Deltek Inc., a leading market research and business management company, announced today that it has been bought by private equity firm Thoma Bravo for roughly $1.1 billion.
Deltek, which is now publicly traded, will be privately held under the deal. Deltek’s stockholders will receive $13 in cash for each share when the transaction closes, the company said in a news release. Deltek’s board of directors and its largest shareholder, New Mountain Capital, approved the acquisition.
Deltek, which earned $341 million last year and has more than 1,600 employees, provides services to 98 of the top 100 federal contractors. The company’s revenues increased more than 20 percent between 2010 and 2011 – a likely result of Deltek’s acquisition of INPUT, a business development company, in September 2010 and the Washington Management Group, with its FedSources market research and consulting components, in April 2011.
“Over the past seven years, we have successfully executed our long term plans for Deltek to enter new markets, grow internationally, and expand our industry-leading solutions for project-based companies,” Deltek President, CEO and chairman of the board Kevin Parker said in the announcement. “Throughout our journey, New Mountain Capital gave us outstanding support and was instrumental in building the Deltek of today. We’re very excited about the opportunity to continue Deltek’s successful journey in partnership with Thoma Bravo.”
The transaction is subject to customary closing conditions and regulatory approvals but is anticipated to close by the end of 2012. Deltek will continue to be based in Herndon, Va. and led by its existing senior management team.
A recent call made by 26 senators to keep the Defense Department’s contract spending in check has prompted the Professional Services Council trade association to ”correct the record.”
Several Defense Department policies and spending cuts over the last few years have affected contractors, including a provision in the 2012 National Defense Authorization Act capping Defense Department spending on services for fiscal years 2012 and 2013 at the level of the president’s 2010 budget request, PSC President Stan Soloway said in an April 30 letter to Sens. Sherrod Brown and Kirsten Gillibrand.
Brown and Gillibrand led 24 other senators on an April 25 letter to Defense Secretary Leon Panetta which urged him to carefully consider the workforce mix and to use civilian personnel where possible instead of awarding contracts.
“We understand that the defense budget must be adjusted to take into account new national security risks and budgetary realities. However, we are concerned that while the size of the civilian workforce is proposed to be cut back to FY 2010 levels, no comparable constraints were imposed on workforce hired through contractors,” the senators wrote. “We are concerned that this would incentivize managers to use contracting firms rather than civilian employees even when the latter costs less.”
PSC refuted the senators’ claim that federal employees cost less — a point that has been studied by several groups but has not yet resulted in a clear answer. But Soloway agreed with the senators in their support for allowing agencies the flexibility to manage their personnel as strategically as possible.
“In some functional areas, the government has a clear need to enhance its workforce capacity and capabilities,” he wrote. ”Likewise, it may well be necessary to increase contractor support for the mission-critical, high-end skills that the government does not compete well for in the broader human capital marketplace. Unfortunately, your letter does not recognize this balance.”
A House caucus focused on increasing the government’s use of contractors will launch next week, the Business Coalition for Fair Competition (BCFC) announced today.
Members of the ”Yellow Pages” Caucus believe that if the government is performing a service that is being done by private businesses in the Yellow Pages, then the service should be subject to market competition, the BCFC said in an email and Facebook announcement.
“This caucus is being created by a group of like-minded members of Congress to create a forum to work together to lower the cost of government, make it more efficient and get a better idea of what government and private enterprises should be doing,” said BCFC President John Palatiello.
The position of the caucus – currently drawing the interest of about 20 members — is that the private sector can often do commercial work at a lower cost than federal workers, Palatiello said. Letting businesses do that work would allow federal workers to focus on truly government-centric work, he said.
The BCFC advocates for policies that promote the use of private businesses in government and that stop agencies from competing with the private sector.
Members of Congress have expressed concern over the push for insourcing in recent years, the moratorium on competitions between the private sector and federal employees for work, and policy revisions last year that added ”closely associated with inherently governmental functions” to the list of jobs that should be done by government employees, Palatiello said.
