“It was     kind of like the weeder course at college in freshman year,” said Ken Blake, president and CEO of Applied Integrated Technologies, Inc. (AIT). 

He was referring to the Department of Defense cutbacks that caused weak government contracting companies to fold. While overall any DoD budget fluctuations may be relatively negligible for the agency—the recent $450-billion-plus cut in spending is an estimated 8 percent scaling over ten years—they shrink the pool of funds for technology service contractors like AIT.

The company employs around 125 people and provides IT support as well as linguist services to prime Defense Department contract winners. It was incorporated in October 2001, just as business was about to pick up due to the wars in Iraq and Afghanistan.  “At that time, government contracting was a beautiful thing to be in,” said Blake. He built his Maryland-based company using a foundation of relationships he had made and skills he had learned while working for other firms.

Since the beginning of the wars overseas, the Defense Department has awarded billions of dollars in contracts each year to private companies that handle information technology. Blake’s company, which specializes in certain areas of IT, subcontracts for those companies and earns DoD dollars that trickle down.

But during the economic crisis that started in 2007, spending on those contractors was pulled back amid widespread fiscal reevaluation. It was around this time Blake’s competitors started to feel the squeeze.

“I believe that was a good way of cleansing the over-utilized government contracting world,” he says. The marketplace was crowded with companies bidding for contracts of up to multi-billions of dollars, but not all bidders were concerned with bringing value to the U.S. government.  “What happened was a lot of those people ended up folding. [Those] who survived were the companies that are serious about government contracting.”

IT is an integral part of any industry, but Blake has learned not to take market demand for granted. He makes sure to stick to his company’s core competencies, and to remember that “you hire people and you pay people to be smarter than you.”

AIT changed its bidding strategy to adapt to the competitive environment. “[In the leaner contractor market] you have to do more work with less money…and you have to do it over many contracts instead of one big contract.” And that doesn’t look to change. The 2012 Department of Defense Budget Request overview reports that the DoD is reducing service contracts by at least $6 billion.

For more information, please visit: www.ait-i.com

Still, a changing defense budget could actually open even more opportunities for AIT. The DoD is holding civilian hiring at 2010 levels, which translates to a great potential for more outsourced work. It also plans to strengthen its USCYBERCOM hacking-defense organization.

That’s why Blake is optimistic, looking to win prime contracts for AIT and grow his company by 30 percent in 2012. “Cyber is where the next war is going to be fought, so they’re being proactive,” he said. “Obviously, I want to be proactive with them.”

For more information, please visit: www.ait-i.com