GSE Systems, Inc.
Wikipedia 🌐 GSE Systems, Inc.
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Russell Microcap Index component
Industry Process Controls Operator Training Simulator Educational Software
Founded 1994
Headquarters Sykesville, Maryland
Key people Kyle Loudermilk, CEO
Chris Sorrells, COO
Emmett Pepe, CFO
Revenue $56.8 Million USD (2015)
Number of employees 450
Website www.gses.com
GSE Systems, Inc. develops and markets software-based simulation and training products to nuclear, oil, and gas electricity generators, and the chemical process industries. It also sells software for monitoring and optimizing plant and signal analysis to the power industry.
GSE Systems was established in 1994 from three simulation companies that came together. They were part of an original heritage from Singer-Link where they were involved in high-intensity simulation applications such as flight simulators. Since 1994 the company has grown through acquisitions. The primary businesses continue to be process control focused in the chemical, pharmaceutical and food industry, and simulation, which is also focused on fossil and nuclear simulation.
GSE Systems is headquartered in suburban Baltimore, Maryland. Global operations are conducted from offices in Sykesville (Maryland), Nyköping (Sweden), Beijing (China), Stockton-on-Tees (UK), and Chennai (India).
Timeline:
1929 Edwin Albert Link invents and patents the first Link Trainer, forms Link Aeronautical Corporation in Binghamton, NY.
1930 Link Flying School organized in Binghamton.
1933 Link Aeronautical Corporation moves to Endicott, NY to maintain the flight school, repair airplanes, and operate charter flights.
1934 Link Aeronautical Corporation returns to Binghamton.
1935 Link Aviation Devices, Inc. is formed in Binghamton, NY to manufacture trainers etc. Link Aviation Devices, Inc. renamed Link Aviation, Inc.
1937 Link Manufacturing Company Limited is formed in Gananoque, Ontario to build trainers for Canadian and UK customers.
1953 Ed Link steps down as president of Link Aviation.
1954 Ed and George Link sell Link Aviation to General Precision Equipment Corporation.
1956 Link Aviation acquires a controlling interest in Air Trainers Limited of England and changes its name to Air Trainers Link Limited.
1959 Ownership of Air Trainers Link Limited is transferred to the parent company, GPE, and the name changes to General Precision Systems Ltd.
1965 GPE buys the operations of the Riverdale, MD plant of Electronics Division of ACF Industries (previously ERCO) and moves it to Silver Spring, MD.
1967 Redifon, a member of Rediffusion, buys Air Trainers Link Ltd. and renames it Redifon Air Trainers Ltd.
1968 Singer Corporation acquires GPE. Edwin Link remains as consultant until 1972.
1984 Simuflite Training International Inc. is founded by Singer.
1987 Singer’s Link Division is incorporated as Link Corporation.
1988 Paul A. Bilzerian buys Singer Corporation.
1988 CAE Industries, Ltd. buys Link Corporation of Silver Spring, MD.
1988 Singer’s simulation manufacturing business is reorganized under the name of LinkMiles with two companies: Link-Miles Limited located in Lancing, England and LinkMiles International Simulation Corporation based in Binghamton, NY.
1989 Singer is renamed Bicoastal Corporation.
1989 Bicoastal Corporation files Chapter 11 bankruptcy.
1990 Link-Miles Simulation Corporation of Columbia, MD is renamed S3 Technologies.
1990 Thomson-CSF of France buys Link-Miles Limited, merges it with Redifussion Simulation, and renames it Thomson Training & Simulation.
1992 Bicoastal Corporation is dissolved.
1993 ManTech International buys S3 Technologies.
1995 Hughes Electronics Corporation buys CAE-Link.
1994 GSE Systems (Global Simulation & Engineering Systems) absorbs S3 Technologies.
Major Milestones:
In 2011, Construction of Westinghouse AP1000 nuclear power plant simulator, a first-of-a-kind project
In 1977, GSE was a pioneer provider of high-fidelity refinery and fossil power plant simulators. Since then, GSE has built more full-scope simulators than all of its competitors combined.
