DynCorp International (DI) Chairman and CEO Steve Gaffney was featured in an interview in the Washington Post’s Capital Business section. In the interview, he described why he believes service contractors should be private rather than public and DI’s long-term strategy as the wars wind down overseas.
Public vs. Private
Gaffney joined DI more than two years ago, just as the company went private. He described how the change has affected the company positively.
“Instead of trying to satisfy the investors on a quarterly basis, we can actually talk to them about our long-term plans. What that allows us to do is be patient and invest in the things that we need to invest in versus trying to satisfy the short-term view of the markets. That sometimes causes bad behaviors [and] wrong decisions. There are types of companies that should be private, and services companies are one of them,” Gaffney commented.
Gaffney believes that service contractors should be private because the portfolio of programs they hold doesn’t operate in the same way as a manufacturer with a consistent production level. With different transition points and other factors Gaffney calls “normal” and “expected,” service contractors’ business is more difficult to explain to analysts.
DynCorp International Business Strategy
In terms of business development strategies, Gaffney explained how DI has reorganized to focus more on business development.
“It really comes down to: Do you have the right people doing the right things? Are you organized the right way? And the business systems that you have in place — are they strong enough to support the pressures of the business? About 90 percent of our top three levels of leadership are either new to the company or they’re new in position. In two years, we’ve restructured twice around getting to the right market-focused, customer-focused type of organization. We stood up a new business development organization, and we were able to move our win rates from the low teens to close to 50 percent of everything that we bid,” Gaffney commented.
DI’s business development function has been strengthened by uniting what were previously two separate operating divisions. Weekly meetings also helped solidify business development strategies from the beginning stages through the proposal process, Gaffney explained.
Asked about the Company’s strategy as the wars in Iraq and Afghanistan wind down, Gaffney explained, “We’ve been thinking about this issue around what’s next for some time, and that’s why we’ve been working to rebalance our portfolio since I got here.”
“Our aviation business, for instance — today it’s a third of our revenues and half of our earnings. That wasn’t the case two short years ago. A couple months ago, we made a small acquisition in the aviation business to fill a gap that we had, not for the business that we have today but to compete for business two years from now and also get us into the commercial space,” said Gaffney.