About

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Andrew T. Gillies is Director of Communications at the Center for Audit Quality, an affiliate of the American Institute of CPAs, in Washington, DC. Based in Washington since 2002, he has also worked in editorial and communications roles at the Investment Company Institute, the World Bank, Forbes, and Vault.com. His policy-themed writing has focused on aerospace and defense, energy and environment, transportation, and financial services.

Friday, January 25, 2008

Fast Tech 25: Beltway Bets

To come up with the eight companies in the accompanying table, we applied a "Business in the Beltway" screen to our 2008 Fast Tech 25. In other words, we scanned the filings of the Fast Tech list to see which companies played up their business with the public sector, particularly the U.S. federal government.

Why do this? As we have often noted on Forbes.com, the fact that a company sells goods or services to the feds is no guarantee of its success. Nevertheless, it is not a bad idea to invest in technology companies that are going after government customers. Tech procurement has its flaws, but it can act as a seal of approval for vendors winning government contracts. That's why you'll often find smaller tech companies, for example, touting wins with a defense or civilian agency.

Consider also that tech buying cycles in the public and private sectors sometimes diverge, as they did dramatically after the dot-com bubble burst at the turn of the century.

A year ago, we zeroed in on MTC Technologies (nasdaq: MTCT - news - people ), touting the stock as a cheap government contracting situation on the Fast Tech list. For most of 2007, our call looked like a bad one, something we fessed up to in our year-end wrap up of 2007 Beltway bets.

Two days after our article about our 2007 Beltway picks appeared, BAE Systems (other-otc: BAESF.PK - news - people ) made a $450 million acquisition bid for MTC Technologies. The deal hasn't closed yet, but MTC shares show a 6% gain since our 2007 Fast Tech story, vs. a 7% decline for the S&P 500.

Full story at F0rbes.com