquirer. In its seven announced transactions from 2001 through April 2004, the company acquired firms in the revenue range of $12 million to $55 million, well within the 15% threshold.

Those transactions enabled CACI to reinforce its brand as technology services provider in intelligence and defense markets.

With the capital market for federal contractors steadily improving and its reputation as acquirer firmly entrenched, CACI stepped up in May 2004 to buy the defense piece of American Management Systems, a $250 million entity. At that, though, with CACI now well over $1 billion in revenue, the 15% line was only marginally breached.

One could argue that these venerable federal contractors 'did M&A right' — embedding acquisition as a core competency, buying right-sized firms relative to their capacity, and investing and defending their core business.

For more on the book, Mastering the Merger, go to www.masteringthemerger.com.

Paul Serotkin is President of Minuteman Ventures LLC. He can be reached at
703-894-1270 or 781-750-8065, and paulserotkin@minutemanventures.com.


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Executive Interview, John Forbus, PEC Solutions

PEC Solutions, Inc., Fairfax, Va., is emblematic of the success of mid-tier acquirers in the federal IT arena.

Public since 2000 — IPO-ing right before the capital markets recoiled — the 1800-employee firm had been the first new public entrant in the federal services sector in some time. It remained that way until 2002 when the IPO floodgates opened for defense and federal/defense IT services and systems integration companies.

Leveraging the public coin and cash on hand, PEC (PECS:NASD) has made five acquisitions since the IPO (see table below), adding substantially to revenue. In fact, based on the reported revenues of the acquired firms at the time of respective acquisition, PEC added over $84 million a year in new revenue from its 2004 acquisitions alone.

Known for the best operating margin among its public peers (12.6% for Q4 2004), the company projects $270–$280 million in 2005 revenue, a 34 to 39% increase over the $203 million recorded in 2004. Its largest customers are the Department of Justice, US Postal Service, Air Force Space Command, Veteran Affairs and the Department of Homeland Security.

Minuteman Ventures LLC spoke recently with John Forbus, PEC Solution's Sr. Vice President, Planning.

FGR: What have been PEC's acquisition criteria to date?

JF: All of our acquired companies added either new customers or a new set of contracts at existing PEC customers. With AC Technologies came the US Postal Service. IITC gave us Air Force customers and enabled us to enter the satellite communications market. Vector brought us new Department of Treasury and FAA customers and a TIPSS II contract vehicle. Troy brought military health and Navy clients and Viking opened up a state and local market for us. There has been little overlap in the customer and contract sets among the acquired firms.

FGR: PEC began acquiring when it was well under $100 million in revenue. How has the size of the acquired firms and potential new targets played in your thinking?

JF: One filter we use is whether the target could be comfortably integrated into our culture and operation without deeply affecting either PEC or the acquired firm.

We have a strong back office operation that is able to acquire sizable firms relative to ours. Witness the recent purchase of AC Technology, which was almost a quarter of PEC's size at the time of the deal.

In any event we do not want to overwhelm organic growth with acquired growth.

FGR: What about your acquisition strategy going forward.

JF: We will continue to look for firms that add new customer sets, with a particular emphasis on defense companies. Currently PEC has less than 30% of its revenue within DOD; we'd like to increase that.

While our cash and debt availability allows for a much larger transaction, we desire to keep acquired growth in balance with organic growth. So it is unlikely we will undertake a major acquisition at this time.

FGR: Many federal acquirers, as does PEC, speak of the importance of 'culture fit' in their acquisitions. What does that mean to PEC?

JF: We play close attention to the business ethics of the seller's executives as well as the way they approach and service customers. Without the attention to detail that PEC historically has earned, we will back off an otherwise attractive property.

FGR: How does PEC differentiate itself as a credible buyer?

JF: Where price and culture are valued by the seller, we fare well. While we are competitive on price, the aspect of a smaller size (than larger acquiring competitors) appeals to many entrepreneurial companies. Certainly in the case of AC Technologies, we feel this combination of values, entrepreneurship and price helped us to capture the owner's attention.

FGR: As PEC nears $300 million in revenue, what are the challenges to growth, and to growth via acquisition?

