- The Washington Times - Tuesday, March 25, 2008

Reston-based federal contractor NCI Inc. this month agreed to take over a U.S. Army contract from MTC Technologies to train soldiers on new equipment.

The contract is valued at up to $382 million if the Army continues through its scheduled completion date of April 2015. The companies plan to close the deal by the end of this month.

NCI, an information-technology company, said it would use the contract to broaden into “the professional services market.”

The contract is divided into three segments: Program Executive Office Soldier (PEO Soldier), Project Manager Soldier Warrior and Project Manager Soldier Equipment.

“The strengths of the PEO Soldier team, when combined with NCI“s core offerings, will open new customers and opportunities for our company and support our organic growth objectives,” said NCI Chief Executive Officer Charles Narang.

The contract covers engineering services and support for integrating equipment into the military. NCI said it would retain the professionals MTC Technologies used for the program.

MTC Technologies divested from the contract under a merger agreement with BAE Systems announced this year. The companies said the Army contract would have created a conflict of interest.

Terms of the deal with NCI were not disclosed.

For the fourth quarter of last year, NCI reported record revenues of $88.2 million, compared with $64.6 million for the fourth quarter of 2006. Net income was $3.3 million, or 25 cents per share, compared with $3.1 million, or 23 cents per share, a year ago.

Its stock, NCIT on the Nasdaq, closed yesterday at $18.90 a share, up 40 cents or 2 percent.

NCI serves civilian customers as well as defense and intelligence agencies.

Mr. Narang said the company’s major accomplishments of the past year included the acquisitions of engineering firms Karta Technologies and Operational Technologies Services, which expanded its customer base.

Industry analysts generally rank NCI shares as high-risk but a good investment.

“With strong new order flow to end 2007 and record firm and total backlog, NCIT is well-positioned heading into 2008,” said Chris Donaghey, a research analyst for investment firm SunTrust Robinson Humphrey.

Heavy defense spending in the federal budget recently approved by Congress will be good for NCI in the current fiscal year, Mr. Donaghey said.

NCI “has been well-insulated to the funding issues which have affected other government [information technology] providers due to its size and position within programs which are operational and/or critical in nature,” he wrote in a research note to clients.

Analyst Michael S. Lewis of BB&T; Capital Markets said NCI’s takeover of the MTC Technologies contract would open the door for other business opportunities.

As a result of the PEO Soldier contract, “we think the firm is in a good position to capture additional market share in higher-end systems engineering work with the customer,” Mr. Lewis said.

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