In 1971, GSE Systems, then Link Simulation, built the first commercial full-scope nuclear power plant simulator.
Major Acquisitions:
GSE Systems Acquires EnVision Systems, Inc in the year 2011. EnVision Systems, Inc. (“EnVision”), which provides interactive multi-media tutorials and simulation models, primarily to the petrochemical and oil & gas refining industries. EnVision, with headquarters in Madison, NJ and an office in Chennai, India, was founded in 1991. EnVision’s tutorials and simulation models serve the rapidly growing entry-level training market for the oil & gas refining and specialty chemicals industries. EnVision’s products provide a foundation in process fundamentals and plant operations and interaction. With this knowledge base, users may then graduate to the full-scope, high-fidelity, real-time simulators provided by GSE. EnVision has completed more than 750 installations in over 28 countries and its approximately 130 clients include Shell Oil Company, BP, Total and Chevron.
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Link Aviation Beginnings
In 1929 Edwin Albert Link, Jr. (1904–1981) invented the Link Trainer, a flight simulator that taught pilots how to fly by instruments (as opposed to watching the ground)1; his brother George Theron Link (1897–1979) is sometimes cited as a co-inventor. The initial patent application was submitted April 14, 1929 for the “pilot maker” flight trainer. Patent 1,825,462 was filed March 12, 1930 by E. A. Link, Jr. and granted September 29, 1931. Shortly thereafter he formed the Link Aeronautical Corporation in Binghamton, NY to market the trainer. In 1934 he demonstrated the value of instrument flying to a group of Army officers, after which the Army Air Corps ordered six of his trainers. By the time the order was completed other orders started coming in.
The rapid acceptance of Link Trainers and their continued development, due chiefly to the threat of war in Europe and Asia, made it necessary for Link to reorganize and expand his enterprises. In 1935 Link Aviation Devices, Inc., later renamed Link Aviation, Inc., was established to manufacture trainers and other aviation instruments. Link Aeronautical Corp., situated at the Tri-Cities Airport in Endicott, NY by 1933, maintained the flight school, an airplane repair service, and operated charter flights, but returned to Binghamton in December 1934. And Link Manufacturing Company, Ltd. was established in 1937 in Gananoque, Ontario to build trainers for Canadian and UK customers (British contracts required that their trainers be manufactured within the British Commonwealth).
By 1940 trainers had been shipped to over thirty-five countries around the world. In the early 1950s, Link Aviation was buoyed by the acceptance of simulators by commercial airlines and an increase in military expenditures caused by the Korean War. The company continued to develop aviation simulators and trainers, including all of NASA’s manned spaceflight simulators, and came to dominate the military training and simulation industry.
By the mid-1950s Link Aviation was enjoying financial and managerial stability. While others took up the innovations begun by Ed Link leaving him with less involvement and while the business aspects became increasingly complicated, Ed’s interests began to shift. In 1953 he stepped down as president of the company, and took the less active position of Chairman of the Board. Ed believed that to ensure the survival of Link Aviation in an increasingly competitive market, he should merge the company with a larger, more diverse corporation. In 1954 he and his older brother George Link sold Link Aviation to General Precision Equipment Corporation (GPE), a large holding company.
That sale marked the beginning of a long period of changes in ownership, during which the Link name would be applied to other organizations, both officially and casually. In 1968 Singer Corporation acquired GPE. Twenty years later Singer was subject to a hostile takeover and dismantled.
Edwin Link was president of Link Aviation until 1953 and board chairman until its merger with the General Precision Corporation in 1954. He was president and a director of General Precision until its merger with the Singer Company of Stamford, CT in 1968; he retained chairmanship of Link Aviation while Hermann Place retained chairmanship of GPE. Thereafter, he became a consultant to Singer (1968–1972). After selling Link Aviation, Ed’s interests shifted from above ground to underwater. He was fascinated by diving and underwater archaeology and invented a number of diving chambers for sea exploration.
