Analytic Sciences Corporation

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Analytic Sciences Corporation

55 Walkers Brook Drive
Reading, Massachusetts 01867
U.S.A.
(617) 942-2000
Fax: (617) 942-7100

Subsidiary of Primark Corp.
Incorporated: 1966
Employees: 2,200
Sales: $296 million
SICs: 7373 Computer Integrated Systems Design; 7372 Prepackaged Software; 7389 Business Services, Nee; 8711 Engineering Services

The Analytic Sciences Corporation (TASC) is a leading provider of applied information technology services. The company is primarily a government contractor, providing services to the Department of Defense and the national security apparatus. Founded in the 1960s, TASC grew steadily throughout its early years, then expanded dramatically during the military build-up of the 1980s. With the downsizing of the military due to relaxed Cold War tensions in the early 1990s, however, the company worked to diversify its business into the industrial and commercial sectors.

TASC got its start in June, 1966, when Arthur Gelb and Harry B. Silverman, both engineers, got together with two other engineers to found the business. The company set up offices along the Route 128 technology corridor outside Boston and set out to solve technical problems through applied information technology. TASC’s primary client became the U.S. government.

For the first 16 years of its operation, TASC worked on contracts from the Department of Defense and other federal agencies. In connection with this work, TASC set up a Washington-area office, located in Arlington, Virginia, in 1976. About half of TASC’s government work was in connection with so-called “black” or top secret programs. Among the projects the company contributed to were guidance systems for the Trident nuclear submarine, design of the space shuttle, and other analysis and engineering projects. On the basis of this work, TASC’s revenue and profits increased steadily each year.

In 1980, with the election of Ronald Reagan and the dramatic increase in the nation’s defense budget, TASC’s operations and revenues began to grow at a rapid rate. By 1983, the company’s revenues were nearing $40 million a year, and TASC had grown to include more than 500 employees. At this time, TASC made its first acquisition, which allowed the company to diversify its operations somewhat beyond its core defense contracting business. In 1983, the company purchased the WSI Corporation, a weather satellite operator based in nearby Billerica, Massachusetts. WSI maintained the world’s largest weather database and was best known for providing the enhanced satellite images and radar used on television newscasts.

WSI drew its raw information from geostationary and polar-orbiting satellites, as well as other sensors based in the air, on the ground, and in the ocean. In addition, WSI interpreted this data through advanced mathematical formulas and computer programs and then communicated it to clients in the aviation, agriculture, and utility industries, as well as to media weathermen.

On the basis of WSI’s returns, and its own booming defense business, TASC’s revenues and earnings continued to grow in the mid-1980s. By 1986, revenues had more than quadrupled from their 1980, pre-Reagan levels to exceed $80 million, and earnings had reached $3 million. TASC’s roster of employees had also grown to 800.

Among the TASC products marketed for civilian use at this time were the Cobol Renewal Series, created by TASC’s Commercial Information Systems Division. In February, 1986, this Division introduced its latest version of Trailblazer, a product designed to help systems analysts design computer programs in the Cobol language more efficiently. Designed for use on IBM computers, Trailblazer was expected to reduce test times by up to 75 percent. TASC set the price of this product at $50,000.

Three months later, another programming tool, called Fastbol, was released as part of this series. Fastbol was designed to speed up analysis by programmers. The product worked by integrating two maintenance steps—analysis and change. Used as an editor, Fastbol featured five commands: Logic Flow, How-Set, How-Used, Comments, and History. In this way, programmers could move about easily within a computer’s code of instructions and also leave records of what they had done for future programmers to consult. This tool was priced at $25,000.

By 1987, TASC’s revenues had topped the $100 million mark. The bulk of this revenue was derived from the company’s consulting business with the federal government, which was run in part out of two offices in the Washington, D.C. area. Company operations near the capitol had been split between the Virginia cities of McLean and Rosslyn. In July, 1987, TASC broke ground for a new office building in another Virginia suburb, Reston. The company planned to move about 600 employees from McLean to the new facility.

By the end of the 1980s, TASC revenues had topped $200 million a year, nearly doubling from 1987 levels in just three years. In May, 1991, the company’s annual revenues reached $228 million. With the collapse of the Eastern Bloc in 1989 and the arrival of greater fiscal austerity in the 1990s, however, it became clear that the U.S. defense budget would undergo steep cuts. This posed a problem for TASC, since 90 percent of the company’s revenues, by 1991, were derived from government contracts. Half of those contracts concerned top secret national security projects, and the other half were for non-classified Defense Department work. Only TASC’s weather satellite subsidiary contributed any non-defense related revenues. TASC’s large reliance on military funding, which had fueled its rapid growth, could not continue indefinitely. Accordingly, the company began to re-position itself to seek new clients outside the military.

With its strengths in software development, information technologies, and systems engineering, TASC began to re-tool for the new era. The company’s systems management group, based in Virginia, began to hire new employees in the industrial resources field in 1991. Called senior technical analysts, these executives were assigned to increase company business in non-defense related government agencies, as well as in the private sector.

In the midst of this effort to shift its focus, TASC’s founders sold the company to the Primark Corporation in July, 1991 for $165 million. At the time of its sale, TASC operations had expanded to include 1,800 people working at 13 locations around the United States, as well as in the company’s Boston and Washington bases. TASC offered expertise in communications, image processing, massively parallel processing, networking, artificial intelligence, atmospheric sciences, and other fields. In addition to its traditional strength in national security operations, Primark hoped to exploit the company’s expertise for greater commercial uses.

