Executive Spotlight: Rick Nadeau on How SRA Became a Private Company and the Role of a GovCon CFO

Rick Nadeau_SRA International_EM

Rick Nadeau serves as chief financial officer at SRA International where he is responsible for the long-term financial picture of the company.

The 32-year business veteran and former accountant has served as CFO at three companies prior to SRA with Sunrise Senior Living being the most recent.

Nadeau spent 25 years with accounting firm Arthur Andersen to begin his career.

The senior executive caught up with ExecutiveBiz to discuss the unique responsibilities of a CFO at a government contracting firm, SRA going private in 2011 and the company’s focus on winning spots on large IDIQs.

ExecutiveBiz: What are the similarities and differences between your current role and some of the other roles you have had in your career?

Rick Nadeau: I have been the chief financial officer for four companies since I left the public accounting profession. When I was an auditor, I felt like my role was as an advisor. Being a CFO is more rewarding, because the decisions you make have a more significant impact on the company. The things you accomplish impact lives of people who work at the company and the company itself more significantly.

 

ExecutiveBiz: Are there any specific accomplishments at those companies that you are particularly proud of?

SRA-logoRick Nadeau: I was recruited to be the chief financial officer at Mills Corporation to help them resolve a Securities and Exchange Commission (SEC) investigation and an accounting restatement. I think we did a good job of improving the controls of the company, while working through the SEC and financial reporting problems, ultimately supporting the sale of the company to Simon Properties.

When I was recruited to Sunrise, they were also having difficulties with an SEC investigation and with financial reporting restatements. We were able to get the company’s accounting and controls environment stabilized and the financial reporting improved. We were able to catch up with the reporting and to keep the company listed on the New York Stock Exchange and ultimately resolve their SEC investigation issues.

 

ExecutiveBiz: What are the unique challenges you face when you are the CFO at a company where the government is the major client?

Rick Nadeau: Being a government contractor means that you have one major customer. One nice thing about working with the U.S. federal government is that you do get paid promptly for invoices that are properly calculated and approved. You don’t have collection risk. But, working with the U.S. federal government, you also have to be sensitive to their rules and regulations and be respectful of their prescribed operating methods.

So, it’s just a different kind of customer, and it’s a little different way of doing business. And once you learn it, it’s a fun industry. There are a lot of very patriotic people in the government contracting space.

 

ExecutiveBiz: What are the some of the major highlights of your time with SRA since 2009?

Rick Nadeau: I would have to say the most visible issue and the most obvious is the role that I played in the going private transaction in 2011. The process started at the end of 2010 and the transaction closed in July of 2011 with the sale of the company to Providence Equity Partners and Ernst Volgenau, SRA’s founder and chairman, retaining a significant equity investment. In connection with that going private transaction, I spent a lot of time working with potential buyers and with financing sources. As soon as the transaction was closed, I spent significant effort selling the non‑government contracting entities that SRA owned.

Since the Providence acquisition, I would say that the most visible highlight was the acquisition of the Morgan Franklin Corporation National Security Group. That was an interesting and rewarding process too.

 

ExecutiveBiz: How has the Morgan Franklin buy affected your defense business?

Rick Nadeau: It’s been a very successful acquisition. The people that came with that acquisition are very talented, and they had great customer relationships. It was a nice infusion of talent and it also gave us access to some skills and access to customers that we didn’t previously have. And that is our acquisition philosophy. When we do an acquisition, we want to improve our company by acquiring new skills and/or new customers. We have not pursued an acquisition just to become bigger. We want to become better.

 

ExecutiveBiz: How are you positioning SRA to grow in the tough budget environment?

Rick Nadeau: We have worked real hard to reduce our infrastructure costs at SRA, to improve profitability, and to free up money that we could spend on growth activities. If you look at our numbers today, as compared to where we were in 2011, you would see that we’ve reduced our total selling, general and administrative expenses by $100 million but increased the selling and marketing costs component of SG&A by almost $20 million.

We have found being a private company different.  We have been able to better focus our infrastructure costs and increase our capture activities and direct more resources to fuel bidding and proposal efforts to secure more work. We are now submitting more than twice the number of proposals as we did two years ago.

As a private company, we spend less time on investor relations work and on presentations to the board of directors. There’s much less emphasis on documentation. We still do the things that are necessary, but we streamline and spend more time on strategy and growth activities, while spending less time on being a public company. It’s enabled us to free up some resources that have been able to repurpose to pursue more work.

In this current marketplace, we’re putting ourselves in a position to bid more work so we can grow faster.  We have also focused on winning key IDIQs. With an IDIQ, you really have to win the work twice. You need first to win a position on the vehicle, and then you have to win the underlying task orders. That’s just a fact of life. So, you have to make sure that you put the right level of effort into the bidding and proposal for the IDIQs you need, because they improve the company’s long term prospects.

We are targeting and spending a lot of effort with the Veterans Administration. We have a position on the T‑4 IDIQ. We’re spending a lot of time at CMS. We just won a big contract with the National Cancer Institute. The types of things that we are focusing on often have a significant IT component.

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