The General Precision Equipment Era (1954–1968)
General Precision Equipment Corporation was headquartered in New York City, New York. GPE was founded June 1936 by Hermann Gauntlett Place as a holding company for a group of theater equipment firms. In addition GPE had a substantial stock interest in 20th Century Fox Film Corp. WW II “with its insatiable demands for the products of American industry” encouraged GPE, with capital to invest, to expand and diversify. Accordingly GPE acquired a number of other businesses beginning in 1941 including Librascope Development Company of Burbank, CA (later of Glendale, CA) in 1941, The Kearfott Company Inc. of Little Falls, NJ and Kearfott Manufacturing Corp. of Wayne, NJ in 1952, and Link Aviation of Binghamton, NY in 1954. In 1955 GPE was ranked 255 in Fortune's list of America's largest corporations. By 1956 the 21 member companies employed 12,000 people in 36 plants in 23 cities. Mr. Place was president and board chairman.
In January 1960 Librascope, Kearfott, General Precision Laboratory (GPL), and Link Aviation combined to form a new electronics firm known as General Precision, Inc. to position itself as a prime contractor on systems contracts. GPI’s headquarters were in NYC as was GPE’s. Each of the founding firms became a division of GPI. GPL was still a subsidiary of GPI in 1967 but had moved to GPS by 1968.
There was another subsidiary, General Precision Systems, which had a facility in Little Falls, NJ. By 1966 it held the Kearfott Group with its Kearfott Products Division. By 1967 it also held a Link Division.
After 1954 Link acquired controlling interests in two British firms, Air Trainers Limited in 1956 and Miles in 1969 (under Singer).
Air Trainers Ltd was formed in 1946 in Leighton Buzzard, Bedfordshire, apparently as successors to J.V.W. Corporation Ltd which, since 1936, had been importing and servicing the American-made Link trainers for the RAF. It moved to Aylesbury in 1946. As well as manufacturing the Link trainer under license, the company pioneered the development of DC analog computing techniques for flight simulators, the first of which was delivered to the RAF in 1953. By 1954 the workforce had grown to 500. In 1956 Link Aviation of New York acquired a controlling interest, Link president Allan Williford joined the Board of Air Trainers, and the name changed to Air Trainers Link Ltd. In 1959 the Link interest was transferred to the parent company, General Precision Equipment Corporation, and the name of the company changed to General Precision Systems Ltd. By 1963 there were 950 employees in Aylesbury occupying 120 000 square feet. In 1967 the firm was sold and became a subsidiary of Redifon Ltd, a member of the Rediffusion organization, and was renamed Redifon Air Trainers Ltd. In 1972 production was transferred to the Redifon Flight Simulator Division, Crawley, West Sussex.
In 1965 GPE purchased the operations of ACF’s Electronics Division (previously ERCO) at the Riverdale plant and moved it to Silver Spring, MD. (There was more to the Electronics Division than the Riverdale plant.)
Link, as Link Group of General Precision Systems (GPS), had a facility in the defense and aerospace industry of Sunnyvale, CA from as early as 1967, if not before. Link Ordnance Div., General Precision, Inc. of Sunnyvale was cited by NASA as a major subcontractor of Boeing, one who played a major role in the development and production of the Saturn V launch vehicle; Link worked on the propellant dispersion systems.
The Singer Era (1968–1988)
In April 1968 Singer Corporation acquired GPE. Singer originally dropped the Link name, but after three years restored it as Singer-Link, or the Link Flight Simulation Division. During the Singer era Link reclaimed the type of dominance it enjoyed in the WW II period. At its peak, there were about 5000 employees of the Link Division worldwide including Binghamton, NY, Silver Spring, MD, Sunnyvale, CA, and Lancing, England.
ACF’s Electronics Division in Silver Spring, MD, bought by GPE in 1965, was renamed Simulation Products Division in 1968. It was renamed Link Division in 1976.