JF: To grow at anywhere close to historic rates, PEC will have to capture larger contracts, meaning we bump up more frequently against larger companies. As a result, pressure on margins continues.

It also argues for a steady campaign to continue the use of acquisition. While firms we acquired bring tremendous value to us, they had not achieved the same margins as PEC. That presents an opportunity for us on rate enhancement as well as the additional customer past performance in competing against larger firms.

FGR: How have the capital markets responded to PEC's acquisitions?

JF: By and large, very well. We presented a very logical story in each case. Our share price responded in kind. (Ed. Note: PEC's share price has been on a roller coaster since its IPO in 2000. Starting at $9.50, it peaked at early in 2002 in the mid $40 range. As their extraordinary margins — still the highest in the group — came more in line with their public peer companies, PEC's stock has trended downward, now near $13 a share. Indeed, though, as Forbus notes, the market generally responded positively to the announced transactions.)

FGR: The IPO market for federal/defense IT services firms has been soft for some time now, after the spike in 2002. What do you foresee in the coming year?

JF: I don't anticipate any major surge in new IPOs this year for the sector, despite the fact that there are probably several good candidates. The acquisition prices are so strong that candidate firms have opted to take the buyout price.


PEC Solutions M&A Transactions
Date Acquired firm Seller revenue
September 2004 AC Technologies $48.5m
May 2004 IITC $36m
June 2002 Vector Research (Data Systems Div.) $8.5m
November 2001 Troy Systems $32m
August 2000 Viking Technology $2m

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The Federal Deal

FGR offers analysis of a recent M&A transaction involving government services contractors. The analysis is written by Stuart McCutchan, president and CEO of InfoBase Publishers, Inc. © and editor of the Defense Mergers & Acquisitions, a premier source for information on defense/aerospace M&A. Opinions expressed below are those of InfoBase. All rights reserved. For more on InfoBase Publishers' services, contact Bill Burton (410-820-6821, wkburton@infobasepub.com).

Alion Acquires John J. McMullen Associates

DISCUSSION

Alion Science and Technology completed its acquisition of employee owned John J. McMullen Associates (JJMA), a leader in naval architecture and marine engineering services. The proposed transaction is designed to strengthen Alion's support of U.S. Navy programs while opening up new civilian and commercial opportunities.

Alexandria, Va.-based John J. McMullen Associates (JJMA) is a provider of naval architecture, marine engineering and program management support, with a 48 year history of providing quality service and value to government, commercial and international customers. JJMA's over 600 employees cover all the major marine disciplines of engineering, design and program management. In addition to the traditional fields of ship design, the company developed capabilities in a number of specialty fields including ship signature management, electronic compatibility, advanced hydrodynamics and machinery control systems. JJMA's engineers and designers possess the knowledge and experience to cover all phases of ship design starting from early feasibility studies, followed by the various engineering phases, ending with detail design supporting the shipyard during construction. In addition to its Alexandria headquarters, the company operates out of 10 offices throughout the U.S.

Alion has created a new business unit, the JJMA Maritime Sector, which will house the company's naval architecture, marine engineering and maritime program management functions.

Alion chairman and CEO, Dr. Bahman Atefi stated: "JJMA is one of the most respected companies in marine engineering and programmatic support to the U.S. Department of Defense. This acquisition will help us further our support of the U.S. Navy, U.S. Coast Guard and Marine Corps with practical, technically- advanced systems and solutions. It will also present new opportunities in the commercial world. The acquisition of JJMA will fit perfectly with our strategy of disciplined growth while enhancing our value to the defense community."

JJMA president P. Thomas Diamant said he sees this acquisition as the natural next step in the company's evolution. "Our high-level engineering and program management skills are an ideal addition to Alion's considerable resources in these areas. This acquisition will also bring Alion's design, simulation, industrial engineering and operational support expertise to JJMA's customer base."

TERMS

On April 1, 2005 Alion Science and Technology on March 25, 2005 announced that it had agreed in principle to acquire John J. McMullen Associates (JJMA). Terms of the transaction were not disclosed.

The proposed transaction, plans for which were announced on March 25, 2005, was subject to the execution of a definitive agreement. The transaction closed as expected during April 2005.

