CACI maneuvers to buy networking-services company

CACI International Inc. is negotiating to acquire Government Systems Inc. a Chantilly Va. networking-services firm that could become CACI's largest purchase in terms of revenue.

CACI an Arlington Va. information technology services firm disclosed the acquisition discussions last week but the company began talking to GSI officials last year said James Allen CACI's chief financial officer. GSI a unit of Infonet Services Corp. has some $40 million in annual revenue and 250 employees. CACI had $273 million in revenue for its June-ended fiscal year.

GSI's networking expertise is a key factor in CACI's interest in the company Allen said. CACI has about $10 million in communications and networking he said adding that purchasing GSI "will go a long way toward making us a meaningful player in that market." Communications and networking he added has become "a rapidly growing area in the government's IT services market."

GSI has federal contracts with the Defense Department and the Federal Aviation Administration. Among the company's contracts is the FAA's Agency Data Telecommunications Network 2000. GSI's services include the installation of dedicated private networks and integrated public and private networks. The company also offers maintenance network management and operations services.

A spokeswoman for GSI referred calls to CACI.

Martin Lee a senior analyst with G2 Research Inc. Mountain View Calif. said the pending GSI acquisition is part of a broader trend in the federal market in which smaller companies are seeking larger allies. G2 Research specializes in the integration market. "To get on larger contracts and get control of the account you have to be associated with a larger company " Lee said.

As for CACI the company would be purchasing a network integrator "on the larger side " Lee said. He said an acquisition may be the only viable option for companies unable to hire enough networking talent in a competitive labor market. An acquisition he said can provide "the bandwidth to do more business."

In addition to the acquisition talks CACI plans to enter into an agreement with Infonet to pursue business opportunities in communications and network integration. Allen said CACI will become a "preferred reseller" of Infonet's international communications services. Infonet operates The World Network an international data communications backbone network accessible from more than 180 countries.

Allen said CACI will continue its acquisition program seeking government IT services business that bring new customer bases or new technology expertise to the company. He said CACI looks for companies in the $10 million to $100 million range noting that most candidates are in the $20 million to $50 million range.