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Computer Services Firms Like Bush’s Budget Plan

From Bloomberg News

Perot Systems Corp. executive Greg Bedner said he was thrilled when the 2004 U.S. budget plan was released last week because it contained $500 million for improving security at communications and nuclear plants.

Perot Systems, the computer services company founded by H. Ross Perot, purchased ADI Technology Corp. in July in anticipation of increased government spending on security. Bedner was chief executive of ADI, which had experience in developing and managing computer systems to improve safety at nuclear power plants.

Bedner, now president of Perot Systems’ government services business, along with rivals including Computer Sciences Corp., IBM Corp. and Electronic Data Systems Corp., is making acquisitions, shuffling resources and even hiring staff to grab a slice of the increased government spending as sales to companies slow or decline.

Last week Perot Systems agreed to buy Soza & Co. to increase sales to agencies that combat terrorism. Bedner and his team are studying President Bush’s budget at their office in Herndon, Va., near Washington, looking for more line items that may generate business for the Plano, Texas-based company.

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Bush’s proposed budget boosts spending on computers and related services by 12% to $59.1 billion next year, according to analyst William Loomis at Legg Mason Wood Walker.

About $4.9 billion is for the new Homeland Security department, and an additional $4.7 billion is for Internet and computer security.

Computer Sciences, the third-largest U.S. computer services company, agreed to buy DynCorp Inc. in December for about $950 million to broaden its services to combat terrorism. The company also said last month that it’s hiring 400 security workers.

CACI International Inc. said in May that profit is being boosted by the government’s effort to fight terrorism.

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The Homeland Security Department was created by Congress last year. About 170,000 workers from 22 federal agencies, including the Customs Service, Secret Service and Coast Guard, were united within one department responsible for domestic security. Bush proposed a $36-billion budget for the department.

IBM and Electronic Data, respectively the world’s No. 1 and No. 2 sellers of computer services, and Affiliated Computer Systems Inc. hope to help build a computer network that links Homeland Security’s 22 agencies, which now operate independently. Money for the project isn’t included in the new budget.

Electronic Data runs the military’s largest information-technology project, the $6.9-billion Navy-Marine Corps Intranet, which combines about 1,000 communications systems into a single network linking sailors and Marines at more than 300 bases.

“With our experience with the Navy contract, we have the skills to help the new department become more efficient,” said Robert Nabors, vice president of Electronic Data’s U.S. Government Solutions business. He is aware that many companies will try to win the work.

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Affiliated and IBM are hoping to bid on an Immigration and Naturalization Service plan to increase screening of people coming into and leaving the U.S., the two companies said. Bush’s budget calls for a $1.2-billion boost for the INS, which also was moved to Homeland Security.

“In general, the commercial market is soft, and this market continues to grow,” Altman said.


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