JJMA has over 600 employees. With the addition of JJMA, Alion has approximately 2,600 employees.

ANALYSIS

Alion Science & Technology is proof — if any were needed after the U.K.'s QinetiQ emerged from government ownership to rack up a string of ambitious acquisitions — that ownership structure cannot hold back a company bent on making deals.

Until three years ago Alion was known as IIT Research Institute. It was a Federally Funded Research and Development Center (FFRDC), part of a small cadre of quasi-governmental organizations supporting selected Pentagon customers with requirements analysis work. And, like its brethren, it was pretty much strategically inert.

Then, in December 2002, IITRI swapped its FFRDC status for employee ownership and the new Alion name. One might have been forgiven for assuming that Alion would lay back and continue to serve its same customer set with the same kind of front-end work. For a company like Alion, the potential for organizational conflicts of interest — OCIs — can make planning an acquisition a bit like playing chess in three dimensions. My move today — buying Company X — could bar me, six moves later, from pursuing a highly desirable contract. Stick that in the average buyer's screening process, and see if anything passes through.

If the OCI issue represents one strike against a former FFRDC, its choice to carry forward as an ESOP had the potential to be another. The ranks of ESOPs keep thinning — and strategically active ESOPs can be numbered on the fingers of one hand.

Indeed, so far as strategic activity is concerned, ESOPs have in recent years been more likely to be on the sell side of deals than on the buy side. We've tracked eleven deals, some larger, some smaller, involving the sale of ESOPs to other firms (some public, some private) since 2000. Notable among these deals has been DynCorp (one of the largest ESOPs in the country, sold to CSC two years ago) and the U.K.'s STASYS (sold to Lockheed Martin last month). There have even been hints from the great-granddaddy of all ESOPs, SAIC, that it might consider a public offering at some point in the future.

This trend away from ESOPs, while unmistakeable, is not yet of landslide proportions. The advantages of employee ownership are still great: the structure boosts employee retention and morale, and there are tax advantages as well (investment bank Houlihan Lokey Howard & Zukin has had considerable success offering an ESOP S package that exempts companies from federal income tax). But companies opting for the ESOP route are increasingly in danger of being swamped by companies riding other cresting trends — private equity buyers awash with cash, and large firms with superior access to capital markets and ever-larger defense contracts. In this kind of environment cash is king, and ESOPs generally find it difficult to compete. What's a small employee owned company to do?

With companies like Alion and SAIC still active as buyers, one attractive answer is: sell out to a larger ESOP. Along these lines we note that JJMA is the second ESOP which Alion has picked up in the brief time since it itself came under employee ownership in late 2002. In Nov. 2003 it picked up Innovative Technology Solutions (ITS) Corp., a 60-employee company with expertise in nuclear technology and systems and software development.

We doubt that Alion has embarked upon an ESOP rollup strategy, as interesting as that prospect would be. Certainly its own status as an ESOP probably weighed in its favor when JJMA was considering whom it wished to be purchased by. But we see a more straightforward motive at work: beginning with its acquisition of Identix Public Sector Inc. a year ago, Alion has been building a naval engineering business. We'd draw attention in particular to the U.S. Navy's massive NAVSEA Professional Support Services (SeaPort) program. There are 21 companies with seats at this massive $14.5 billion table — and two of those companies (IPS and JJMA) will belong to Alion. Ten percent of that action, if the company can land it, would pay for a lot more acquisitions.

That there will be a lot more acquisitions appears certain. Alion has made six (count 'em) acquisitions since the ESOP buyout in December 2002. This is an acquisitions campaign that hasn't had a lot to say for itself: Alion hasn't announced the price or revenues of any of its deals. But Peter Jacobs, Alion's assistant vice president for marketing, says that on a pro-forma basis, Alion will have revenues of about $425 million after closing the acquisition of JJMA. That is more than double the $205 million in revenues with which the company began life only 27 months ago. That's remarkable growth for a company which, only three years ago, was a FFRDC beginning to wipe the sleep from its eyes.