The caucus’s kickoff event will be at 3 p.m. Tuesday at the Capitol Triangle, just outside the Capitol Building on the House side.
Government contractors who blow the whistle on improper use of federal dollars or unethical behavior would be protected against retaliation under a bill introduced by Sen. Claire McCaskill, D-Mo.
Recent laws that extend protections to some contractors have created a patchwork of inadequate protections, McCaskill, chairwoman of the Senate Contracting Oversight Subcommittee, said during a hearing Tuesday.
For example, whistleblower provisions added for defense contractor employees in 2008 do not protect contractors from retaliation by a government official nor does it cover subcontractors.
Senate Bill 241 would extend whistleblower protections to all government contractors and subcontractors, and consolidate some of the current whistleblower provisions for contractors.
McCaskill introduced the same bill in 2009.
Walter Tamosaitis, who worked for a subcontractor on an Energy Department nuclear waste treatment project in Hanford, Wash., testified that was kicked off the project and moved to a basement office after he raised technical design problems that could cause safety issues. Addressing the concerns would have kept the prime contractor, Bechtel, from finishing on time and collecting a $5 million award fee, he said.
“It’s a very visible example of what happens when you speak up,” he said.
Tamosaitis is now taking Bechtel and the Energy Department to court. Bechtel National spokesman Jason Bohne said the company is contesting all allegations of wrongdoing in Tamosaitis’ case.
In direct response to a presidential order under consideration, lawmakers today introduced two bills to prevent federal agencies from collecting or using information about contractors’ political expenditures.
Several lawmakers – most of whom are Republican – have asked the president to abandon his plans for an executive order, a draft of which was leaked last month, that would require potential contractors to report their campaign contributions and political expenditures before being awarded government contracts.
After the leak, White House officials said they are considering the policy as a way to add more transparency to the contracting process. But it has been a month with no action from the president.
So Republicans in both the House and Senate have introduced preemptive measures that would prohibit federal agencies from essentially doing what the executive order would require.
An amendment with similar language was also included in the 2012 National Defense Authorization Act, which the House passed today.
The opposing lawmakers, backed by contractor groups, argue that the executive order could silence contractors’ support of political groups and politicize the federal procurement process.
They say the president is trying to override the Supreme Court’s decision last year in Citizens United v. Federal Election Commission, which protected corporate donations to political organizations and drove millions of dollars into the 2010 elections.
The president and Democratic members of Congress were unsuccessful in passing a bill last year requiring disclosure of the donors to political organizations.
The agency that ensures federal contractors are meeting federal employment rules is seeking more information from contractors.
The Office of Federal Contract Compliance Programs (OFCCP) says the changes should make the process easier on contractors while also providing better data for their evaluations.
But corporate law firms and consultant groups are alerting contractors via their blogs and websites that the additional data OFCCP wants will actually be a new burden for them.
OFCCP, which checks contractors’ compliance with federal affirmative action and equal employment opportunity requirements, sends what’s called a Scheduling Letter to contractors selected for a compliance evaluation. That letter lists what data the contractor is required to submit so OFCCP can perform its evaluation.
The current form of the Scheduling Letter is set to expire on Sept. 30, prompting the proposed changes by the OFCCP which are posted at regulations.gov.
The additional information that OFCCP is seeking includes policies for employment leave and accommodations for religious observances and practices; demographic data on applicants, hires, promotions, and terminations; compensation data for each employee by job title, EEO-1 category, and job group; and the last three years’ of veterans’ employment reports.
Corporate lawyers are encouraging contractors to provide comments to the proposed changes, which OFCCP will accept through July 11. And in the meantime, contractors should review their policies, as well as their affirmative action plans and procedures, to ensure they comply with legal requirements, law firms advise.
Now here’s what I call strategic workforce planning. The Drug Enforcement Administration is trying to hire up to nine contract linguists who are fluent in Ebonics, according to a request for proposal posted on the Smoking Gun this morning.
