Government Solution Provider Super Power CSRA Is Winning New Business At Breakneck Pace

CSRA, the $5.5 billion government solution provider powerhouse, booked a whopping $2.3 billion in new business in the most recent quarter – more than double the company's target of $1 billion in new awards each quarter.

CSRA CEO Larry Prior told Wall Street analysts Wednesday that the Falls Church, Va., company, which was created one year ago from spin off merger of CSC's North America public sector business with government solution provider SRA, said the company recorded a 40 percent win rate for new business in the quarter, well above its goal of 25 percent. "We're really hitting our stride as a new company," he said.

[Related: CSRA CEO On New IT In Government, Security Breaches And The Election Impact On Federal IT Spending]

The new contract wins come even as the company is "still ramping up" its capacity to bid on more government contracts, said Prior. He said CSRA submitted $4.9 billion of proposals for new business in the second quarter and is on track to reach its fiscal year 2017 target of $16 billion in new bids.

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"Our investments in business development and our focus on next-generation solutions are paying off," said Prior after the company posted better than expected result for its second fiscal quarter ended Sept. 30. "Our new business wins position us well to return to organic growth in FY18. The second quarter marked the moment where we saw the full benefits of our merger and integration."

In the second quarter, CSRA landed six awards north of $100 million in total contract value, including a $503 million agreement to provide background checks for the U.S. Office of Personnel Management; a $114 million cyber program to develop and deploy a network security strategy for the Pentagon; a $116 million contract to modernize the IT systems for the Department of Justice; a $73 million contract to manage a portfolio of cloud computing services across the Department of Veteran Affairs and a $45 million three-year contract to advise the U.S. Customs and Border Protection on effective and efficient methods to detect and prevent unlawful travel and trade.

The new contract wins include a $744 million award – mostly new business – that was subsequently protested by a competitor – but with the contracting organization holding a "100 percent success rate" defending its contract awards. "So we're confident that we will ultimately prevail," said Prior.

Prior said he expects dispute to be resolved in the current quarter. What's more, CSRA expects more than $3 billion in additional new business award decisions in the current quarter.

The contract wins are driving "significant opportunities to take market share" and keeping "morale high" at every level of the company, said Prior.

For the second fiscal quarter, ended Sept. 30, CSRA reported net income of $80 million on a 30 percent increase in sales to $1.26 billion. Sales for the quarter came in $20 million above the Wall Street consensus. That compares with net income of $53 million on sales of $967 million in the year-ago quarter.

GAAP net income of $80 million, or 56 cents per share when adjusted for charges, was 10 cents above the Wall Street consensus of 46 cents per share.

The better-than-expected results sent CSRA shares up $2.56 – a nine percent increase- to $29.95 on Thursday.

The company’s success, Prior said, is due to the quick integration of the two separate businesses into a single company, its focus on new technologies like cloud and application software and its ability to find and hire new talent.

The breakneck pace of new contract wins is creating a demand for more talent, Prior said. In the most recent quarter, CSRA added, 1,300 new employees with an additional 500 slated to come on board in the future.

Even with those new hires, the company is still looking to fill about 1,000 more funded openings, Prior said, adding that the acceptance rate on offers extended is about 90 percent.