In purchasing TASC, Primark was taking an important step in its effort to re-position itself as an information services provider. The company had spun off its primary business, the Michigan Consolidated Gas Company, in 1988, and with the funds from this sale had sought to enter the applied information technology field. Although it had bought and sold several companies in the previous three years, with its purchase of TASC Primark made its first serious foray into this field, and TASC became by far the largest component of the company. “This will give us an excellent position in the applied information technology field,” Primark chairman Joseph E. Kasputys told the Washington Post at the time of the sale. “TASC is an excellent company with commercial sector applications in image processing, networking and communications technology.”

Primark also hoped to benefit from shared expertise between TASC and its other major unit, Wellmark, Inc. This company processed medical claims, and Primark expected that TASC’s experience in networking and graphics display could help Well-mark grow. Indeed, Primark envisioned TASC as a “technology engine” that would support the efforts of all of the company’s units.

For TASC, the influx of cash from its sale meant that money would be available to help fund the company’s transition from military contractor to commercial consultant. “This merger will give us capital for our growth to expand our commercial venture operations,” company founder Gelb told the Washington Post. “We are ready to become a diversified ownership company.” Primark also guaranteed that its purchase of the company would not result in the lay-off of any of TASC’s employees.

By early August, 1991, the purchase of TASC had been completed for a final price of $166.6 million. With this acquisition, Primark reported sharply higher revenues for the quarter ending that month, when TASC contributed $121 million of the company’s $148 million total. This pattern held true for the year as a whole—as Primark reported a profit by February, 1992.

In August, 1992, Primark made another acquisition, which it planned to integrate with TASC. The company purchased Data-stream International, which provided computerized historical financial information, in hopes that its products would be complemented by TASC’s information technology expertise. Then in October, 1992, TASC moved to further diversify its activities into the commercial sector, when it announced a joint marketing program with the MCI Communications Corporation to offer business customers TASC’s document and imaging products and services. By the end of 1992, TASC’s corporate parent was reporting sales which had doubled and revenues which had multiplied by eight. These gains were attributed to TASC and its fellow subsidiary Datastream.

TASC made further headway in marketing its products to commercial customers in July, 1993, when the company’s Image Systems Integration Division won a contract in excess of $1 million to provide document imaging services to T. Rowe Price, a Baltimore-based mutual fund company. Under the contract, TASC used its TASC-Flow graphical workflow tool, and its PictureCom compression software, to automate the company’s processing and transfer agent functions. This was done by converting paper into electronic images, and then using routing software to send these images to 160 different information processors. In addition, the new system would link up more than 300 telephone operators to the data flow.

One month later, TASC won another large civilian job that made use of this technology when the North Carolina Employment Security Commission awarded the company a $2.5 million contract to develop an image-based application for collection of unemployment taxes. TASC planned to create and install a document imaging system that would employ TASC-Flow and PlctureCom image compression technology to automate the Commission’s operations. Other customers for this proprietary technology included a major credit card processor, a mortgage banking operation, an overnight delivery company, and other firms in the utilities, healthcare, and real estate industries.

Also in August, 1993, TASC moved to expand its WSI subsidiary by buying two weather information companies. TASC acquired two British firms, The Weather Department, Ltd., (TWD) and The Computer Department, Ltd., (TCD). TWD provided weather predicting services to broadcasting and cable television clients in the United Kingdom, Ireland, Scandinavia, and Portugal. TCD provided computer programs to interpret raw weather data. With the technology of WSI, these two companies were able to expand their offerings to European clients. “The acquisitions are a natural expansion to TASC’s U.S. operations and provide us with a strong foothold in the rapidly growing European weather market, Primark’s Kasputys told the PR Newswire in August, 1993.

In October, 1993, TASC made further headway in its diversification program when it was named a contractor in a large U.S. Department of Energy program to improve automotive efficiency. In addition, the company won three major contracts from the U.S. Department of Transportation. By the end of the year, TASC was also able to report that its national security business had expanded, despite government cutbacks and increased competition. Although the company lost $14 million worth of work when the Strategic Defense Initiative was severely pruned by Congress, TASC still increased its defense-related work by 15 percent, or $6 million. With this gain, the company’s defense-related returns grew to 89 percent. TASC finished 1993 with revenues of $296 million.

TASC attributed its continuing defense-related output to its concentration on basic research and development and information technology—areas which were less affected by government cutbacks. In addition, national security operations began to shift toward surveillance, tactical intelligence, smart weapons, systems upgrades, and simulation, all of which related to TASC’s applied information technology expertise.

In February, 1994, TASC won another government contract, this one related to its optical devices. Joining with two other firms, TASC embarked on a three-year attempt to develop and integrate a next-generation, all-optical network, in which data would be transferred from one point to another without being broken down into electronic data and then reconstituted. The company’s Vision Computing Division took on this task for the Advanced Research Projects Agency, an arm of the Department of Defense. In addition, TASC continued its work with the National Institute of Standards and Technology.

In April, 1994, Primark announced the appointment of John Holt, formerly of the A.C. Nielsen Co., as its new president. In the years ahead, TASC hopes to move forward by relying on its strength in national security, its growing market in civilian government agencies, and continued efforts to enhance its commercial opportunities. With a strong record of profitable operation behind it, the company appeared well-situated to thrive in the coming years.