Nearly four years after being divested from Lockheed Martin, PAE has tripled its headcount and significantly expanded the range of the services it offers.
The contractor was long known for providing support at facilities overseas, such as embassies and base camps. In 2011, when PAE was sold by Lockheed to private-equity firm Lindsay Goldberg, the vast majority of its work took place overseas and more than half of its sales were to the State Department.
Now, with three new acquisitions under its belt, the company has remade itself, focusing not only on work abroad but also on domestic training, maintenance and support services. More than half of its work is now in the United States, and less than 30 percent of its sales are to the State Department.
PAE, which collects $2 billion in annual revenue, has also grown in size, reaching roughly 15,000 employees, up from about 5,000 four years ago.
John Heller, chief executive of PAE since late 2013, told InsideDefense.com this week that the company is still seeking new acquisitions, adapting to a market that he says has expanded its scope over the last decade.
"As a contractor, we're all chasing that finite amount of dollars, but the finite dollars are being spread across a much broader, expanded market," he said during an interview in his Arlington, VA, office. "Traditionally, the market's been defined by conventional warfare support. . . . We still have that conventional requirement, but the dollars that were going there are now spread to support unconventional service requirements and support."
PAE is still seeing demand in its core business, Heller said, given the need for a U.S. role in the Middle East, Africa and other areas. But new acquisitions have helped it move into new areas.
In 2011, PAE made its first buy since leaving Lockheed when it bought Defense Support Services. The company was founded in 2004 as a joint venture between Lockheed and Day & Zimmermann and specializes in military aircraft and vehicle maintenance, logistics and base support services.
In 2013, PAE paid $175 million in cash for Computer Sciences Corp.'s applied technology division, a 5,400-employee unit that focuses on aviation maintenance, base operations and maintenance, test and training and range and space range support at U.S. bases.
CSC had acquired the unit in 2003 when it bought DynCorp.
Most recently, PAE picked up in January the global security and solutions business unit of U.S. Investigations Services, a 1,900-employee unit that specializes in litigation support, biometric capture, training, construction surveillance and security consulting.
The buy expands PAE's work with the Department of Homeland Security as well as the company's classified business.
In seeking acquisitions, PAE has sought work that will always be needed, Heller told InsideDefense.com.
"What we have always focused on is supporting enduring government requirements," he said. "Our focus has been on operations that have been there for decades and will be there for decades in the future."
The acquisition of the USIS unit also added about $600 million to PAE's work pipeline, according to the company. "There were things in our pipeline that we weren't bidding because we didn't have the customer relationships that they had and some of the experiences that they had," Heller said. "They weren't big enough to bid on certain things on their own."
As PAE seeks new buys, Heller said it would continue to pursue an expanded set of work and customers.
"What we have to do is expand our customer base as well in these other areas, so that we have the ability to go after the finite dollars that are out there," he said. "We would look for additional acquisitions that will allow us to continue to leverage our international experience and continue to add capabilities in this expanded market."