3877 Fairfax Ridge Road
Fairfax, Virginia 22030
Telephone: (703) 383-8000
Toll Free: (800) 432-4284
Fax: (703) 556-9290
Web site: http://www.btg.com
Wholly Owned Subsidiary of The Titan Corporation
Sales: $224.8 million (2001)
NAIC: 541512 Computer Systems Design Services
BTG, Inc. provides information technology (IT) expertise to government and commercial enterprises. The U.S. Department of Defense accounts for 60 percent of sales. A variety of federal and state agencies avail themselves of BTG’s services. The company has facilities in 11 states and Washington, D.C.; its employees also work at customer sites. IT giant Titan Corporation acquired BTG in late 2001.
Edward Bersoff founded BTG, Inc. in 1982. (The initials stood for Bersoff Technology Group, not Bill The Government, reported the Washington Post.) Before founding BTG, Bersoff had been an executive at CTEC Inc., a systems integration firm in Wilkes-Barre, Pennsylvania, for several years, and before that he worked for Logicon, Inc. He had begun his career in the Army, which assigned him to a NASA facility in Cambridge, Massachusetts, in the 1960s.
BTG was headquartered in Falls Church, Virginia, a suburb of Washington, D.C. The company was dedicated to systems development, including requirements analyses, design, development, product assurance, maintenance, and training. The company’s original four employees worked out of a basement at first.
A 1987 plan for Logicon Inc., a publicly traded electronic systems and high-tech services company, to acquire BTG was canceled due to falling stock prices. Bersoff felt that BTG, then billing $25 million a year, was too small to survive on its own in the era of post-Glasnost defense cuts. He sought to double the firm’s size in 1990 by buying Systems Exploration International (SEI), a computer engineering support company based in San Diego. Before BTG could acquire it, though, SEI had to settle an $875,000 claim from Olin Corp., a huge conglomerate, which had sold SEI its Martin & Stern subsidiary two years earlier. The bizarre episode resulted in Martin & Stern employees being evicted from their offices after the company missed a rent payment to Olin.
In spite of the defense slowdown, BTG’s revenues grew 15 percent to about $30 million in 1991, though profits were static. BTG’s specialty, software for intelligence analysts and commanders in the field, was in high demand following the Persian Gulf War, noted the Washington Post.The company had 300 employees, its most to date. Still, like most other defense firms, BTG found capital increasingly harder to obtain.
In April 1992 BTG and Hughes Aircraft Co. won a contract to supply the Navy with up to 4,300 computer workstations. The deal was potentially worth $100 million over eight years.
By this time, BTG had begun to look for work outside the defense sector. It installed an electronic security system at George Washington University. The company collaborated with the National Institutes of Health to develop a system to produce 3-D X-rays. The Federal Aviation Administration tapped BTG for a ten-year program to overhaul the country’s air traffic control system.
A New Business in 1992
In 1992, BTG merged with BDS Inc., a Sterling, Virginia, computer reseller valued at $27 million. BDS’s vending capabilities complemented BTG’s software systems business nicely. After the merger, BTG was organized into two operating units: BTG Systems and BDS Technologies. Entering the reselling and systems integration business would help BTG boost revenues by 800 percent in the next four years. The company was eventually reorganized into three units: engineering for defense agencies; engineering for civilian and commercial markets; and reselling.
BTG logged revenues of $103.6 million in fiscal 1994. Profits were $1.8 million. Defense work still accounted for three-quarters of business. The company won a $160 million contract to provide defense and intelligence agencies with off-the-shelf software and services.
In July 1994 BTG paid $2 million for ACTech, a company that customized computers for the Department of Defense and had annual revenues of $15 million. Arlington’s Delta Research Corp., which specialized in environmental management for military bases, was acquired later in the year for $3 million.
