- The Washington Times - Monday, June 10, 2002

Jeffrey Hall stood in a bathroom last week at a Rockville restaurant with three local actors filming a short scene on a digital camera depicting two men holding up an unsuspecting truck driver.
The assailants took the driver's keys at gunpoint, intending to use his gasoline-filled truck in a terrorist attack at a military base.
Mr. Hall, chief creative officer at WILL Interactive, in Potomac, Md., will use the footage in an interactive CD-ROM for the Defense Department. Until September 11, WILL Interactive made corporate training materials for companies, educational software and interactive CD-ROMs for students on more personal subjects like whether to drink alcohol.
But since the terrorist attacks last year, the company is focusing on the federal government. Commanders of U.S. military installations will use the CD-ROM that Mr. Hall is working on to help them decide how to react in the event of terrorist strikes against U.S. military bases.
"We're not in the hills of Afghanistan, but we feel like we're contributing," Mr. Hall says.
Now the promise of future federal government contracts is so compelling that WILL Interactive Chief Operating Officer Lyn McCall predicts half the firm's revenue could come from federal business this year. That's up from an an estimated 10 percent last year.

Jockeying for position
WILL Interactive and legions of other tech firms are scrambling to position themselves for a shot at the billions of dollars the federal government will spend on security and information technology in the wake of the attacks.
Tech companies are being lured by the $37.7 billion the Bush administration is proposing to spend on homeland security in fiscal 2003. Firms shifting their attention to the federal government include those whose software that mines data from the Internet, those with software that improves sharing of information between agencies and those that protect computer networks and databases of electronic information from hackers.
Some are establishing a public-sector division from scratch. Others are swiftly ramping up public-sector sales offices that were in place prior to the terrorist attacks.
But if the thousands of proposals submitted to the federal government by tech firms recommending how to bolster security are any indication, there will be stiff competition for the money.
"Everyone is trying to position themselves as a federal contractor," says Payton Smith, manager of public-sector market analysis services at INPUT, a market research firm in Chantilly, Va., that measures federal technology spending.

Follow the money
Until recently, chasing federal contracts was not a significant pursuit at WebMethods Inc.
WebMethods ended fiscal year 2002, which closed March 31, with $196 million in revenue. But only about 6 percent of revenue came through federal contracts. WebMethods co-founder, Chairman and Chief Executive Phillip Merrick hopes to increase that to 25 percent of annual revenue within two years.
The Fairfax software company was founded in 1996 and became one of the region's most recognizeable technology firms under Mr. Merrick's direction.
Mr. Merrick and his wife, Caren DeWitt, started WebMethods to develop software that integrates computer systems both within companies and between companies, and it marketed the software largely to private sector firms. The strategy worked just fine. The couple began WebMethods in their basement, and nearly four years later the company held one of the most successful initial public offerings ever, based on the first-day percentage increase of its stock price.
Two new high-profile employees will bear much of the burden for reaching that goal.
Len Pomata, the former president and chief executive at Litton PRC Inc., joined WebMethods March 11 and will take over as the president of the company's federal unit. Litton PRC, now a part of massive defense contractor Northrop Grumman Corp., is among the leading information-technology firms and has marketed services heavily to the federal government.
Don Upson, the former secretary of technology for the state of Virginia, joined the company last week after weighing a handful of opportunities, including opening his own technology consulting firm. Mr. Upson was named senior vice president of business operations for WebMethods' federal unit.
WebMethods is banking on the duo's familiarity with Capitol Hill and Capitol Hill's familiarity with them to help it market its software.
"The contacts [developed as Virginia's technology secretary] are one thing, but I think I know how government works," Mr. Upson says. "If we aren't careful we will miss an opportunity to convince the government to spend money on really good technology and the money will go toward guns, guards and gates."
Their appointments at WebMethods represents a reuniting. Mr. Upson and Mr. Pomata worked together at Litton PRC until former Virginia Gov. James S. Gilmore III made Mr. Upson the nation's first cabinet-level technology secretary.
Mr. Pomata already has bolstered the federal division at WebMethods to include 15 employees, and the company plans to boost the staff to about 30 people within a year.
"Obviously they aren't the only hires we will make. We are building a significant business unit under [Mr. Pomata and Mr. Upson]," Mr. Merrick says.
Mr. Merrick isn't divulging the total investment WebMethods plans to make in its new federal unit, but the company's strategy indicates its leaders believe the federal market is potentially lucrative.
"The federal market is one that will be good for many companies, if they understand it," Mr. Pomata says.
One of WebMethods' biggest federal customers now is the National Security Agency, which uses the company's software to integrate separate databases of electronic information to help agents share data. Other agencies, like the Immigration and Naturalization Service, have multiple databases that are incompatible, and WebMethods will target them, Mr. Pomata says.
The software could also help separate agencies share information from their databases. It has become known that officials within the INS, the Federal Bureau of Investigation, the Federal Aviation Administration and other agencies each had some information about members of al Qaeda who hijacked U.S. commercial airliners. But there was no way for agencies to gain access to data locked in computer networks belonging to other agencies.

