Science Applications International Corporation (SAIC) (IT Consulting)

Uncle Sam's techies

Science Applications International Corporation (SAIC) is a Fortune 500 scientific, engineering and technology applications company that solves problems of vital importance in national security, energy and the environment, critical infrastructure and health.  The company's approximately 45,000 employees serve customers in the U.S. Department of Defense, the intelligence community, the U.S. Department of Homeland Security, other U.S. government civil agencies and select commercial markets.  The firm has had a hand in some high profile government projects over the years, including the clean-up of Three Mile Island and the manufacture of the Hubble Space Telescope.  Around 500 U.S. federal, state and local agencies are on its client list, and nearly half of its employees carry some level of national security clearance.  It's no surprise, then, that government contracts have accounted for more than 90 percent of SAIC's revenue in the last three fiscal years, including 95 percent of 2009's $10.1 billion total.

While services to government clients cover a broad range of technical and scientific support, in addition to IT consulting and infrastructure solutions, SAIC's projects for commercial clients tend to be focused solely on IT services, such as applications and IT infrastructure management, data lifecycle management and business transformation services.  Commercial work, which accounted for the remaining 5 percent of revenue in 2009, is conducted within the oil and gas, utilities and life sciences sectors.

Essential components

The firm was founded in 1969 by J. Robert Beyster, a Ph.D. physicist who came in with just two contracts and the notion that the employees should own the company.  As staff joined up, Beyster promised to carve out stakes in the firm based on individual contribution, though he assured them that this was not a means of getting rich quick.  At the end of the first year, he had parceled out 90 percent ownership in the enterprise.  

Making SAIC work was no easy task, however.  With such a small operation, the scientist-owners had to fill in as the marketing and sales teams for the very work they were doing.  Before the firm turned profitable in 1970, Beyster and some employees had liens placed on their homes.  Beyster continued to recruit committed workers willing to take the long view, and contracts and revenue finally began to multiply.  The owners may not have gotten rich quick, but they certainly got rich: By the end of the 1970s, SAIC was a $100 million firm.  Today, it's a multi-billion dollar firm with locations in 150 cities worldwide.

The pick-up game

SAIC has augmented its growth and success over the years through acquisitions.  In the last six fiscal years, it has purchased almost 30 companies.  In one of the most recent examples, it acquired Maryland-based SM Consulting, Inc.  The deal, which closed in May 2008, enhanced the firm's IT consulting capabilities and added a unique dimension with linguistics services, such as translation and intelligence training.  In April 2008, SAIC picked up Icon Systems, Inc., a provider of laser-based systems and products.  

A major past transaction that helped shape the firm was the 1994 purchase, for $4.5 million, of Network Solutions.  The acquisition was extremely timely, as the company was in charge of the registry for Internet domain names.  Network Solutions would go on to raise billions in an IPO spinoff in the late 1990s, and in 1999, VeriSign forked $21 billion for SAIC's majority stake.  Not bad for an original investment of less than $5 million!  

Through a venture capital arm founded in 2000, meanwhile, the firm also seeks beneficial strategic collaborations, making minority investments in strategic emerging technologies with a tangential interest to SAIC's areas of expertise.  That has led the firm to projects such as a joint venture with engineering giant Bechtel to create a new nuclear waste repository at Yucca Mountain in the Nevada desert, a project that likely faces some considerable political opposition, not least from Senate Majority leader Harry Reid, who represents Nevada, and who seemed to have succeeded in getting much of the proposed Yucca Mountain funding trimmed from President Obama's first budget as of March 2009.  At other times, the venture capital arm may make outright purchases for the firm, as well, leading to companies such as Eagan McAllister Associates and Benham becoming wholly-owned subsidiaries of SAIC.  (The former is a tech, engineering, management and logistics company that mainly serves branches of the U.S. military, while the latter is a full-service planning and design firm that serves the federal government).

Public, but not too public

SAIC made its IPO in October 2006, bringing in more than $1.2 billion.  The original ideal of employee ownership was able to persist, however, with staff still holding about 80 percent of the company.  And new hires are not left out in the cold, as they are able to take advantage of a certified employee owner program (often appealingly abbreviated as "CEO program").  The program imparts information on the company's values, business goals and legacy of ownership.



Science Applications International Corporation (SAIC) (IT Consulting)


10260 Campus Point Drive
San Diego, CA 92121
Phone: (858) 826-6000
www.saic.com

STATS


  • Employer Type: Public
  • Stock Symbol: SAI
  • Stock Exchange: NYSE
  • Chief Executive Officer: Walter P. Havenstein
  • 2010 Employees: 43,000

Major Office Locations

  • San Diego, CA

Key Financials

  • 2010 Revenue: $11,100 million

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