Equity firm merges Pentagon IT contractors

Consolidation in the military IT sector is accelerating with the merger of three defense and intelligence agency contractors in a deal financed by private equity firm seeking to position the new company as an agile alternative to slow-footed prime contractors.  

Washington-based Arlington Capital Partners said this week the combined company, Polaris Alpha, merges EOIR Technologies of Fredericksburg, Va., with Intelligent Software Systems, Colorado Springs, Colo., and Proteus Technologies based in Annapolis Junction, Md.

Terms of the transaction were not disclosed.

The merger creates formidable contractor with more than 1,100 employees and existing contracts worth an estimated $250 million in revenue over the next year. The merged company is being positioned between defense prime contractors and "niche players" to attract what the equity firm characterized as "a growing number of government customers disillusioned with the traditional options available to them."

Michael Lustbader, a managing partner at Arlington Capital, also noted that the combined company is "contractually well-positioned" and has benefited from technological innovations in the national security sector. Polaris is expected to compete for future DoD and intelligence agency contracts in areas such as advanced analytics, big data and cyber security along with C4ISR, signal intelligence and military space.

Arlington Partners acquired EOIR Technologies in June. Peter Cannito, president and CEO of EOIR and a former U.S. Marine Corps officer, will head the combined company. EOIR has specialized in a range of high-demand military and intelligence applications ranging from C4ISR and big data analytics to cloud computing and training and simulation.

Among its current military contracts are an Electro-magnetic Maneuver Warfare Command and Control program with the Office of Naval Research and an Army Research Lab contract to develop analytics software for surveillance and reconnaissance platforms. 

Intelligent Software Solutions provides IT platforms for the military. It employs more than 300 workers in Colorado, Virginia, New York and Florida. The company said it has won more than $100 million in government contracts this year and is continuing to hire.

Cyber security specialist Proteus includes 100 staffers and also has an office near National Security Agency headquarters at Fort Meade, Md.

Arlington Capital's portfolio of technology investments totaling $1.5 billion targets aerospace and defense technologies along with business services and software. Prior to acquiring EOIR, it had been working over the last several years with Proteus and Intelligent Software Systems.

“Polaris has invested heavily in its core technologies and has had tremendous success transitioning its R&D efforts to full-scale operations,” David Wodlinger, a partner at Arlington Capital, added in a statement announcing the merger. The deal reflects Arlington Capital's "buy and build" acquisition strategy, and Wodlinger added the combined company's "ability to develop and operationalize technology will be significantly amplified by the combined scale of the new entity."