The RFP, which was originally released in May, said it needs people in Atlanta to “listen to oral intercepts in English and foreign languages and provide a verbal summary, immediately followed by a typed summary” and then transcribe pertinent calls.
Ebonics is just one of more than 100 languages requested in the RFP. It’s not surprising that the DEA is looking for people who can translate Spanish, Farsi, Korean, and other standard languages — the entire government has struggled to beef up those capabilities in recent years. (They’re also looking for people who can understand the Jamaican patois.) But it seems kind of odd that the DEA feels it has to hire contractors to help it understand what is essentially very heavy black slang.
It sounds like the DEA’s got a bunch of frustrated agents sitting around listening to slang-filled wiretaps and struggling to figure out what the drug dealers are saying — pretty much like every episode of The Wire. Omar comin’.
Defense Secretary Robert Gates delivered a tough message earlier today for his department’s bureaucracy (not to mention its contractors): The spending spree is over. Read an account of his Kansas speech and some of his planned changes at our sister publication, Military Times, here. And the Washington Post’s article has this interesting detail on contracting:
Among Gates’s apparent targets for major cuts are the private contractors the Pentagon has hired in large numbers over the past decade to take on administrative tasks that the military used to handle. The defense secretary estimated that this portion of the Pentagon budget has grown by as much as $23 billion, a figure that does not include the tens of billions of dollars spent on private firms supporting U.S. troops in Afghanistan and Iraq.
The defense contractors, who populate new office towers throughout Washington’s suburbs and have been a major driver of the local economy, are a significant source of budgetary bloat, Gates said. “We ended up with contractors supervising other contractors — with predictable results,” he said in the speech Saturday.
The WaPo said Gates is prepared to stay on past this year to make sure his changes stick. Since defense spending is often viewed as sacrosanct in American politics, this could be the first shot fired in a major budgetary war.
I did a quick post yesterday on Sen. George Voinovich’s hold on Rafael Borras, announced at yesterday’s DHS management hearing in the Senate Homeland Security committee.
One other colloquy from that hearing worth mentioning: Sen. Claire McCaskill, D-Mo., got into a discussion with Elaine Duke, the current undersecretary for management, about how many contractors work at DHS. McCaskill has been trying to get a hard number for years; the department finally sent her a spreadsheet last month, which lists 10,520 contractors in the Washington area. But it turns out even that figure might not be accurate. Here’s Duke:
The figures are based on algorithms… so they’re as accurate as we can get under the current conditions. There was an attempt about six years ago to start counting contractors… it was put out in the Federal Register as a public notice. The comment from industry was so strong that the notice was withdrawn, and the federal government did not go forward with that policy… we’re looking at that again, how should we be counting contractors, how should we be accountable.
Contractors say they’re being hired to provide a service, and it shouldn’t matter how many subcontractors they use to deliver a service; what’s more, they claim that’s privileged information. But it seems senators, particularly McCaskill, are going to push DHS to come up with an exact figure next year.
The State Department “got what it paid for” when it hired embattled contractor ArmorGroup North America to provide security to the U.S. Embassy in Kabul, Afghanistan, a new report from the Wartime Contracting Commission found.
Unfortunately, the commission also found State had little choice because federal law prohibits the department from choosing security contractors based on performance rather than cost. According to the report:
Unlike other federal agencies, the U.S. Department of State is forbidden by law to select anything but the lowest price and ‘technically acceptable’ offer when awarding contracts to protect its overseas buildings — even if this means passing up offers from firms offering higher quality and better experience. In contingency operations like those in Iraq and Afghanistan, this prohibition can have negative consequences for security, wartime mission objectives, and America’s image.”
The report comes on the heels of revelations by the Project on Government Oversight that employees of ArmorGroup threw alcohol-fueled parties and forced subordinates to engage in lewd behavior that resulted in high staff turnover and placed embassy officials at risk.
The commission recommended removing the low-price requirement to allow State to select the contractor that will provide the best value.