RealTime IT News

Nortel Buy Courts Homeland Security

Nortel will pay $448 million cash for PEC Solutions to boost business with the U.S. Department of Homeland Security and other agencies.

"This is the beginning of a great business area for Nortel," Bill Owens, Nortel's CEO, said in a conference call with analysts and reporters.

Owens, a former U.S. Navy admiral and vice chairman of the U.S. Joint Chiefs of Staff, added that the purchase signals that the network equipment giant is "playing to win" in an industry that is facing consolidation and increased competition from Asian rivals.

Nortel was attracted to PEC because of its work in the U.S. federal government market, which features longterm contracts and rising budgets. For example, the Department of Homeland Security, a large PEC customer, has a proposed budget increase of 23 percent this year.

Other PEC customers include: The U.S. Secret Service, U.S. Coast Guard, Transportation Security Administration, Immigration and Customs Enforcement, Department of Justice, FBI, U.S. Marshall Service, Department of Defense, U.S. Postal Service, and Department of Veteran Affairs.

Based in Fairfax, Va., PEC has 1,700 employees and 30 program offices in the U.S. in nine states and the District of Columbia. The company is marking its 20th anniversary this year.

Chuck Saffell, president of Nortel Federal Network Solutions, will continue to lead Nortel's federal business. Nortel PEC Solutions will continue to be headquartered in Fairfax, Va. PEC CEO David C. Karlgaard and his team will remain senior managers.

Nortel, which is based in Canada, does not anticipate any security clearance issues when it comes to winning contracts for intelligence agencies.