In September 1969 Link bought Miles Electronics Limited of Lancing, Sussex, England and renamed it Link-Miles. Miles Electronics was a subsidiary of F. G. Miles Limited founded in 1948 by Frederick George Miles to produce aircraft. Miles Electronics was involved in the manufacture of flight simulators. US patent 3584429 dated 1971 was held by Link-Miles Limited.
In January 1981, the Singer company announced a split in the Link division:
- Link Simulation Systems Division in Silver Spring, MD was chartered to promote growth in the fields of nuclear and fossil fuel, power plant simulation, industrial process plant simulation, tactical simulation, and for finding new opportunities in other simulation areas.
- Link Flight Simulation Division with operations in Sunnyvale, CA, Houston, TX, Lancing, England, and Binghamton, NY was chartered to expand the company's business in the aircraft and spacecraft industries.
As early as 1982 the Link Simulation Systems Division had a facility in Columbia, MD. They built nuclear power plant simulators there. The headquarters remained in Silver Spring.
In 1984 Singer formed a new enterprise, Simuflite Training International Inc., to compete with Flight Safety International in the business aircraft pilot training market. Simuflite2 was located in Dallas, TX. It used simulators built by Singer-Link.
In January 1987 Singer split the Kearfott Division into Kearfott Guidance & Navigation Division located in Little Falls, NJ, which was sold to the Astronautics Corporation of America in 1988, and the Electronic Systems Division located in Wayne, NJ (originally Kearfott Manufacturing Corporation), which was sold to GEC-Marconi in 1990 and renamed GEC-Marconi Electronic Systems.
In December 1987, the Link Division was incorporated in Delaware as Link Military Simulation Corporation (“Link Corporation”), a wholly owned subsidiary of Singer. In that same month Singer converted the Kearfott Guidance & Navigation Division into a wholly owned subsidiary, which it named Kearfott Guidance & Navigation Corporation.
After Singer, Unstitched (1988 and later)
By 1987 Singer had gotten in financial trouble. It had enormous debt, a $20 million dollar loss, and its chairman died unexpectedly. In February 1988 it was purchased by Paul A. Bilzerian, a Florida financier known as a corporate raider, for $1.06 billion. He quickly began to sell off the pieces to pay his debt. He also moved the headquarters from Stamford, CT to Tampa, FL.
In April 1988 the Singer Link-Miles Simulation Corporation surrendered its incorporation in Delaware.
On August 5, 1988 Bilzerian sold Link Corporation in Silver Spring, MD (the old Link Aviation and ERCO groups) to the Canadian firm CAE Industries, Ltd. (previously known as Canadian Aviation Electronics Ltd.) who renamed it CAE-Link Corporation or Link Domestic Simulation and Training Systems Division. In 1995 CAE sold Link to Hughes Electronics Corporation for $155 million. Two more sales saw Link with L-3 Communications in 2000 (bought for $160 million), who restored the Link name; it now known as L-3 Link Simulation & Training and is located in Arlington, TX.
In September 1988 the Kearfott Guidance & Navigation Corporation was sold to Astronautics Corporation of America for $285 million.
On October 12, 1988 Bilzerian, Chairman and CEO of Singer, announced a reorganization of its simulator manufacturing businesses under the name Link-Miles, to consist of two autonomous operating companies, one in the United States and the other in the United Kingdom. The UK company, Link-Miles Limited, located in Lancing, England, was involved in the military flight, airline visual, naval, and ground simulation businesses worldwide. The US company combined the airline simulation activities of the Link-Miles International Simulation Corporation based in Binghamton, NY and the industrial process and power plant business of the Industrial Simulation Corporation3 located in Columbia, MD. [I have found references to Singer Link-Miles Simulation Corporation dated July 1989, so it is not clear how long the Singer name persisted.]
