Dave Dacquino, chairman and chief executive officer of Serco and a 2021 Wash100 Award recipient, and Tom Watson, senior vice president of the company's Defense Services Business Group, recently spoke with ExecutiveBiz regarding Serco's acquisition of Whitney, Bradley & Brown, Inc. (WBB) from an affiliate of H.I.G. Capital for $295 million.
“Acquisition Program management has been a long-term business of ours, and it’s been rapidly growing over the course of the last few years. So we're really excited to get an opportunity to expand these capabilities with both their and our customers.,“ Watson said.
“It’s always been a focus for us and we have oriented ourselves to specialize in program management. WBB is a great addition to our suite,“ Dacquino added.
ExecutiveBiz: Congratulations on your acquisition of WBB! How will this growth-oriented acquisition strengthen Serco's presence in consulting services, program management and defense?
Dave Dacquino: “We started our strategic plan three years ago with the acquisition of BTP Systems. With the purchase, we brought in engineering services, such as systems engineering. We doubled down with the acquisition of Alion Science and Technology's Naval Systems Business Unit in 2019. From that transaction, we added front end Naval architecture and acquisition support for the Naval business.
Since then, we have grown organically. We’ve done a great job of that, achieving about 16 percent, but what we found is that with respect to the Army and Air Force, it was difficult to break in and win contracts on larger programs, even though we had great references from the Navy.
With the acquisition of WBB, we will gain a suite of programs in those areas that, when combined to ours, give us a critical mass of over $100 million in each in those critical customer markets. That’s absolutely what we're most excited about is growing our business in those markets.”
Tom Watson: “When we acquired Alion’s Naval System’s business, we doubled the size of our Navy business, including early acquisition capabilities and end to end life-cycle support. We then wanted to get greater depth within the other services. This purchase gives us over $100 million each in strategically important Army and Air Force business.
It also gives us new customers with the Office of the Secretary of Defense (OSD), Missile Defense Agency (MDA), Army Space and Missile Defense Command (SMDC) and some smaller accounts. At the same time, we also added expanded capabilities and some very advanced analytic tools.
Our largest area of organic growth for the last few years has been in acquisition program management. Our strategic plan was to double down on the defense business to give us an even stronger platform to continue our growth. This acquisition increases our capabilities in the front end of the acquisition life cycle.“
ExecutiveBiz: Serco has been a trusted partner of WBB for a number of years. How has your previous relationship with the company led to this major acquisition?
Dave Dacquino: “We’ve been working with them for a while. Our people know each other. As part of a potential acquisition, we were looking for specific capabilities and when WBB became an option, we dropped our pencils and said, “˜that’s the one we want, it's a perfect fit.' Once we zeroed in on that, the more we looked, the more we liked. The culture is a great fit, the customers are a great fit and they bring great tool sets to combine with ours.”
Tom Watson: “WBB has a tremendous reputation in the market for providing great highly skilled people and fantastic support services to their customers. They’ve been on my radar for a long time. Our offices are right next to each other. Our Air Force teams support the same customers.
Sometimes we compete and sometimes we team, but we always had mutual respect for each other in the market. When the opportunity came to market, we knew that this was a perfect fit and it's right in line with our strategic plan. We were very excited to have the opportunity.
We’re a services company in a services market. Your success is dependent upon the great people that you can recruit and retain for your programs. One of the ultimate measures of success of these acquisitions is how the people are treated and how they integrate into the company. I just think that WBB is a natural fit from a culture and values perspective.“
ExecutiveBiz: More specifically, how will WBB's capabilities expand your own in advanced areas such as artificial intelligence and machine learning as well as data, cybersecurity and other areas, and how it will support the Department of Defense (DoD) and the U.S. military?
Dave Dacquino: “Serco focuses on three market sectors: defense services, citizen services, and transportation.
For example in the Citizen Services market, we support the Center for Medicaid and Medicare program, CMS. We have made incredible advancements with the use of artificial intelligence (AI) and robotic process automation (RPA) to implement intelligent automation to help match data and enable Americans to figure out whether they qualify for subsidies under the Affordable Care Act (ACA). We’ve realized that this technology for benefit analysis transfers to other customers such as Veterans Affairs.
We’ve also seen some of our advanced technical capabilities being used with our federal civilian customers to easily be replicated with our defense customers.”
Tom Watson: “Cybersecurity is obviously something that’s on everybody’s mind. It is a big part of our industry, and it's embedded in a number of our programs where we help our customers, in certification and accreditation, or penetration testing, but we don’t do it at a large scale.
The WBB acquisition gives us a far more scale with the cybersecurity capability. One of WBB's large contracts is with the MDA, where they are providing the cybersecurity hardening for both the enterprise and systems that are being produced and acquired by MDA.
That's a big enterprise qualification that we can add to Serco's capabilities, experience, and performance. WBB is doing a lot with Artificial Intelligence and data analytics within the DoD, such as OSD, the Army, and the Air Force.
They’re also applying other advanced information technology (IT) tools to programs, which are easily leverageable when you understand what the capabilities are and how we can bring these services to our customers. WBB is a great fit from a technology perspective. We’re really excited about it.“
ExecutiveBiz: Once the acquisition is completed, you're forming a new business unit with WBB's assets as well as the company's 1,000 employees and 200 subject matter experts. What can you tell us about the new business unit, the appointment of Robert Olsen and your goals heading into 2021?
Dave Dacquino: “They’ve got a great plan. We are bringing over a company that is healthy and growing, so we want to let them continue that process.
We’ve been very clear, and Robert from WBB has been very clear, our continued focus is on support of the mission, supporting our customers. Once we have integrated, we will look for synergies which means programs that we can now bid together that would have been a stretch for either of us to bid alone.
Our goal is to show our customers what more we can provide them. And that’s the exciting part of the business. This acquisition is all about growth. That is what we demonstrated in the last two acquisitions.
We integrated Alion's NSBU over a year and a half ago and haven’t lost one single executive, and that’s impressive. Once WBB comes on board, we will look at our big family and portfolio, and determine future opportunities we want to chase.
Most companies buy for scale, and they cut heads for costs. That’s not what we’re doing here. Once WBB is a part of Serco, we’re growing the business together. We took this approach of not using personnel cuts to get cost synergies on our last 2 acquisitions and we’re going to do that again here. No one does that in the industry.“
Tom Watson: “We’ll get some cost synergies out of our real estate. I’d much rather pay for people than real estate. We have common locations that we’ll be able to combine. We are not looking at the success of this deal measured by how many people we cut. We do measure the success of this deal on how we grow this business together with the added talent we are getting from WBB.
It's measured by the opportunities that we create for our people, and the synergy opportunities that we can identify together by going to market together, either by cross selling existing capabilities to our existing customers or leveraging into new customers.
We’ve already identified $500 million in new opportunities that we’re going to be able to bid in this coming year, as a result of this acquisition. These are deals that we could not have done otherwise, if not for this acquisition. I look at this as an opportunity for growth and as an ability to create careers here at Serco and for WBB.“