Not so fast
Few local technology companies are leaping into corporate restructuring with the same enthusiasm that WebMethods has demonstrated.
Patrick J. Sweeney II, president and chief executive of Sterling, Va., tech firm ServerVault Inc., reassigned one person within the company in January to begin searching for federal business. He also hired one person who begins today from a bankrupt competitor to help in the pursuit of federal business.
Panos Anastassiadis, chief executive of Arlington data-mining firm Cyveillance Inc., has a federal unit consisting of two persons.
Mr. Sweeney founded ServerVault in 1999 to market secure Web-hosting services. So far, its customers consist mostly of private-sector firms, including the Carlyle Group, Capital One and the National Football League. Now he is eager to market secure hosting and secure computer networks to federal agencies, which are common targets of aggressive hackers who try to cripple Web sites and tap into databases.
"We had always planned on generating probably 20 percent of our revenue from government sources, but we never got to the point where we saw the traction. So we didn't do it," Mr. Sweeney says.
Until now. That's because even a single contract would have a significant impact on a small, privately held company like ServerVault.
"I think nailing down a couple of federal clients will give us a lot of operating leverage to do the kinds of things we want to do in terms of growth," Mr. Sweeney says.
But with so many firms seemingly getting in line for a shot at federal government contracts, there likely will be vigorous competition for the nearly $38 billion the Bush administration will spend on homeland security. As an indication of the interest that tech firms have in the issue, companies have submitted more than 30,000 proposals to the Office of Homeland Security recommending how they can help bolster national security.
"I wouldn't like to be the government right now. These guys must be bombarded by companies they've never heard of. It's probably like winning the lottery and you start hearing from everyone you ever exchanged business cards with. Suddenly they all want to be your best friend," Mr. Anastassiadis says.
Most federal information-technology funds historically have gone to behemoths like Lockheed Martin Corp., the Bethesda firm that was the leading federal contractor in fiscal year 2000 with $3.3 billion in contracts, according to McLean, Va., research firm Federal Sources Inc.
Los Angeles based Northrop Grumman ranked second with $1.6 billion in federal contracts.
Still, Mr. Sweeney is optimistic about the ability of small companies to compete with giants like Lockheed Martin.
"Until September 11, I think the government was particularly close-minded about doing business with small companies," Mr. Sweeney says.
With the exception of an emergency supplemental appropriation of $40 billion immediately after the terrorist attacks, the federal government's homeland defense effort has led to little spending on technology and security projects. Instead it's the lure of big contracts that has technology firms jockeying now to get federal business.
"Anecdotally, I think there's a lot of frustration that money hasn't been released," Mr. Smith says.
Many firms expect federal funds will begin to flow their way beginning in October.
But if it doesn't, companies that raced to start federal divisions within their companies to market products and services to the government could move just as quickly to shut them down.


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