Isn’t it always a company’s goal to grow? Not necessarily, according to a Washington Post article published earlier this week. If it means the firm will have a hard time winning essential government contracts, staying small might be the best bet. 

According to the Post’s analysis, medium-sized contractors have been getting squeezed out of the picture as more and more government dollars go to the largest firms. At the same time, these middle children don’t qualify for special small-company contracts. Stuck in the middle like Jan Brady, they’ve been left frustrated lately with fewer and fewer government dollars.

Mid-sized businesses used to dominate the contracting market. So why the sea change? The government has altered its method of awarding contracts. Whereas individual contracts used to be assigned by individual agencies, now we’re seeing more government-wide contracts. That means in order to compete for the job and handle the work, a company has to be quite large.

So, if you’re a mid-sized company and you want to stay in the game, what do you do? Mergers and acquisitions. It’s one option many firms have already undertaken or are seriously considering. In fact, the Post shared some interesting statistics from Richard Knop, head of the defense and government contractors group at BB&T Capital Markets, Windsor Group. According to Knop, defense companies “became aggressive buyers of services and technology companies” after the 9/11 attacks. He added that the sector has recently seen about 400 mergers and acquisitions every year.

What about companies that don’t want to merge or buy out other firms? They had better have a darn good niche so they can compete for appropriately-sized contracts rather than the huge ones that are out of reach. Either that, or they could look for opportunities to be part of a larger team in drafting a wider-ranging proposal.

The final option—one that some have chosen—is simply to stay small. With government dollars specifically set aside for small businesses, this could be the best way for some companies to remain secure and profitable—and for their executives to sleep at night. (Signs of too much stress include excessive hair loss, ingestion of 15 Excedrin or more per day, and uncontrollable toe-tapping.)

Alion Science and Technology Corporation announced this week that they have acquired virtually all the assets of LogConGroup, Inc., a firm providing logistics and identification technologies as well as program management. The terms of the deal were not disclosed.   

Based in McLean, Virginia, Alion provides a wide range of technology solutions to both the government and private sector, including IT, engineering, and naval architecture. An employee-owned company, Alion was formed in 2002 when employees of ITT Research Institute purchased ITT’s assets. Alion now ranks among the top 100 largest federal government contractors, and their revenue for 2006 totaled $508.6 million. Almost 75% of Alion’s 3,500 employees hold security clearances—a good indication of Alion’s focus on classified government projects.

Headquartered in Davenport, Iowa, LogConGroup specializes in automatic identification technology and logistics inventory tracking systems for the Defense Department and private industry. As specialists in munitions management, LogConGroup has contracts supporting the US Navy and US Army, and they’ve created many systems for tracking and automatically identifying inventory. These systems include RFID (radio frequency identification), MEMS (micro-electromechanical systems) sensors, bar codes, smart cards, touch memory buttons, handheld readers, and scanners.

Rick Meidenbauer, Alion Spectrum Engineering Group Manager, stated that the acquisition would allow Alion to increase their capabilities and presence in the high-value asset identification and tracking market. He added, “LogConGroup’s capabilities to track Class V munitions and other high-value military and commercial assets mesh well with ours, so we can support and help expand their current work with the resources of a much larger technology innovator.”

The founder of LogConGroup, Paul J. Ricciuti, echoed Meidenbauer’s words, saying, “We are actively engaged in providing logistics transformation and emerging logistics technologies for all Joint and Army Depots. As part of Alion, we can extend our service capabilities to existing and new Alion customers. Culturally, we believe it’s a great fit, and we expect to make the transition quickly.” 

Just last year Alion snapped up assets of Anteon International in what Washington Technology rated the second largest mergers and acquisitions deal of 2006. How large, you ask? Oh, the tidy little sum of $225 million. (How many double mochas would that buy? Enough to caffeinate you to Mars and back.) An aggressively growing company, Alion continues to add to its fold. Keep your eyes peeled for whatever Alion pulls out of the bag next—or should I say, puts in.