"Link-Miles : 3 businesss units Link-Miles limited, Link-Miles International Similation Corporation, and Lin-Miles Industrial Simulation Corporation located in Columbia, MD"
In March 1989 the Singer Sewing Machine Division was sold to Semi-Tech Microelectronics of Canada for $289 million. This company was owned by James Henry Ting, whose business empire rose and fell meteorically. His Akai Holdings suffered greatly in the 1999 Asian financial crisis. By early 2000, most of his companies had stopped doing business, slid into bankruptcy, or been absorbed by other companies. Semi-Tech bondholders sued Ting in November 2001 for $578 million. Ting was arrested in 2003 in Hong Kong for falsifying the accounts of Akai to the tune of more than $38 million. The Singer sewing machine business and trademark were sold in 2004 to Kohlberg & Company.
In June 1989 Bilzerian resigned as chairman and CEO of Singer, hours after the Securities and Exchange Commission filed civil securities fraud charges against him for his takeover of Singer. Joseph J. Campanella continued as president and chief operating officer. (Bilzerian evenutally agreed to pay $55 million in fines, but had not done so by 2001 and was jailed.)
By August 1989 all that remained of Singer was Librascope in Glendale, CA, Simuflite in Dallas, TX, Singer Link-Miles (U.S.) in Columbia, MD, and Singer Link-Miles Limited (U.K.) in Lancing, England. The domestic Link-Miles comprised Link-Miles Simulation Corporation in Columbia, MD and Singer Link-Miles Corporation in Binghamton, NY.
On October 16, 1989 Bilzerian adopted the business name of Bicoastal Corporation. Later that year, in November, Bicoastal filed Chapter 11 bankruptcy in Tampa, FL. The company dissolved in 1992.
In May 1990 Link-Miles Simulation Corporation, the domestic simulator business in Columbia, MD, announced a joint venture named General Energy Technologies with NPO Energia of the Soviet Union. General Energy Technologies would be a Soviet enterprise centered in Moscow and would provide Soviet and Eastern European simulation, training, and engineering services in energy related fields including nuclear and fossil fuel power plants, and chemical processing.
In April 1990 Link-Miles Simulation Corporation of Columbia signed a contract to provide nuclear plant simulators to SYPRO of Sweden and Pennsylvania Power & Light Co. Link-Miles also won a contract for an ethylene plant simulator.
In August 1990 Link-Miles Simulation Corporation of Columbia, MD, a manufacturer of nuclear power-plant control room simulators, was renamed S3 Technologies. Before that it was Industrial Simulation Corporation, and even earlier, the Link Simulation Systems Division of Singer. In September 1993 ManTech International bought S3 Technologies.
GSE Systems (Global Simulation & Engineering Systems) was formed on March 30, 1994 to consolidate the simulation and related businesses of S3 Technologies, General Physics International Engineering & Simulation, and EuroSim (Sweden), each separately owned and operated by ManTech International Corporation, GP Strategies Corporation, and Vattenfall AB, respectively. GSE, originally headquartered in Columbia, MD in the offices of the old Link-Miles Simulation Corporation, was subsequently headquarted in Sykesville, MD. In October 2003 controlling interest was acquired by GP Strategies Corporation, whose principal operating subsidiary is General Physics Corporation (founded in 1966 by Robert W. Deutsch). In 2007 GSE Systems developed training solutions for the power, process, manufacturing, and government sectors worldwide. GSE Systems has subsidiaries.
In September 1990 Bicoastal sold Link-Miles Limited, the UK simulator manufacturer, to Thomson-CSF of France for $100 million. In 1994 Thomson bought Redifussion Simulation from Hughes Aircraft, merged it with Link-Miles, and renamed the company Thomson Training & Simulation; it was located at Crawley, West Sussex. In December 2000 Thomson-CSF changed its name to Thales and the Link-Miles-Rediffusion company was rebranded Thales Training & Simulation.
In September 1991 Simuflite was sold to Southern Air Transport, Inc. of Miami, FL. In January 1998 Simuflite was sold to General Electric Capital Services when SAT sold itself to Kitty Hawk Inc. In December 2001 CAE bought Simuflite for $247 million.