As for JJMA, the pressure it felt to be acquired may have gone beyond the pressures affecting small firms in other market niches. The naval engineering and design niche has seen quite a bit of consolidation. Activity has been diffuse (translation: there are lots of active buyers), but front-runners are starting to emerge in this space, including AMSEC (and its co- parent, SAIC) and L-3 Communications. For JJMA, cutting a deal at a time when sellers still have their pick of suitors (and consequently more ability to set a high price), was probably a wise decision.

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Contract Central

FGR presents briefs on selected technology services contracts awarded by the U.S. government to federal contractors during the last two months. The briefs are compiled by InfoBase Publishers, Inc.©, a leading provider of competitive intelligence for the worldwide defense/aerospace industry. All rights reserved. For more on InfoBase Publishers' services, contact Bill Burton (410-820-6821), wkburton@infobasepub.com or click http://infobasepub.com.

Army ATEC Chooses Westech International for IEWTD Test Support Services

The U.S. Army Test and Evaluation Command (ATEC) (Ft. Hood, TX) awarded Westech International, Inc. (Albuquerque, NM) a five-year, $18 million, cost-plus- award-fee contract (W9115U-05-C-0001) to perform technical and test support services for ATEC's Intelligence and Electronic Warfare Test Directorate (IEWTD) (Fort Huachuca, AZ).

Under the contract, the company will provide operation and maintenance (O&M) of IEWTD's instrumentation, equipment and systems.

The work is expected to be completed by March 31, 2010.

The contract was competitively procured through solicitation DATM01-03-R-0003, which was issued on May 14, 2004, and called for competition limited to 8(a) companies only (NAICS 541330; $23 million).

USAF AETC Names Betis Group, CDW to Supply IT Hardware, Software and Support

The U.S. Air Force Air Education and Training Command (AETC) (Randolph AFB, TX) awarded Betis Group, Inc. (Arlington, VA) a 10-year blanket purchase agreement (BPA) for information technology (IT) products and services.

Under the BPA, the company will give AETC the ability to purchase more than 100,000 different technology products from 1,400 manufacturers. The Betis Group will provide the command with hardware and software support services.

CDW-Government Inc. (CDW-G) (Vernon Hills, IL) is the company's subcontractor on the contract. Betis is a member of CDW-G's small business partner consortium, formed in 2003 to help small businesses win IT contracts with federal, state, and local government agencies. There are 18 members on the team that can bid on contracts.

USAF WR-ALC Inks Two 8(a) Companies for SOF/ CSAR Aircraft Modifications

The U.S. Air Force Warner Robins Air Logistics Center (WR-ALC) (Robins AFB, GA) awarded two parallel five- year, IDIQ contracts, worth $97 million collectively, to support modification of Special Operation Forces/ Combat Search and Rescue (SOF/CSAR) aircraft.

The recipients were:

— Aerospace Integration Corp. (AIC) (Crestview, FL) (FA8509-05-D-0002)

— E.J. Mlynarczyk & Co., Inc. (dba EJM Aerospace Services) (Crestview, FL) (FA8509-05-D -0004)

Under the multiple-award program, these companies now will compete for task orders to support WR-ALC's LU Program Office (WR-ALC/LU) by performing SOF/ CSAR aircraft modifications. The work covers structural, avionics, radar, electronic warfare (EW), and DeMODs (removal of obsolescence) on aircraft such as MC-130E/H/P, AC-130H/U, HC-130N/P, EC-130J, MH-53J/M, HH-60G, and UH-1N/H.

The contract was competitively procured through solicitation FA8509-04-R-61540, which was issued in October 2004 and called for competition limited to 8(a) firms only (NAICS 336413; 1,000 employees).

AFRL Taps Incumbent SRC to Support Distributed Mission Operations Center (DMOC)

The U.S. Air Force Research Laboratory - Space Vehicles Directorate (AFRL VS) (Kirtland AFB, NM) awarded Scientific Research Corp. (SRC) (Atlanta, GA) a five-year, $22.4 million, cost-plus-award-fee contract (FA9453-05-C-0177) to support the Distributed Mission Operations Center (DMOC), formerly known as the Theater Aerospace Command and Control Simulation Facility (TACCSF).