Public in 1995
Around 1992, venture capitalists that had invested in BTG were pressuring Bersoff for a quick development of one of the company’s product lines, and the subsequent opportunity to exit the venture within a year via an initial public offering. Bersoff negotiated for a less accelerated approach; BTG went public in December 1995. The offering netted $9 million and Bersoff retained 20 percent ownership in the company. By this time BTG had more than 600 employees. Revenues for fiscal 1995 were $156 million.
Spencer Gifts, operator of mall novelty stores, hired the firm to develop an encryption system for handling customers’ credit card information over the telephone. Then, in September 1995, BTG bought Concept Automation Inc. (CAI), another Washington-area systems firm, hoping to reduce dependence on defense work. CAI boasted contracts with several non-defense federal agencies and had annual revenues of about $84 million.
In December 1995, two partnerships, led by BTG and Cordant Inc., together won a $929 million Air Force contract to allow defense and intelligence agencies to order computers and software via the telephone and the Internet. BTG won a similar, $1.1 billion contract from the Department of Transportation in May 1996. This merely set up BTG as one approved vendor among several, however—part of a new government procurement policy designed to allow agencies to order equipment and services more quickly than the traditional, cumbersome “winner takes all” approach of awarding large contracts to a single vendor.
The company moved to a new headquarters in Fairfax, Virginia, around 1996. Annual revenues jumped from $214 million to $156 million in that fiscal year. Net income, down slightly to $3 million, was affected by federal government shutdowns.
The company was expecting 1997 revenues to exceed $400 million. This proved nearly accurate and soon BTG was aiming for revenues of $1 billion by fiscal 2000. This would not happen, in part because of the sale of the company’s product reselling unit in February 1998, which cut product sales 84 percent.
In spite of BTG’s considerable success in the government sector, margins were shrinking there and the company’s management felt a need to diversify into the faster-growing commercial sector. In mid-1996, BTG formed a subsidiary, Community Networks Inc. (CNI), to provide high-speed cable modem internet service. Loudoun County, Virginia, was its first test market. The commercial market proved difficult to enter, and CNI was a case in point. BTG invested more than $5 million in CNI while failing to sign up enough customers. Bersoff announced plans to fold CNI, which was costing BTG $400,000 a quarter, into BTG’s other operations in 1997, ending its existence as an independent subsidiary. Commercial ventures accounted for only 11 percent of BTG’s business in 1997, hurting both its bottom line and share price, reported the Washington Post.
Buying and Selling in the Late 1990s
In late 1997, BTG announced plans to buy New York-based Micros-to-Mainframes Inc., a commercial sector network integration specialist, for $25 million. A few months later, BTG sold its reseller division, which had 320 employees, to rival Government Technology Services Inc. (GTSI) for $23 million in cash and stock. A group of five BTG vice-presidents made a competing offer for the unit; the division’s employees were not happy about GTSI’s plans for job cuts or the prospect of working for their archrival, whom Bersoff himself had once compared to Star Wars villain Darth Vader. Ultimately, GTSI prevailed over the management group. The deal left BTG with a 30 percent holding in GTSI, although it began selling those shares back to GTSI in February 1999. The divestiture marked BTG’s return to being a pure services company, noted one analyst in the Washington Times.
BTG reported a $35.2 million net loss for the fiscal year ending March 31, 1998, mostly due to the sale of the reselling division and the discontinuance of the CNI cable internet venture. Revenue was $588.9 million.
Our Goal: Ensure our client’s success. At BTG, we believe that technology must help clients accomplish their missions and business goals. Whether your business is government or commercial, our job is to understand your needs and apply the right level of technology to satisfy them. Technology is not leading-edge —unless it gives you the edge over your competitors.
BTG bought STAC Inc. of Fairfax, Virginia, for $5 million in January 1999. The $14 million purchase of SSDS Inc., a Denver-based network security firm, followed in the spring of 2000. BTG then bought Research Planning Inc., a local provider of high-level support services, for $9 million in April 2001. The fact that 90 percent of Research Planning’s 450 employees held security clearances made it an attractive buy, according to Bersoff.
