October 06, 2014 -
Taking on giants
BY KATHY FINN Special to The Advocate
Growing a new technology company into a $30 million contracting business is no small feat. Even though Metairie-based Geocent LLC reached that mark in just six years, its owners have their sights set much higher and think the company now is poised to push toward its “real” revenue goal — $125 million.
For Geocent CEO Robert “Bobby” Savoie, hitting that target would constitute a repeat performance.
Savoie made his name in technology through a company he founded in the 1990s that eventually merged with Science & Engineering Associates Inc. He became chief executive of SEA and built it into a substantial primary federal contracting business before seeing it through another merger seven years later.
After that transaction, Savoie took a break to pursue a long-delayed doctoral degree in engineering. While working on his dissertation, he realized he’d like to start the entrepreneurial process over again.
In 2008, Savoie teamed up with friend and fellow tech entrepreneur Rick Gremillion. They combined Gremillion’s company, Diamond Data Systems Corp., with a small engineering firm to form Geocent, a new provider of information technology and engineering services.
Gremillion, now president of Geocent, said he was eager to join with Savoie after watching him build SEA. “We knew how to do good work but not how to grow,” he said of his Diamond Data team. “Bobby knew how to grow.”
Such knowledge can be precious in a field that holds billions of dollars in rewards but is crowded with competitive giants.
According to an analysis by Virginia-based Deltek Inc., the top 20 federal contract opportunities for fiscal 2014 represent a total value of more than $160 billion. Bidders that dominate the competition include Lockheed Martin Corp., The Boeing Co., SAIC Inc. and many other contracting heavyweights.
Historically, the defense industry issues the bulk of big contracts. In recent years, many have been for the type of professional and IT services that have become Savoie’s bread and butter — cloud computing, geospatial and aerospace engineering, mobile applications and data analytics.
During his years at SEA, Savoie became indoctrinated into the complexities of dealing with big federal agencies. As he gained skill in navigating the bidding process, the company’s annual revenue climbed past $100 million, which is why topping that mark became his goal for Geocent.
During Geocent’s early years, the firm established itself as a go-to subcontractor for government and commercial clients, and it fanned out geographically to form clusters of specialized expertise in key areas. Headquartered in Metairie, the company today employs about 225 people in seven offices, from Metairie and New Orleans to Baton Rouge; Stennis, Mississippi; Charleston, South Carolina; Huntsville, Alabama; and Tulsa, Oklahoma.
About a third of Geocent’s work now is in aerospace engineering; the rest is IT services.
One of its key projects was the development of a benefits management system for the Veterans Administration that enables individuals to apply for and claim benefits online. The system aims to reduce benefit wait times for millions of GIs and their families, Savoie said.
Geocent’s contracts have also included collaborating to build human resources systems for the U.S. Navy, design a next-generation NASA space vehicle that could go to Mars and perform geospatial engineering for the Department of Homeland Security.
The company typically performs its engineering work in partnership with such primary contractors as Boeing or Jacobs Engineering Group Inc., and much of that work occurs in the company’s Huntsville and Stennis offices.
As Geocent has expanded its reach, its annual revenue climbed fairly quickly past $33 million. But last October the company, along with many other government contractors, suffered a blow when budget disputes in Washington, D.C., produced a two-week government shutdown, followed by several months of limited federal spending under a continuing resolution.
“It basically froze all the contracts, and no one was issuing new ones,” Savoie said.
The damage rippled through the business for months, as pending contracts in which Geocent was heavily invested remained on hold. Retaining employees during the dry spell became a challenge, as workers who faced ongoing job uncertainty searched for alternatives.
“We lost some good people and, frankly, spent millions to keep good people,” Savoie said.
Then, suddenly, in July, government agencies began to loosen their grip on spending, and Geocent turned a corner.
In a single week, the company won four significant contracts that included being named a primary contractor on a major cloud computing project for the Space and Naval Warfare Systems Command. Geocent’s portion of the contract will involve 27 employees working from the South Carolina office, with some overflow into the New Orleans and Baton Rouge offices. The initial contract value of $10 million could grow significantly over time, Savoie said.
“It’s going to present tremendous opportunities,” he said. “It was our first really big win this year in the federal IT group, and it was critically important.”
Savoie faces challenges as he seeks to turn Geocent, whose work has mostly been at the subcontracting level so far, into a primary contractor that works directly with federal agencies and other big clients. Primary contractors enjoy the benefits of having more control over projects and outcomes. In order to land more of this business, Geocent will have to go head to head with industry behemoths.
Federal government contracting is “a very difficult marketplace” because of the complexity of its regulations and compliance demands, said Van Hitch, a senior adviser to Deloitte Consulting LLP, whose parent company is itself one of the country’s largest federal contractors.
“You really have to have a pretty good knowledge of what the government is doing in order to respond to what they need,” he said.
Hitch said that while federal agencies are spending more than $80 billion a year on IT, a shift that’s now underway will put more of the money into operations and maintenance and mean fewer purchases of brand new technology.
“There’s a lot of pressure to keep spending down,” he said, and maintenance spending is more predictable and controllable than are capital expenditures for evolving technology.
Hitch said the trend will put increased focus on cloud computing, which gives clients access to new applications through fee payments rather than having to purchase software outright.
He said other services likely to see rising demand include cybersecurity, such as applications that enable identity management and protection from cyberthreats; health care IT; mobile technology applications and infrastructure; and data analytics that help governments and businesses derive predictive information from large data sets.
That outlook appears to bode well for Geocent and its offerings, and Savoie thinks the company is up to the challenge of morphing from a subcontractor to a primary vendor for the federal government.
“It is extremely difficult, and it’s where most small companies fail, but we’re fortunate in that I’ve done it before,” he said.
The transition may require some reorganizing in order to better integrate new business development with systems processes and contract execution, Savoie said. New contract awards may require hiring up to 100 people. His focus will be on finding “talented next-level people” who can do it all.
In addition to the contracts Geocent recently landed, the company has proposals pending on about $120 million worth of new projects, Savoie said.
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