You’ve heard the buzz. And now you’ve read the news: Serco Inc., the U.S.-based division of the international service company Serco Group plc, has just acquired SI International for $423 million. The transaction would further evolve Serco’s North American organization into a management services business, the company said. Still untold is what this acquisition will mean to the future of both companies — until now. In an exclusive interview with ExecutiveBiz, Serco Inc.’s Chairman and CEO Ed Casey lets us in on the back story behind the acquisition — his first major acquisition as CEO — plus he discusses his top priorities for the coming months, and how SI International’s President and CEO Brad Antle will be part of what many are calling a winning new chapter in both company’s lives.

This is your first major acquisition as CEO. Tell us how the deal came about and how you chose SI International.

Ed Casey: About a year ago we decided to pursue an acquisition strategy. We surveyed the entire marketplace — companies anywhere from $200 million to $2 billion in size. We created a shortlist of those we thought had the best strategic fit and the most promise. SI International was one of those companies. We pursued a couple of companies on that list and this one is obviously the one that got to the finish line. Basically I met Brad Antle [president and CEO of SI International] in March and that was the basis for some conversations that ultimately evolved over the last five months.

Tell us about your integration plan for the two companies.

Ed Casey: As we think through transition integration, clearly the number one priority is our people, the employees of SI International and Serco. Obviously when you have a situation where the two companies here in North America are almost equal size there are a lot of people who have a lot of questions and a lot of concerns. That will be without question our number one priority: trying to design the new organization going forward and to get the right people in the right roles. If we don’t get the people side of it right then really everything else suffers – our service to our customers, our results to our shareholders – so for us it’s all about the employees over the next 90 to 100 days, or however long it takes us to close the transaction.

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While there are multiple paths for government contractors to ascend to the coveted tier-one status of $1 billion+ annual revenues, most lead - at some point - to a significant acquisition (or two) that opens up a new Agency channel or adds a new core service offering.

This was indeed the case for Serco, Inc., the U.S. division of the British Serco Group, which today announced it has entered into a definitive merger agreement with SI International. Per terms of the agreement, Serco will acquire SI International for $423 million ($32 per share in cash) - propelling the management services government contractor past that threshold $1 billion mark.

SI International is one of the most well-respected contractors in the area, and was named 2007 Contractor of the Year at the 5th Annual Greater Washington Government Contractor Awards. The company mantra - Rapid Response • Rapid Deployment® - has resonated with civilian and defense agencies seeking mission-critical services, as the company ranked number 44 on Washington Technology’s list of the Top 100 Federal Prime Contractors for 2008.

In today’s press release announcing the transaction, SI International President and CEO Brad Antle referenced the move as a way to step up to the next level:

“We are pleased that we can join a company of Serco’s stature and success,” said Brad Antle, President and CEO of SI International. “We have had a tremendous track record during our ten-year history and are very proud of the leading position we have achieved in the government services sector. Now is the right time to go to the next level so the services we provide to our customers are enhanced by the scale and global reach that Serco can offer.”

Serco will also assume SI International’s debt, which, at June 28, 2008, was $87.3 million, net of cash. For Serco, the transaction represented an opportunity to add business process re-engineering and mission critical technology solutions to its existing service portfolio.

“Serco and SI International share the same commitment to excellent service and complement each other exceptionally well in both capabilities and markets,” said Ed Casey, Chairman and CEO of Serco Inc. “SI International strengthens our ability to bring business process re-engineering (BPR) and technology solutions to the most demanding government missions, while our increased combined scale positions our businesses to deliver even larger and more complex integrated solutions for our customers.”

Earlier this month ExecutiveBiz highlighted ten area executives in relatively new roles who we expect to be firmly placed in the 2008 spotlight. Perhaps these executives can take their cue from another set of leaders who have grown quite accustomed to being in the middle of the action. ExecutiveBiz’s “Beltway Game Changers” recognizes 10 prominent names who are not only well-known commodities within the DC government contractor community, but heavy hitters who lead some of their organizations’ largest and most critical business units.

The ten executives listed below have lofty goals to achieve and tens of thousands of employees to lead and motivate. Not surprisingly however, they are ten leaders with the track record and pedigree to hit all of their marks.