Annual revenues slipped to $225 million in fiscal 2001 from $249 million the year before. Titan Corporation, a $1 billion San Diego defense technology firm, announced in September 2001 that it was acquiring BTG for $174 million in stock and cash, including the assumption of $32 million in debt. BTG became a wholly owned subsidiary of Titan after the merger.
BTG Systems Engineering, Inc.; BTG Technology Resources, Inc.; Delta Research Corporation; Nations, Inc.; STAC, Inc.
Analysis and Consulting; Solutions Development; Systems Integration; Operations and Support.
CACI International Inc.; Dynamics Research Corporation; Emergent Information Technologies, Inc.; PRC Inc.; Science Applications International Corporation; SM&A Inc.
- BTG is founded by Edward Bersoff.
- BTG enters product reselling business via acquisition of BDM, Inc.
- BTG goes public on the NASDAQ stock exchange.
- Short-lived CNI cable internet venture is launched.
- BTG sells reseller business to rival GTSI.
- The Titan Corporation completes purchase of BTG.
Behr, Peter, “The High Price of Money: Giving Up Some Control,” Washington Post, July 17, 1995, p. F15.
Bhambhani, Dipka, “Stock Price No Concern to Fairfax, Va.-Based Information Technology Firm,” Washington Times, March 27, 2000.
Cassidy, Padraic, “Acquisitive Titan Grabs BTG in $174 Million Deal,” Daily Deal, September 20, 2001.
Chandrasekaran, Rajiv, “BTG to Offer Internet Link Via Cable; Loudoun County to Be Test Market,” Washington Post, August 7, 1996, p. Fl.
Day, Kathleen, “Two Va. Companies Make Acquisition Bids,” Washington Post, September 22, 1995, p. C3.
“800 Percent Growth; BTG’s Venture into Reselling and Systems Integration Has Boosted Sales from $50 Million in 1992 to $213 Million in 1996,” VAR Business, August 15, 1997, p. S144.
Estrada, Louie, “Unfazed by Defense Cuts, Contractor Extends Its Reach,” Washington Post, August 22, 1994, p. F11.
Haggerty, Maryann, “BTG’s Stock Wounded by High Expectations,” Washington Post, January 30, 1995, p. F25.
Hinden, Stan, “BTG Studies the ABCs of Going Public,” Washington Post, November 7, 1994, p. F29.
Kopecki, Dawn, “Growth for Growth’s Sake at BTG Inc. Worries Analysts,” Washington Times, November 24, 1997.
Leibovich, Mark, BTG’s Commercial Sector Struggle; Government Contractor Finds Rough Sailing As It Charts a Course in Unfamiliar Waters,” Washington Post, November 3, 1997, p. F5.
_____, “BTG Vice Presidents Bid for Unit Sought by GTSI,” Washington Post, January 23, 1998, p. G1.
Lipton, Eric, “Two Fairfax Firms Win $929 Million Contract,” Washington Post, December 2, 1995, p. F1.
Pearlstein, Steven, “The Big Squeeze; Pentagon Cuts Bring a New Era for Area Defense Firms,” Washington Post, January 13, 1992, p. Fl.
Richman, Tom, “Beyond the Start-Up Team,” Inc., December 1987, p. 53.
Schatz, Willie, “Dispute Put the Brakes on BTG Takeover Plans; Apparent Settlement Reached to Acquire SEI,” Washington Post, May 7, 1990, p. F5.
Schrage, Michael, “Software Research Group Set; 11 Major Contractors to Combine Efforts,” Washington Post, October 10, 1984.
Sugawara, Sandra, “Vienna Firm, Hughes Win Computer Contract,” Washington Post, April 2, 1992, p. B10.
Swisher, Kara, “Government Contractors See Changes in Competition,” Washington Post, May 25, 1996, p. Fl.
—Frederick C. Ingram