Reston, Va. — When Pragmatics Inc. decided that it was time to leap beyond the realm of small business, the IT services provider went back to school. To pull even with or get a leg up on its larger competitors, the firm trained for and won a number of high-level technical certifications, including ISO [International Organization for Standardization] 9000, a quality management series designed to improve productivity, accountability, and customer service.
Dr. Kim Nguyen, the company’s co-owner who guides its strategic development, says that Pragmatics has gone through a continuous process of improvement to secure its spot in the midmarket: “We’ve had to transform ourselves multiple times to get where we are today.”
With about 600 employees, other offices in Tampa and St. Louis, and a few smaller satellite facilities, the family-owned company’s revenue in 2012 was in the $190 million range.
To climb upward, Pragmatics put the emphasis on winning large government contracts, a business plan that first bore fruit in 1997, when the company was named one of the prime contractors on a $610 million Defense Department contract to assist the Defense Information Systems Agency. This first federal contract put Pragmatics in the same competitive arena as the Lockheed Martins and Northrop Grummans of the world and provided the impetus to remain there.
Other contract wins soon followed, from the Army, the Justice Department, and the Treasury Department. Today, Pragmatics has 19 federal IT contracts with the departments of the Army, Health and Human Services, Homeland Security, and State; the Federal Deposit Insurance Corp.; the General Services Administration; and several intelligence agencies.
“Our growth has all been funded through retained earnings,” Nguyen says. There has been no outside investment even to fund the 2010 acquisition of Innovative Solutions International Inc., a privately owned engineering and consulting firm specializing in aviation-related satellite technologies for the Federal Aviation Administration. By adding specialists in air traffic management and flight safety, Pragmatics has become an even stronger player in the government’s growing role in aviation.
“We want to combine our information technology with that domain expertise,” Nguyen notes, much as Pragmatics’ addition of agile software development 9 years ago gave the company a head start even before such solutions became a critical government need. “Now our agile development practices can help our federal customers to build software quicker,” he observes. “The agile development makes software more reliable, more attuned to what the users want,” without having to wait for manufacturers’ upgrades, he explains.
Emboldened by its successes, Pragmatics has its sights set on continued growth by excelling in key government requirements such as business intelligence and cybersecurity. “Although the market may be a little flat or declining, it is a humongous one, and we will continue to grow by taking away work from companies that are not performing as well or who may not be adapting or changing to meet their customers’ needs or mission,” Nguyen says.
As you might expect from a Ph.D. in economics, his optimism is based on statistical analyses. “Historically, if you go back 3 to 5 years, the incumbent contractor may have won 90% of the time because the government was very risk-averse. I think that now this statistic is down to 60% of the time,” Nguyen explains. “The incumbent loses 50% of the time, whether it’s because they are overpriced or because they are not responding to the new realities with which their customers are dealing. This means that there is a huge opportunity for other companies to take away work from these incumbents.”
Nguyen believes that the biggest hurdle now is the uncertainty caused by the disruption in the federal budget cycle. “If we just had certainty one way or the other,” Nguyen says, “then our customers could have a budget and could plan for the future — and we could adapt to and accommodate that.”
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