Sterling buy improves Army C4I opportunities

Sterling Software Inc. made a major step into the Army command and control arena with the planned acquisition of Mystech Associates Inc. in a $25 million stock deal announced last week.

Mystech, a Falls Church, Va.-based company founded in 1971, holds several Army contracts, including the Army Intelligence Master Plan and the Maneuver Control Systems (MCS) Block IV Program.

Mystech and Sterling Software have worked together on the PASS-K contract, which Sterling holds with the U.S. Army Intelligence and Security Command. Mystech has served as a subcontractor on the contract to support the operation and enhancement of intelligence functions of U.S.-based forces in Korea.

"Except for one contract in Korea, we do not have any Army business, so what we are getting from Mystech is a position in the Army [command, control, communications, computers and intelligence] world, and that's very important," said Phil Kiviat, vice president of business development for Sterling's federal systems group.

The acquisition also moves Sterling into tactical C4I. Most of the company's intelligence work has been in strategic intelligence, Kiviat said.

Meanwhile, Sterling expects the Army will benefit from work the company has done elsewhere in the Defense Department. For example, Sterling has done secure communication systems for the Defense Intelligence Agency, and some of that work could be brought into the Army, Kiviat said.

In addition, Kiviat said, "[Sterling has] some weather visualization work that we've done for the Air Force that we think can be added to the picture of the battlefield world."

Officials at Mystech could not be reached for comment. Sterling expects few layoffs, Kiviat said, because most of Mystech's 300 employees are directly involved on contracts, and there is no plan to fire any of them. The acquisition is subject to the approval of Mystech's stockholders. The two companies expect the deal to be final by July.

"Acquisitions have always played a major part in the federal market place," said Olga Grkavac, senior vice president of the Information Technology Association of America's Systems Integration Division.

"We see no sign that that's abating. If anything, there's going to be more," she said.