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Four companies navigate the maze of regulations and competition facing IT firms

The federal information technology industry is facing plenty of obstacles these days: planned budget cuts, increased oversight from the Office of Management and Budget, and an Obama administration policy that favors reducing the number of support contractors.

This week, we take a look at several of the area’s fastest-growing federal IT contractors — small, medium and large — to see how they’ve kept business booming and how they plan to address coming changes.

Invincea stakes out a middle ground in hopes of winning government business

Conventional wisdom says innovation originates at small companies. But in the government contracting world, conventional wisdom also says small companies have a hard time competing against large systems integrators and established midsize firms.

Several small, local firms have tried to stake out a middle ground, producing innovative technology valuable enough to win them partnerships with major integrators and to sell directly to government agencies.

Take Fairfax City-based Invincea, a small start-up that has developed a virtual browser. The product is straightforward: It operates as a separate browser on a user’s computer, programmed to detect risky activity and ensure that it — not the computer — handles an attack.

CACI International — a major defense contractor that has opened a new cybersecurity lab in Chantilly — has already incorporated the company’s virtual browser into its government offerings. But Invincea says it’s not seeking an exclusive relationship with any major integrator, and the company is already working directly with multiple government agencies to test the product.

Invincea founder Anup Ghosh was a project manager at the Defense Advanced Research Projects Agency, but left in 2006 to work as a professor at George Mason University. Partnering with students, Ghosh developed Invincea’s technology and in 2009, backed by venture financing, began working on today’s product.

The company now has 20 employees, up from half that at the start of the year, and expects to keep hiring.

Invincea is counting on the fact that every government agency handles its procurement process a little bit differently. The company is trying to customize its approach, teaming up with larger integrators for agencies that prefer to work with a known entity and ready to sell directly to agencies willing to give a new firm a shot.

Agencies “need to realize that there are innovative solutions from non-traditionals … and sometimes they’re in your back yard,” Ghosh said. “The challenge is [large integrators] own these contracts so you have work with those guys.”

In Reston, another small, technology-focused company called KZO Innovations is building its own partnerships with large integrators. Wes Cruver, the company’s 28-year-old chairman and chief executive, founded the company four years ago as an offshoot of a nonprofit he launched at age 11.

That nonprofit specialized in training underprivileged children on how to use technology. Though it started with peer-to-peer training, it soon evolved into video-based training. That focus served as the basis for KZO, which offers video platform software that helps users create, manage and distribute content that can be used collaboratively.

The company sells the software to both government and industry; the business is split about 50-50, said Cruver. Last year, KZO received backing from In-Q-Tel, an investment firm established by the CIA to identify innovative technology that might be useful to the intelligence community.

Cruver said he is currently focused on improving his product, shying away from providing related services and content.

“We’re not going to be developing content because we’re not content experts,” he said.

Helping tech firms win government work keeps immixGroup busy

Tysons Corner-based immixGroup started as a contract management company, helping commercial technology companies unfamiliar with federal acquisition policies negotiate and manage their government contracts.

But as commercial companies became less likely to contract directly with the government, immixGroup expanded into co-selling their software and hardware products. And as commercial tech firms gained ground within the market, immixGroup expanded yet again, this time into helping them find appropriate partners and generate new leads.

Now, the business has grown from about $170 million in revenue in fiscal 2006 to about $550 million in fiscal 2010. President Art Richer credits the 170-employee company’s growth to regularly adapting its services. Today, immixGroup also has an IT solutions division that offers services in cybersecurity and other areas.

Yet the company’s purpose has stayed the same: to help commercial technology companies large and small win work with the government. Richer said immixGroup boasts 150 different commercial tech companies as clients and has worked with virtually every government agency.

In recent years, commercial technology companies have become increasingly interested in selling to the government, particularly as the economy suffered, causing a decline in the commercial market.

Yet, these businesses sometimes don’t realize that their typical sales pitches won’t work for government agencies, said Richer. For instance, commercial firms are accustomed to demonstrating how their products will increase profit — but that’s not necessarily key to the government.

The growth in the number of tech companies hoping to make federal sales, coupled with an increased government interest in commercial technology, has propelled immixGroup’s growth, according to Richer.

“They want to enter this market space,” he said. “Our offerings, I think, have made it easier.”

Commercial technology should only become more relevant in a constrained spending environment, he said, because it typically provides a cheaper approach. Following reviews by the Office of Management and Budget, Richer said, the government may look to implement commercial technology rather than developing systems from scratch.

And when smaller technology companies are acquired by larger ones, it rarely means a lost client, according to Richer. In fact, acquisitions of smaller clients helped immixGroup win work with both Oracle and IBM, he said.

CenTauri Solutions finds a secret to success in the intelligence backgrounds of its founders

Some companies are built around a key technology or product. The four founders of Alexandria-based CenTauri Solutions said they built their company around a mission: to provide the government with valuable intelligence on an increasingly challenging battlefield.

The founders were all familiar with the problems of dealing with an unpredictable enemy. James M. Kelly, a former intelligence officer in the Navy, had previously founded HawkEye Systems, bought by ManTech in 2005. Robert W. Kelly (no relation) had served as deputy assistant secretary of defense for drug enforcement and worked at the White House. Michael Yermakov had significant experience working at contractor Syntek Technologies, while Glenn Beach had previously launched a company focused on tethered aerostats.

The experience of CenTauri’s leaders and the relationships they had in place helped the firm get off the ground. Now, they say the company, after winning a spot on a key contract, is poised for more significant growth.

Earlier this year, CenTauri was selected as one of 11 companies to provide information technology services to the Defense Intelligence Agency under a broad contract worth as much as $6.6 billion over five years.

From the four founders, the business now has about 85 employees. The firm’s 2009 revenue hit $13.7 million, up from $1.5 million in 2006, according to its ranking in the Inc. 500, Inc. magazine’s annual list of the fastest-growing companies.

CenTauri provides IT support in the intelligence arena — including areas like analysis and software development — as well as integrating (but not manufacturing) unmanned aircraft and other systems used to collect intelligence.

The company’s founders knew each other well when they met to hash out a business plan for the new venture. Three of the partners — all but Beach — had worked together at HawkEye. Beach and James W. Kelly had crossed paths personally and professionally; they both were officers in their neighborhood’s community association.

In early 2006, the four sat down to sketch a business that would bring together surveillance and reconnaissance technology with intelligence analysis. The company reached a milestone after it won a piece of the Defense Intelligence Agency contract.

Now CenTauri is focusing on pitching an unmanned aircraft called Desert Hornet. The aircraft would be tethered to a vehicle on the ground and provide an expansive view of the landscape as well as identify roadside bombs.

As the Defense Department warns of budget constraints, CenTauri officials said they’re convinced they’ll still be able to grow. Beach said the company has positioned itself to work in areas — like intelligence analysis and unmanned aircraft — that won’t be curtailed.

James M. Kelly didn’t rule out selling the company if the right buyer came along. Since winning the DIA contract, he said, CenTauri has received about a call a week from companies asking whether the firm is interested in selling.