Under the contract, which has an estimated total level of effort (LOE) of 88,320 labor-hours, the company will perform research and development (R&D) technical support to further the DMOC mission of acting as the integrator of distributed modeling and simulation efforts involving a variety of development ad test and evaluation programs. The contract was competitively procured through solicitation FA9453-04-R-0006, which was issued on September 9, 2004, and called for competition limited to small businesses only (NAICS 541710; 1,000 employees).

Army AMCOM Selects M7 Aerospace to Maintain C -23C Sherpa Aircraft

The U.S. Army Aviation and Missile Command, PEO for Aviation (AMCOM) (Huntsville, AL) awarded M7 Aerospace L.P. (San Antonio, TX) a 10-year, $309.2 million, firm-fixed-price contract (W58RGZ-05-C-0124) to perform Life Cycle Contractor Support (LCCS) for C -23C Sherpa cargo aircraft.

Under the contract, the company will provide maintenance services, logistical support and management processes to maintain a total of 43 C-23C aircraft, a boxy twin-engine turboprop built in the 1980s by Ireland's Short Brothers, plc, and which now belong to the National Guard. C-23 is the military designation for the Shorts SD-360.

M7 Aerospace's principal subcontractor is L-3 Communications Vertex Aerospace LLC (Madison, MS).The contract was competitively procured through solicitation W58RGZ-04-R-0523, which was issued on June 18, 2004, and called for competition limited to small businesses only (NAICS 336411). Proposals were due on August 3, 2004. A total of three offers were received.

Army RDECOM Names Science and Technology Corp. for Data Collection Services

The U.S. Army Research, Development, and Engineering Command (RDECOM) (Aberdeen Proving Ground, MD) awarded Science and Technology Corp. (Hampton, VA) a five-year, $85.3 million, time-and- materials, IDIQ contract (W91CRB-05-D-0007) for data collection/mission support services for the U.S. Army Aberdeen Test Center (ATC).

Under the contract, the company will perform computer sciences, engineering, and operations services. The contract was competitively procured through solicitation W91CRB-04-R-0037, which was issued on July 7, 2004, and called for competition limited to small businesses only (NAICS 518210). Proposals were due on September 30, 2004. A total of four offers were received.

The procurement is considered a follow-on to work previously performed under two separate contracts. The incumbents were:

— DynCorp, now part of CSC Defense Integrated Solutions & Services (Falls Church, VA) (DAAD05-97-D -7025).

— COBRO Corp. (Huntsville, AL) (DAAD05-98-D -7002).

DCC-W Adds AC Technologies to Lot 2 of IMCEN Desktop Support Program

The U.S. Defense Contracting Command - Washington (DCC-W) (Washington, DC) awarded AC Technologies, Inc. (Fairfax, VA) a five-year, $50 million, IDIQ contract (W74V8H-05-D-0002) to provide Applications Development support for the Headquarters Dept. of the Army (HQDA) Information Management Support Center (IMCEN). The award represents the fourth contract awarded under Lot 2 of the Army Desktop Support Services procurement.

Under the contract, the company will compete with three other Lot 2 awardees for task orders that cover development and maintenance of 300 mission-critical systems and databases for the Headquarters Dept. of the Army (HQDA), Information Management Support Center (IMCEN). The other companies with Lot 2 contracts awarded in September 2004, are AlphaInsight Corp. (Falls Church, VA), which was awarded a $7.4 million contract (W74V8H-04-R-0040); MicroPact Engineering, Inc. (Herndon, VA), which won a $91 million contract (W74V8H-04-D-0072); Pragmatics Inc. (McLean, VA), which won a $117.6 million contract (W74V8H-04-D-0073).

The contract was competitively procured through solicitation DASW01-03-R-0040, which was issued on May 23, 2003, and called for full & open competition in six lots. Several awards were reserved for small businesses or 8(a) firms only (NAICS 541513).

AC Technologies is a wholly-owned subsidiary of PEC Solutions, Inc. (Fairfax, VA).

GSA Inks 13 Companies for Navy FNMOC Support Program

The U.S. General Services Administration (GSA), Federal Technology Service (FTS), Technical Services Div. (Auburn, WA) awarded eight parallel five-year, IDIQ contracts, worth $100 million collectively, to perform information technology (IT) engineering, scientific, technical, and analytical services for the U.S. Navy's Fleet Numerical Meteorology and Oceanography Center (FNMOC) (Monterey, CA).

