ITC Federal LLC, an 18-year-old Fairfax firm that provides IT services for federal agencies focused on national security, is eyeing acquisitions after landing its first-ever outside investment.
The $25 million in funding came from Blue Delta Capital Partners, a Tysons growth-stage investor that backs government contractors.
ITC Federal CEO Greg Fitzgerald said his firm intends to use the funds to buy up similar companies and help it better compete for federal IT contracts against "billion-dollar behemoths" like Lockheed Martin Corp., ManTech International Corp., CACI and General Dynamics Information Technology. ITC Federal, one of Greater Washington's fastest-growing companies, is on track to reach $170 million in revenue this year and Fitzgerald's aim is to double that figure over the next five years.
"We've grown exceptionally well over the years, and we're sitting certainly in the midsize range," Fitzgerald told me in an interview. "But the mid-market is now a billion dollars, right? There's a big gap. You're like [either] a really big-small or a really small-large, and the truth is, we really need to accelerate quickly to be able to compete with this next level of competitor in the market because we no longer get small business set-asides."
Fitzgerald expects this initial investment to be all that's needed for the company's first acquisition, though he expressed an openness to seeking additional investment in the future.
“Once we get through the first one, I think then we go back and [ask], ‘Do we now need to raise money or can we do it with debt?’”
ITC Federal, which has about 40 workers locally and more than 1,000 nationally, specializes in providing technical infrastructure — think virtualized systems, servers, and network management — for large federal agencies working in the interest of national security. Its clients include the Departments of Justice and Homeland Security.
Apart from scouting for acquisitions, ITC Federal will also use the funds from Blue Delta Capital to help bolster its senior leadership team, Fitzgerald said.
Blue Delta, for its part, is eyeing more investments in local IT services firms. In July, it closed on a $250 million investment vehicle from which it intends to cut checks ranging between $15 million and $50 million primarily to government contractors generating at least $40 million in annual revenue.
"Think mini SAICs, mini CACIs, mini Leidoses," Blue Delta Capital General Partner Mark Frantz said last month about companies he's targeting. "They're people who work and learn and grow up around here doing high-end software development, they're working on cybersecurity stuff, cloud analytics, AI and [machine learning]."
