It’s a great time for government contractors. Yes, despite everything you’ve heard — insourcing, plus talk of a “global war on contractors” — the time is now for the industry to make its mark. John Hillen recently carried that message to Wall Street, where his company, GLOBAL North America was officially listed on NASDAQ as Global Defense Technology & Systems, Inc., (GTEC). That move effectively ended a three-year IPO drought in government contracting. “It was a bit of a homecoming,” says Hillen, who started his business career in financial services on Wall Street. “In terms of GTEC,” he says, “to go through the whole process with the SEC and then have that come to fruition not only as an IPO but a successful IPO was a great victory for everybody involved.” On the heels of a strong public showing, ExecutiveBiz recently spoke with Hillen about his plans to further GTEC’s contributions to national security in 2010 and beyond. We learned an important priority for GTEC right now: the duality the American public has in defense companies; both as end customers of national security efforts and advancements, as well as potential shareholders in the company.
ExecutiveBiz: This is the first IPO in government contracting in three years. What benefits do you see for GTEC, and other companies in the defense industry, to go public?
John Hillen: Almost all our work is connected to national security. There is only one stakeholder for all of that work being done by the government — and that is the American public. I think those kinds of companies, or many of them anyway, should be public. That way there is a double stake of the public in companies like ours. Not only do they have a stake in us working with our customer to keep America – and by extension them, the citizens safe – but also by being able to invest in public companies like ourselves.
ExecutiveBiz: What growth areas do you see in government contracting, particularly defense, over the next few years?
John Hillen: I think this is going to be a great time for government contractors. Three factors alone — mission, technology ownership, and the management flexibility needed by government— [demonstrate] the market will remain strong for government contractors for a while. On the mission side, if you look at today’s counter insurgency operations, for instance, those kinds of missions fall in between the seams of a government that is still largely organized for Cold War-type threats. So we need contractors to plug mission gaps that the customer has. Technology ownership cases are even more telling. The government really isn’t set up to own its own technology, especially information technology. It needs outside expertise for that. The last factor is demographics. That is a huge demographic bow wave of [government] retirees coming. The government has said they’ll hire more but they are not a very fast hirer as an employer. And they need the management flexibility of an external workforce to complement their government employees. One of the things I enjoyed when I was a senior government official was the flexibility of being able to have an internal and an external workforce, [the latter which] I could manage without all the deliberate processes needed for my internal government workforce. Government managers need that flexibility.
ExecutiveBiz: What intelligence issues are we as a country taking for granted? How does GTEC plan to address them?
John Hillen: The essential challenge of our government in the intelligence space has shifted. For decades we spent a lot of time focused on collection. The challenge [now] is how do we organize it, mine it, search it, collate it and then package it into packages that people can act on. The attempted airline bombing [of Detroit-bound flight] is an example of that [necessity]. There was information out there. There was information on Major [Nidal Malik] Hasan before his attack on Fort Hood. We didn’t have the systems in place to put all of the information in the right hands, at the right time. That’s going to define the intelligence challenge for quite some time.
ExecutiveBiz: What acquisitions might we expect from GTEC?
John Hillen: All our work is oriented around the unique missions of our customers that only they can perform. We don’t’ do generic IT work. In other words, we don’t do anything for the intelligence community that is also an institutional need for, say, an IBM or other big company or institution. The institutions we do work for have very generic needs and very unique mission needs and all our work is on that mission side. So, we’ll look for acquisitions that keep us in that mission space, that have original engineering or technology solutions to the mission problems of national security customers. We will look for acquisitions in new customer areas. We are very strong in some customer spaces; it’s other customer spaces where we need to get stronger. There will be basically the three criteria for acquisitions: Do they add to our mission capabilities? Do they add new elements to our differentiated technology or engineering solutions? Or, do they put us in a new customer base?
ExecutiveBiz: Eric Rangen was recently appointed to your company’s Board of Directors. What else can you tell us about your leadership team in 2010?
John Hillen: We’ve essentially assembled a board and management team to run a billion dollar company. We are just over a $200 million company today. We are all growth-oriented managers and we’ve all built up firms in defense, intelligence, and the federal IT sector that are much bigger than GTEC today. Our Board of Directors, including Eric Rangen, are former senior government officials and industry figures at a very high level, including experts in America on intelligence, acquisition and defense procurement. Our [Board of] Directors, combined with our management team, gives the management nucleus and government expertise to build this firm quickly and decisively.
ExecutiveBiz: What leadership advice would you give CEOs of smaller companies?
John Hillen: The same advice we follow ourselves: Pick your spots and do good work for your customer that distinguishes you in their eyes. There is nothing worse for a mid-sized company than to be seen as interchangeable with other firms by the customer. The recent procurement trends have not been kind to generic mid-sized companies. There was a trend in this industry for the past couple years: The customer wanted simplified buying, so they rolled more work up into big contracts that only four or five big prime contractors could bid on. Thankfully, senior government officials are starting to realize that the buying needs of the government are too complex for that. We are starting to see a splitting up of procurements and acquisition strategies. That will provide opportunity for differentiated smaller and medium- sized companies to prime – as we almost always do. These kinds of companies need to really be a partner who the customer knows well rather than an invisible subcontractor standing behind one of the big prime contractors.
ExecutiveBiz: What do you strive toward in terms of leadership style?
John Hillen: One of the things that we try do — not just me, but the whole team — is to be accessible. We don’t like to sit gated up in an executive suite making decisions without much input. We want to be visible and accessible because in a knowledge environment we attract the smartest people who know our customer’s mission and the technology. Our employees teach us and that helps us with the essential activity of an executive – decision making. That’s the kind of environment our employees want to work in as well.
ExecutiveBiz: Your father was an accomplished and interesting man. What business lessons can he teach future leaders?
John Hillen: My dad was a big influence on my life and on the lives of a lot of people in this community. He not only had a very storied military career, he was one of the very first guys to join SRA. I always say if you go to Borders and look at the bookshelf on business leadership – at the end of the day there is probably hardly anything there your mother and father didn’t tell you. I often feel that way about business leadership. Treat others the way you want to be treated. Inspire rather than trying to direct everything. Inspire people to achieve within the broad parameters you set. Life lessons of that flavor are a lot of what I take away from my dad.
ExecutiveBiz: Like your father you count military service, along with government and industry experience, as part of your background. Now you’re featured in the recent book on Desert Storm, Warrior’s Rage. Tell us about that.
John Hillen: Ironically, for a guy who spent most of his life on cutting edge IT and has written a lot about new threats, the biggest chapter in my uniformed military career was being a part of what was the last tank battle the world will probably ever see. On February 26, 1991 I was in an armored cavalry unit, which are tanks and Bradley fighting vehicles. We blundered in the middle of a sand storm into the middle of an Iraqi Republican Guard Brigade of tanks. They were very prepared and fought back in a very coherent and organized way — one of the few battles [in which they did]. The battle is now a much-studied affair by the US military. I was very blessed to have served in that and to have come out on the other side of it along with a lot of great people; the unit received a Presidential Unit Citation for it.
To watch John Hillen speak about his father, click here.
To watch John Hillen speak about the book, Warrior’s Rage, click here.