Jim O’Neill – President, Northrop Grumman IT
Staff meetings were probably a little easier to arrange decades ago when O’Neill entered the government technology space as a contract negotiator for Sanders Associates (now BAE Systems). Today, as President for the largest employer in the Commonwealth of Virginia, communicating and motivating 18,500 employees requires a little more strategic coordination. But, as he said when interviewed by ExecutiveBiz in early 2007, the company’s product is the employee which means that every single person is critical to the firm’s success.

As one of 30 companies awarded part of the Alliant ID/IQ Contract, O’Neill – and all NG employees – are in store for a busy 2008. Despite the commitments required with his day job, O’Neill served as the 2007 chairman of the Professional Services Council; recently joined the Board of Directors of Lee Technologies; and is a board member of the Northern Virginia Technology Council and the Security Affairs Support Association.

Bill Hoover – President & Chief Executive Officer, American Systems
Some executives – perhaps concerned about failing to meet lofty expectations – keep their corporate growth plans buried deep within the bowels of the C-Suite. Hoover however, has never been one to shy away for aiming big and hitting the mark, and he put a definitive stake in the ground by securing a $75 million expandable line of credit to have on hand for his aggressive acquisition plans.

Hoover has not even hit the three-year mark at American Systems, but he’s made a quick mark at the company with a plan to hit tier one status sooner rather than later as part of corporate vision/2012.

Linda Gooden – Executive VP, Lockheed Martin Information and Technology Services
After transforming a small division at Lockheed into a 14,000-employee operation it surprised few when Gooden was promoted to her current role January of last year. The U.S. Black Engineer and IT Magazine 2006 Black Engineer of the Year is now engineering a 52,000-employee Lockheed business area that embodies a concerted realignment from traditional defense contractor to fast-growing IT services.

Dan Johnson – Executive VP, General Dynamics Information Technology
Johnson’s bio indicates he is responsible for the day to day operations of GD’s 16,000 person Information Technology unit – which no doubt makes for some long days balancing short-term operational needs with long term objectives. The IT unit - formed after the December 2005 Anteon acquisition - is chugging along under Johnson’s stewardship as he aligns the two firms’ expertise (networking and mission-based services) together.

Brad Antle – President and CEO, SI International
In an ExecutiveBiz blog posting back in October, I cited Antle’s published commentary in the Washington Post about scrutiny directed at government contractors. Because Antle is held in such high esteem inside and outside the government contractor community, he was the ideal thought leader to remind readers in that piece how the overwhelming majority of contractors are playing a critical role in aiding government and military operations.

Antle assumed his current role over three years ago, and the company’s mantra of Rapid Response • Rapid Deployment® seems to be paying off as SI brought in $450 million in Federal Contracts (if all options are exercised) during September of last year alone. Beyond the revenues however, Antle has the company on a path that has earned the respect of peers. SI was named 2007 Contractor of the Year at the 5th Annual Greater Washington Government Contractor Awards.

Greg Baroni – President, Federal Systems, Unisys
While Presidential election uncertainty can be good news for lobbyists – who typically thrive when clients need to cover all bases – election years can be challenging for Government Contractors that will see ambitious new and lucrative Agency initiatives fade as November approaches.

As Baroni cited when interviewed for a recent Washington Technology story, Unisys’ Federal Systems Unit must certainly contend with that reality. But, Baroni adds, he is leading an aggressive charge to secure the most strategic and significant opportunities out there for 2008 – first and foremost holding on to the DHS Information Technology and Managed Services contract (the next iteration of which could be worth up to $1 billion) it has been fulfilling since 2002.

Baroni has helped to transform Federal Systems into a true leader in providing solutions to secure the government enterprise, and while the election year will invite the unknown for contractors, he is focused on making growth and new wins a certainty.

Donna Morea – President, U.S. operations and India, CGI
CGI-AMS might be one of the more acronym-loaded post-merger names inside the Beltway, but Donna Morea is one name that has always rolled off the tongue frequently – and favorably – within the Federal IT community.

Morea jointed AMS in 1980, and has gradually extended her leadership and involvement with area business and technology organizations – including her current role as Vice Chair of the NVTC. All of this while not only successfully integrating CGI and AMS, but growing it as well through what she described to ExecutiveBiz back in May as a “evolutionary rather than revolutionary” approach to winning business.