The recipients were:

— BAE Systems Information Technology (formerly DigitalNet) (McLean, VA)

— QSS Group, Inc. (Lanham, MD)

— ASR International Corp.

— Devine Consulting

— Trofholtz Technologies

— Northrop Grumman IT, Defense Enterprise Solutions (DES) (McLean, VA)

— Planning Systems, Inc. (PSI) (Reston, VA)

— Quimba Software, Inc.

— Galois Connections, Inc.

— Anteon Corp. (Fairfax, VA)

— Science Applications International Corp. (SAIC) (McLean, VA)

— Computer Sciences Corp. (CSC) (Falls Church, VA)

— X-Feds, Inc. (San Diego, CA), teamed with subcontractors, BAE Systems Information Technology, Hewlett Packard, YARCOM, Gray Hawk Systems, Inc., and SYS Technologies

The products and services are essential to DoD's efforts to increase safety of U.S. forces and optimize the use of platforms, weapons, sensors, and facilities anywhere, at any time. The program is designed to furnish full-spectrum IT services in support of the Center's mission to develop and provide meteorological and oceanographic products to the Navy and other DoD elements worldwide.

The contracts were competitively procured through solicitation GS10T-04-ECD-0002, which was issued on October 31, 2004, and called for multiple awards under "open, continous" competition. Some awards were reserved for small businesses only (NAICS 541990). In an "Open Continuous" procurement, no proposal due date is used. In fact, proposals are still being accepted at this time. This set of awards were made from offers submitted by August 31, 2004. All proposals received after August 31, 2004, will be evaluated on a quarterly basis.

Navy SPAWAR Inks Intelesis Technologies for Advanced C4ISR and IT Systems Engineering

The U.S. Naval SPAWAR Systems Center San Diego (SSC-SD) (San Diego, CA) awarded Intelesis Technologies Corp. (San Diego, CA) a five-year, $16.2 million, cost-plus-fixed-fee, IDIQ contract (N66001-05- D-5028) for engineering support services for advanced C4ISR and information technology (IT) systems engineering.

These services will be focused on the engineering tasks and research efforts at SSC-SD Code 241 for the development of the Navy Enterprise Portal (NEP)/Navy Marine Corps Portal (NMCP) in support of Web Enabled Navy (WEN) and FORCEnet. Work will be performed in San Diego, CA.

The contract was competitively procured through solicitation N66001-04-R-5015, which was issued on April 16, 2004, and called for competition limited to small businesses only (NAICS 541512; $21 million). Proposals were due on September 27, 2004. A total of four offers were received.

NAWC-TSD Elects Eleven for Fielded Training Systems Support (FTSS II)

The U.S. Naval Air Warfare Center - Training Systems Div. (NAWC-TSD) (Orlando, FL) awarded 11 parallel five-year, IDIQ contracts, worth $800 million collectively, for Fielded Training Systems Support (FTSS II).

The recipients were:

— Boeing IDS - Aerospace Support (Oklahoma City, OK) (N61339-05-D-6000)

— CAE USA, Inc. (Tampa, FL) (N61339-05-D -6001)

— Cubic Worldwide Technical Services Div. (WSTD) (Orlando, FL) (N61339-05-D-6003)

— Engineering Support Personnel, Inc. (Lynnwood, WA) (N61339-05-D-6004)

— Fidelity Technology Corp. (Reading, PA) (N61339-05-D-6005)

— FlightSafety Services Corp. (Centennial, CO) (N61339-05-D-6006)

— L-3 Communications Corp., Link Simulation & Training (Arlington, TX) (N61339-05-D-6007)

— LB&B Associates, Inc. (Columbia, MD) (N61339-05-D-6008)

— Lockheed Martin Information & Technology Services (Cherry Hill, NJ) (N61339-05-D-6009)

— ProActive Technologies, LLC (Wintersville, OH) (N61339-05-D-6010)

— CSC Defense Integrated Solutions & Services Div., Integrated Technology Solutions (ITS) (Norco, CA) (N61339-05-D-6002)

Paul Branske, vice president of ITS, said FTSS II matches up well with work his unit is doing for the Army under an eight-year $752 million GSA ANSWER task order awarded in FY00 that covers lifecycle contractor support (LCCS) for all Army virtual training (VT) systems. Teaming with CSC for the FTSS II work is Engineering Support Personnel, Inc., a small business that will provide staffing solutions.

