CSRA executives tout benefits of new company

In an investor day held this week, executives at the soon-to-be-created CSRA said the company will be well positioned in a changing government services market.

The new company will be created by separating the U.S. public sector work of Computer Sciences Corp. and merging it with SRA International to create a new contractor known as CSRA and led by industry veteran Larry Prior.

The new company will have about $5.5 billion in annual sales – about $2.9 billion in civil work and $2.6 billion in defense and security business.

About 76 percent of the company's work will be related to information technology, while 24 percent will be mission services, company executives told investors. Prior said IT is an area where federal agencies will simply have to invest.

“They've got to modernize their legacy IT systems to next-gen,” Prior said. “It's just inevitable.”

He told analysts about 42 percent of CSRA's contracts are fixed-price, a higher rate than many peers, and described the company as “so frugal.”

“I share a table with 12 other people,” Prior said. “It is a discipline and a commitment to put your investment in places that make a difference around technology, as opposed to having a walnut-covered office.”

“Those days are gone,” he continued. “Any C-Suite where it's got oriental carpets and it's got wood paneling -- short the stock.”

Size is key to CSRA's efforts to reposition in the market. Mike Lawrie, the chief executive of CSC who will run the remaining commercial and international business once the government unit is separated, said he expects continued consolidation within the government services market.

At one point, he said, CSC considered trying to get bought by someone else.

“Fundamentally, we at CSC and the board made a decision to be a consolidator as opposed to a consolidatee,” he said this week. “That was a change in strategy.”

That switch, Lawrie said, came when the board and the leadership team started “to get comfortable that we could actually begin to grow this.”

“We reversed strategy, reversed course and decided to be the consolidator and be one of the first to drive that process,” he said.