Morea’s interests are as diverse as her background – which focused as much on the arts as it did on business pursuits. Known throughout the community for her role as Chair of the 2007 Kidney Ball, and perhaps by pasta fans for her Internet-based Italian oil business. The good news for CGI is that while Morea’s oil might be saturated (the good kind, right), the market opportunities for her company to grow in 2008 aren’t.

Mike Bradshaw – Head of Federal Enterprise, Google
I’ve always wondered what happens when a Google employee Google’s himself. Perhaps the entire system implodes or banishes the employee to the 5th dimension. Regardless, if Mike Bradshaw, head of Google’s Federal Enterprise Unit, conducts a search these days it is likely that far more content will come up as the ever-expanding behemoth continues to make Federal IT inroads.

The Federal team has roughly quadrupled over the past year and extended its focus from search to Google Maps, Google Earth and security product offerings resonating within the Federal enterprise. Bradshaw’s predictions made to ExecutiveBiz about where the Federal space is headed in 2008 offers a window into the pain point Google hopes to address with Software-as-a-Service (SaaS) tools that Government organizations can use for collaboration, security and efficiency.

Mark Johnson – Senior VP, Oracle Public Sector
While enigmatic chief Larry Ellison is always the one associated with Oracle, the name Mark Johnson is becoming increasingly recognized within Federal IT circles as Oracle extends its plug-and-play methodology to the public sector.

The company’s recent acquisition of BEA Systems will aid Johnson’s Public Sector operation when pitching Agencies on how to improve efficiencies via SOA. Johnson is a long-term fixture at the company, and has been a tremendous part of the Public Sector unit’s ability to penetrate the market – 100 US federal government agencies - and 1,500 public sector organizations – now run Oracle applications to improve efficiency and accountability.

Rick Marcotte – President and CEO, DLT Solutions, Inc.
Before Marcotte was leading the charge to drum up Federal business for DLT Solutions, he was a drummer (don’t worry Rick, the hyperlink doesn’t take readers to an old photo) in a rock band during high school. While the long hair might be gone – thankfully not all of it – Marcotte’s growth plan has DLT’s vendor-centric model rocking and rolling along just fine.

In the hyper-competitive VAR market, Marcotte continues to help DLT achieve aggressive growth – evidenced by its recognition as one of the Inc. 5000 fastest growing private companies; Federal Times top 100 contractors and a top government integrator and GSA vendor.

Brian Lustig is co-founder of Lustig Communications, a Rockville, MD-based communications firm that works with growing technology and government IT firms. Lustig is also a contributor to local business and industry publications.

ExecutiveBiz recently asked government contracting leaders their predictions in their industries for 2008. Here are their responses:

“Flawless execution and systems integration and engineering will define the hallmarks for 2008 in our marketplace. The need for effective partnership with our government customer will be of paramount importance. An increased emphasis on stability in requirements and funding will be complemented by the need for value-driven solutions!”

– Deb Alderson, President of System and Network Solutions Group, SAIC

“The close of 2007 saw an improvement in award activity that gives the industry confidence for a robust 2008. We continue to believe shifting government priorities caused by an increased focused on the intelligence community combined with BRAC and the return of some forces from Iraq will create higher funding opportunities for federal civilian agencies, department of defense, and the intelligence community.”

– Brad Antle, President & CEO of SI International

“Agencies will place more emphasis on exploiting HSPD-12 identity management card benefits for applications like secure physical and logical access, collaboration, productivity and worker mobility. Also, outdated ERP installations will drive demand for applications modernization initiatives as requirements for business agility, information sharing, and productivity become more pressing across government.”

– Dennis Stolkey, Vice president and general manager of the U.S. government unit, EDS

“In 2008, I expect government spending in IT hardware, software and services to remain relatively flat compared with 2007. I predict that contracting vehicles such as the GSA schedules will remain the primary way to procure commodity-like technology products and services.”

– Peter Ostrow, President and CEO of Technical Communities

“The trend toward the use of government-wide acquisition and ID/IQ contracts will continue. Since there is a shortage of the number of contracting officers within federal agencies, these contracts help streamline the competitive process and can help agencies get work initiated more quickly.”