The contract was competitively procured through solicitation N61339-04-R-0038, which was issued in April 2004 and called for full & open competition. Some awards were reserved for small businesses only (NAICS 541330). A total of 22 offers were received.

The procurement is considered a follow-on to the original FTSS initiative, a 10-year, $400 million program awarded in March 2000. Since these contracts were fast approaching the $400 million ceiling, NAWC- TSD was forced to recompete the FTSS requirement five years earlier than originally planned.

NAWCAD Inks Four Small Businesses to Support NAVAIR's Avionics Dept. (AIR 4.5)

The U.S. Naval Air Warfare Center - Aircraft Div. (NAWCAD) (Patuxent River, MD) awarded four parallel, four-year, IDIQ contracts, worth $100 million collectively, to provide engineering and technical services in support of NAVAIR's Avionics Dept. (AIR 4.5) research, development, integration, analysis, assessment and test and evaluation efforts for avionic sensor systems.

The recipients were:

— American Electronics, Inc. (California, MD) (N00421-05-D-0012)

— AMEWAS, Inc. (Lexington Park, MD) (N00421 -05-D-0013)

— RBC, Inc. (Alexandria, VA) (N00421-05-D -0014)

— Triton Services, Inc. (Bowie, MD) (N00421 -05-D-0015)

Under the multiple-award program, these companies now will compete for task orders to perform technical and engineering services in support of research and development (R&D) in the following technology areas: Avionics Science and Technology, Network Centric Warfare (NCW), Flight Information Systems, Electronic Warfare (EW) Systems, Radar and Antenna Systems, Electro Optic (EO) and Infrared Systems, Imagery and Video Systems Software Enhancements, Ballistic Missile Defense Surveillance Technology, Airborne Information Processing Systems, Acoustic Systems Special Mission Sensors, Communication Systems, Identification Friend or Foe (IFF) Systems, and Navigations Systems. Work will be performed at individual contractor facilities (20%) and at Patuxent River, MD (80%).

NAWCWD Names NTA for Depot Level Maintenance Support Services

The U.S. Naval Air Warfare Center - Weapons Div. (NAWCWD) (Point Mugu, CA) awarded National Technologies Associates, Inc. (NTA) (Alexandria, VA) a five-year, $48.4 million, time-and-materials, IDIQ contract (N68936-05-D-0013) for services in support of the depot level maintenance (DLM) modernization, Conversion, In-Service Repair, Overhaul, and other categories of DLM for the Naval Air Depot (NADEP) North Island (San Diego, CA).

The contract was competitively procured through solicitation N68936-05-R-0014, which was issued on January 20, 2005, and called for competition limited to small businesses only (NAICS 336411). Proposals were due on February 22, 2005. Only one offer was received.

NAWCWD Picks DCS for Weapons and Systems Integration Support Services (WSISS)

The U.S. Naval Air Warfare Center - Weapons Div. (NAWCWD) (Point Mugu, CA) awarded DCS Corp. (Alexandria, VA) a five-year, $119.8 million cost-plus- award-fee, IDIQ contract (N68936-05-D-0002) for Weapons and Systems Integration Support Services (WSISS).

NAWCWD is the weapons and systems integration and software support activity for all assigned aircraft IPTs. Those currently operating at NAWCWD include the F/A -18, AV-8, AH-1, F-14, JSF, UAV, and Special Missions (EP-3, ES 3, and VPU) aircraft. In addition to the aircraft named above, the contract may support the AV-22 and the Maritime Patrol aircraft, and any other aircraft that may be assigned to NAWCWD in the future.

The contract was competitively procured through solicitation N68936-03-R-0014, which was advertised in April 2004, and called for competition limited to small businesses only (NAICS 336411; 1,500 employees). Proposals were due on July 12, 2004. A total of two offers were received.

