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About The List—Defense contractors become more self-reliant

By 2002, Thomas Stone, vice president of San Diego operations for American Systems Corp., wants to see his company conducting business on the commercial side of things.

The San Diego Business Journal’s List of Defense Contractors features 25 local contractors ranked by total number of San Diego County employees.

Since 1997, the defense contracting company, No. 25 on the List, has worked on systems engineering and technical advising for the Space and Naval Warfare Systems Command (Spawar) and such local defense firms as AVIA.

But with the start of the new year, Stone has implemented a new business plan.

“I would like to see my office in San Diego mirror my corporate office enough so that we can expand into the commercial side of business,” he said.

If all goes according to plan, ASC will transition from 100 percent defense contracting to generating roughly 30 percent of its revenues from commercial contracting work such as infrastructure and cabling.

To adapt to the U.S. government’s decreasing defense budget and maintain steady company growth and revenue, Stone believes expanding into commercial contracting is a good idea.

“With Spawar taking funding reduction and so on, this encourages me to find other ways to keep my staff employed,” he said.

A few other local defense contractors have caught the expansion bug and are transitioning into other arenas of contracting besides defense.

For Indus Technologies, No. 23 on the List, branching out within the industry actually meant branching in.

Before entering defense contracting two years ago, the engineering services company did commercial engineering contracting in the areas of academic research.

In the early part of last year, Indus won the PMT Omnibus contract in partnership with Booz-Allen & Hamilton, a defense consulting firm, to provide program management support to Spawar.

This not only helped them merge into defense contracting, it catapulted their number of employees from four to around 38 people.

Not bad, said James Lasswell, vice president and senior engineer for a company that, according to the Small Business Administration, is at a disadvantaged status because of its small staff size and woman ownership.

“Up until this time we were all solid engineering, hard-core engineering work now we’re getting a little of everything and when you’re small you can’t afford not to do all the work,” he said.

Growing from providing mechanical engineering to doing financial and technical analysis and completing acquisition documents has enabled Indus to become knowledgeable and competitive in a market outside of its basic skills levels.

“This is an interesting time in defense contracting,” Lasswell said. ” the bottom line is the government is buying less and less of some things and as a result the market is becoming increasingly more competitive and so we’re trying very hard to be very competitive in that market.”

For Quantum Magnetics, Inc., No. 18, the problem is not competition, but finding qualified physicists to work on an $11.9 million contract with the U.S. Navy to develop a backpack-mounted landmine technology for the Marine Corps.

The backpack will have special sensing capabilities for locating the explosives that kill more than 2,000 people per month and stifle economic development in foreign war-torn countries, according to the United Nations.

Totaling 90 employees now, it plans to increase its staff to 110 before the year is out, said Caroleen Williams, director of government relations.

Hiring 20 additional employees should not seem like an impossible task, but when the criteria is scientists and engineers who specialize in quantum physics, the availability is limited.

“There aren’t that many physicists in San Diego, so there’s always a search,” Williams said.

A worldwide search, to be exact.

The research and development firm has advertised employment opportunities on the Internet and attended conferences and recruitment fairs worldwide as a means of trying to close the staff gap.

Despite the limitations, Williams said the outlook for Quantum Magnetics is promising.

“The outlook for this year looks very good, but first we need more people, a little more help,” she said.

As for the competition, Williams said that because the company researches and develops in a niche market that produces “very precise scientific measurements and sensing technologies,” rivalry among competitors is not as prominent as in other companies.

“We’re recognized by our government as providers of very special technologies, so let’s keep moving it forward,” she said.

Encouraged by San Diego’s continual growth of wireless and information technology and the defense industry, Stone, too, is optimistic about moving ASC forward.

Standing behind his business plan to increase employment and work with one to two new federal agencies in San Diego, Stone said that providing quality customer service remains a strong focus for his company in 2001.

“We’re going to put our egos in our back pocket,” he said.

“The key to success is to be smart, responsive to the customer , capable, committed and available to do the job.”

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