– Stacy Mendler, Chief Operating Officer of Alion Science

“In 2008, government will be gripped by mandate-mania, as agencies race to meet looming deadlines to become COOP-ready and IPv6-enabled. Of course, meeting the mandates is important, but we should also be mindful they will help prepare the country to compete globally and ensure government continuity in case of a disruptive event.”

– Haywood Talcove, vice president, Public Sector Americas, Juniper Networks

“Dollars will become stretched as agencies hold off on the results of the election, and as our military presence in Iraq continues. Tier 1 and 2 providers will execute on strategies to secure small business dollars through means other than M&A. M&A deal flow will remain soft due to the SBA recertification rule that took effect last summer.”

– Raymond Roberts, CEO of Citizant

“With National elections coming up and the end of an administration, we believe agencies will stay the course with programs currently underway. New contracts will likely be limited to those with bipartisan support, with the remainder sliding to the right. We also expect qualified talent to remain a scarce resource both for government agencies and the contractors who support them.”

– Jim O’Neill is the president of Northrop Grumman’s Information Technology sector

“2008 will be another year of gridlock for contractors…

- Presidential election year politics in full display
- Legislative “one-upmanship” the order of the day
- Costs of the war will continue its ripple effect across the entire budget
- Reality of re-certification regulation will increase the chasm between small and large companies.”

– Bill Hoover, CEO of American Systems

“Homeland security, infrastructure, health, and ageing issues constitute the top priorities for our nation in the years ahead. We will need to find new and innovative ways to link the public, private, and civil society sectors, as a Megacommunity, to address the challenges that we collectively face together.”

– Mark Gerencser, Managing Director of Global Government Business, Booz Allen Hamilton

At times, public and private sector organizations that fall under media scrutiny feel as if they are engaged in a bruising boxing match; withstanding a series of relentless jabs - some which inevitably land below the belt. And just when they are ready to launch a counterattack the bell dings and the round is over.

While Google’s experiment allowing news subjects to respond to articles they are featured in has limped along thus far, other efforts undertaken by news organizations to allow news subjects a viable platform have proven more substantive.

The Washington Post recently added a “Commentary” column to the Monday Business Section; an editorial outlet that culls bylines, blog entries and event presentations from regional executives and newsmakers. Because daily newspapers offer so few slots in the editorial page for private sector executive bylines, opportunities like this - where executives can speak and respond to coverage of a broader industry trend rather than provide marketing spin - are invaluable.

In today’s column, Brad Antle, president and chief executive of SI International, responded to the congressional and media scrutiny that has swirled around government contractors the past few months. Speaking unofficially on behalf of the Federal Contractor community, Antle addressed not only how - pardon the Halloween analogy - a few sly tricks and under-the-table treats can spoil the whole pumpkin batch, but also how the Contractor talent pool is integral to the current and future success of government and military operations.

Federal contractors are no doubt suffering lingering effects of the cozy relationships exposed between lobbyists and members of Congress and the Administration, as well as the unfettered flow of talent that seemed to pass between the two entities. Antle is quick to point out that, bad pumpkins aside, the Federal Contractor community depends on knowledge transfer from individuals who have experience in an Agency or military setting.

Antle himself, as referenced in the column and my earlier post on current Federal Contractor executives with a Navy background, served on active duty as a surface warfare officer for the U.S. Navy and as a naval reservist for three decades. His background in this capacity, and that of hundreds of other former federal civilian and military personnel who currently serve in the Federal Contractor workforce, is vital to meeting the need for qualified, experienced, technical personnel - especially as government-employed Baby Boomers near retirement.

Much of the innovation and success flowing through the Federal Contractor industry was on display earlier this month at The Greater Washington Government Contractor Awards - which celebrated established and fast-growing leaders such as SI International (named Contractor of the Year award in the $300 million plus category). The Awards event - as well as Antle’s commentary in the Washington Post - serve as reminders of what motivates Federal Contractor workers in providing the service they do each day.

Antle’s piece was not a call to quash legitimate investigations into wrongdoing. The Federal Contractor industry - like many others - is still grappling with ways to improve transparency and for the right blend of self- and government regulation. Instead, it was a call for a measured and appropriate response that does not undermine positive, tangible industry efforts.