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Deals of the Month

Closing/
announcement date
Buyer Seller Purchase Price Seller Revenue
April 1, 2005 General Dynamics MAYA Viz Ltd. N/D 55 employees
April 1, 2005 VT Group plc The Cube Corp. $25.5m $115m
March 25, 2005 Alion John J. McMullen Associates N/D 600 employees
March 22, 2005 Analex Corp. ComGlobal Systems, Inc. $47m $39.5m
March 1, 2005 MTC Technologies Eagle-D GmbH N/D N/D
February 24, 2005 ITS Corporation Charis Corp. N/D $3m
February 22, 2005 Calspan General Dynamics (Aeronautics and Transportation Testing groups) N/D 230 employees
February 18, 2005 Lockheed Martin The SYTEX Group $425m $465m
February 18, 2005 Northrop Grumman Integic Corp. N/D $161m
February 17, 2005 Spectrum Sciences & Software Corp. Horne Engineering N/D $26m
February 14, 2005 Alion Science and Technology ManTech Environmental Technology N/D N/D
February 14, 2005 IAP Worldwide Services Johnson Controls World Services, Inc. $260m $770m

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Minuteman Ventures LLC News

Please welcome Chuck Chappell on the Minuteman Ventures LLC team. Chuck spent many years in operations and then as an M&A executive for ICF Consulting, Inc., Fairfax, VA, a $200 million management/policy consultancy mostly serving federal clients. He will bring those skills to Minuteman in the M&A project management area and will focus on Minuteman activities in the greater Washington, DC area. Chuck worked in corporate development for six years at ICF Consulting. As ICF Consulting's Vice President of Corporate Strategy, he led the firm's M&A program, managed a strategy project to grow the firm's organically generated revenue 50% by 2006, and developed financing for acquisitions and internal growth initiatives. Chuck was instrumental in ICF Consulting's 2002 acquisition of two businesses from Arthur D. Little, Inc. and the leveraged-recapitalization buyout of ICF Consulting from its former parent in 1999. Before he joined ICF Consulting, Chuck served as a Legislative Aide to a U.S. Congressman Sherwood L. Boehlert (R-NY) on environmental, small business, and other issues. He holds an M.B.A. with Honors (Palmer Scholar) from the Wharton School of Business at the University of Pennsylvania and a B.A. magna cum laude, Phi Beta Kappa, in Environmental Studies from Hamilton College. He is based in South Riding, VA, west of Washington, and can be reached at 703-963 -3150. … Those of you in Boston on June 16 will be wise to attend the annual Spring M&A conference of the Boston Chapter of the Association of Corporate Growth (ACG). It brings together the region's most dynamic capital providers with influential leaders in transactions and corporate growth. This year, the Conference will host over 90 Capital providers at the ACG Capital Connection. For more, click here. … Mark your calendars for Sept. 25–27 in Williamsburg, Va., the annual conference of the Professional Services Council (PSC). As always leaders from small, mid-tier and large companies in the federal services industry will be there to debate and discuss issues affecting the sector. For more, click here . … On April 18, the Contract Services Association is hosting a lunch session for federal contractors on 'The Ins and Outs of Doing Business Overseas. Bruce Bade, Director, Pacific Armaments Cooperation (Office of SECDEF), will speak. For more, click here.

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*Note

The Minuteman Federal Deal Meter covers M&A transactions of services firms principally serving federal agencies.

Transactions covered are those announced between January 1, 2005 and Apri 1, 2005.

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About Us

Minuteman Ventures LLC advises company owners on the sale of their businesses, and assists corporate and private equity buyers in strategic acquisitions and divestitures. Our team consists of experienced entrepreneurs and business executives who founded or operated companies and corporate divisions.

We specialize in companies that sell services and product solutions to federal government clients. We pride ourselves in being the investment bank for entrepreneurial companies in the federal sector.

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Minuteman Ventures, LLC
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Burlington, MA 01803
781-750-8065
703-894-1270
www.minutemanventures.com

HQ: Minuteman Ventures · 11 Cypress Drive · Burlington · MA · 01803
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