2015 Market Outlook: NCI President Brian J. Clark — Companies Will Look to Increase Value Via M&A, Spin-Outs

WashingtonExec 2015 Market Outlook Series

We look forward to a new year and new opportunities for innovation and growth in the government contracting community. This past year, we experienced an increased emphasis on cybersecurity, the government’s procurement process and a perpetual focus on doing more with less.

WashingtonExec reached out to those most knowledgeable and experienced in the federal contracting space. We asked executives in and around the beltway for insight regarding where they see the government contracting community headed in 2015. Topics discussed include M&A activity, cloud computing, privacy issues, data collection, healthcare IT, defense and more.

NCI President Brian J. Clark expects companies will be looking to increase value through M&A or, in some cases, unlock value through spin-outs.

Brian J. Clark: At NCI, we expect to face continued uncertainty in the federal procurement environment in 2015. Although we welcomed the issuance of several long-delayed RFPs in late 2014 and into this year, the acquisition cycle for both individual contracts and task orders issued under IDIQ vehicles continues to be very long.

NCI was among the first in our industry to respond to the changing landscape in 2011, and we’ve taken definitive steps to reposition ourselves with enhanced capabilities despite a far leaner overall infrastructure. Many players in our space – including NCI – have completed reorganizations and significant cost-cutting to be more price-competitive and increase profits in an era of organic top-line contraction. While I believe that opportunistic cost-cutting will go on, I expect companies will be looking to increase value through M&A or, in some cases, unlock value through spin-outs.

In NCI’s case, we’re investing in growth through M&A, as well as internally, to refine business development strategy and execution. I believe the right mix of “build and buy” is essential to success and ultimately value creation in the federal market in 2015 and beyond. Our recent acquisition of Computech was perfect for NCI because it brought all new customers, contract vehicles and a number of differentiating capabilities, particularly in the area of agile application development, IT systems modernization and data analytics, which we believe will lead to meaningful top-line synergies going forward.