Case Study: 'David' Defense Contractor Has Goliath MindsetCase Study: 'David' Defense Contractor Has Goliath Mindset

Government contractors and agencies, like everybody else, are feeling the burn of tough financial times. So how is it that one of those players grew by leaps and bounds in 2010--and has been growing steadily, in fact, since opening its doors about 14 years ago?Intelligent Software Solutions (ISS), a government contractor based in Colorado Springs, Colo., hasn't been just "making do," even as other businesses hunker down and tighten their purse strings. With about $120M in annual sales and 550 employees, this midsize business added about 100 people to its payroll in 2010 alone and is growing its revenue by about 30% year over year. ISS even opened a new location in Tampa, Fla., to support ongoing work with the U.S. Central Command. Customers include the Air Force Research Laboratory, the Department of Homeland Security, Lockheed Martin, the Pennsylvania Department of Corrections, and the U.S. Coast Guard.

Carl Houghton, vice president of strategic planning at ISS, attributes the company's success to three things: GOTS/open-source solutions, hiring practices, and attitude.

First, the contractor is capitalizing on the fact that open-source and GOTS (government off-the-shelf) software are back in favor again. Houghton says there's an ongoing debate over COTS (commercial off-the-shelf) vs. GOTS, with government agencies vacillating between the two every five years or so. With COTS software, purchasers get a preconfigured, shrink-wrapped solution they use as-is and pay for by the seat. (A 500-user license for Microsoft Office would be an example.) On the other hand, the government funds the development of GOTS software and has unrestricted use of it (no user licensing fees, that is).

"A lot of our competitors are offering COTS solutions right now," Houghton says. "The problem is that, once you spend money on the user license, what do you do if you want to add features? How do you incent a vendor like Microsoft to add the functionality you're looking for?" In this climate of diminishing budgets, the government is seeing value in owning what it pays for--in GOTS software, Houghton adds.

He says that many of the solutions crafted by ISS are 80% put together from the outset, consisting of code the contractor has written already and various open-source components such as OpenMap and JBoss. The customer is paying, in large part, for integration, customization, and support. Meanwhile, open-source software often affords greater interoperability among systems, prevents users from being locked into a particular platform or vendor, and results in lower total cost of ownership.

The second thing to which Houghton attributes much of ISS' success? Its hiring practices. "Many of our competitors hire software engineers and people just out of college," he says. "We focus on more senior, seasoned staffers, and on subject-matter experts. For example, we probably have more command-and-control expertise here at ISS than you'll find at some of the big names in government contracting." Other areas of expertise that ISS emphasizes include C4ISR, Fusion Programs, Intelligence Systems, and Maritime Security.

And then there's ISS' mindset. The contractor may be a midsize player, but it thinks and operates as if it were the proverbial 800-pound gorilla (but in a good way). "We're like the Chihuahua that thinks it's a Great Dane," Houghton says. "We take the lead as the prime contractor in most cases, and we're able to do that because of our high-level expertise and because we can demonstrate our value proposition to government agencies. It's less expensive to contract with an SMB like us than it is to contract with a larger company. And once you've got one customer convinced, there's a snowball effect."

So, what about you, SMBs? Are you a David successfully walking in a Goliath's shoes? Shoot me an e-mail and maybe you'll be the subject of my next case study.