In December 1991 Librascope was sold to Loral Corp. for $9 million, the last piece of Singer to be sold. It was renamed Loral Librascope. In January 1996 Lockheed Martin acquired Loral including Librascope. On June 30, 2000 Librascope’s Glendale, CA facility was closed, and its remaining business was moved to its parent Lockheed Martin division in Manassas, VA.
All the pieces of Link claim all of its history
ERCO
In 1930 Henry Berliner founded the Engineering and Research Corporation (ERCO) in Washington, DC to produce tools for the manufacture of metal aircraft and propellers. It was incorporated in MD in 1936. In 1937 it designed and produced the famous Ercoupe airplane. A plant was built in Riverdale, MD in 1938. An adjacent airfield named ERCO Field was built 1942–1943. A total of 112 Ercoupes were produced in Riverdale before the war forced the company to suspend production, thousands of Ercoupes were produced after the war until 1952. In 1949 ERCO built a flight simulator and entered the electronics field.
In November 1954 the Berliner family sold ERCO to American Car & Foundry Corporation (later known as ACF Industries, Inc.) for $3 million. ACF was a diversified manufacturing company whose products ranged from railroad equipment to nuclear power equipment. The ERCO operation was renamed as the ERCO Division, ACF Industries Inc. It remained in Riverdale, MD. In 1957 ERCO Division merged with ACF’s Nuclear Energy Products Division (previously known as Albuquerque Division) and became known as Nuclear Products, ERCO Division. The Riverdale plant served as the Nuclear Products Division Headquarters. The Nuclear Products group built a number of a nuclear power plants.
ACF’s Electronics Division was in existence by 1962. I suspect that it encompassed the old ERCO Division without the nuclear group.
In 1965 GPE purchased the operations of ACF’s Electronics Division at the Riverdale plant and moved it to Silver Spring, MD. After Singer’s purchase of GPE, the division was named Simulation Products Division. It had offices in Sunnyvale, CA until 1972 at the earliest that were used to design nuclear power plant simulators and flight simulators. It also had offices in Houston, TX and Binghamton, NY. In 1976 Singer Simulation Products Division was renamed Link Division.
[...]
GSE Systems Inc., a Columbia-based supplier of systems that simulate industrial processes, said yesterday that it has acquired a Hunt Valley business that could extend GSE's reach far beyond its stronghold in the power generation industry.
Under an agreement with Texas Instruments Corp. of Dallas, GSE will offer jobs to the 235 managers and other employees of TI's Process Systems business and continue doing business at its current location. GSE Systems will change the name of the business to GSE Process Solutions Inc.
The companies declined to reveal the price of the acquisition.
GSE Systems is the holding company for Columbia-based S3 Technologies, formerly the Link Simulation Systems division of the Singer Co. S3 Technologies is a leading provider of computer systems that simulate power generation processes, both for system design and employee training purposes.
The business that GSE is acquiring creates systems that do the actual work of controlling manufacturing and power generation process -- running the automated machinery that formulates a medicine, for instance.
William Kuhlmann, GSE's chairman and chief executive, said the acquisition was part of a long-term strategy to expand the company's role in such industries as pharmaceuticals, foods and beverages, wastewater treatment and chemicals.
Michael Allocco, GSE's vice president for sales and marketing, said the two companies are "an absolutely very positive fit."
Mr. Allocco said about 80 percent of S3 Technologies' business comes from the power generation industry while 90 percent of the Process Systems' group's work comes from manufacturing processes.
And whereas S3 Technologies' business is 90 percent international, the Texas Instruments subsidiary's sales were 80 percent domestic, he said.
Mr. Allocco said the combined businesses will have an estimated $90 million in sales during the current fiscal year. He declined to provide any further breakdown.
Process Systems has been active in Hunt Valley under several owners since the late 1960s, he said. Originally named EMC Controls, it was owned by Rexnord Inc. until 1987, when it was sold to TI, he said.
With the addition of the Process Systems, GSE Systems will employ about 560 people worldwide, Mr. Allocco said. Besides S3 Technologies and GSE Process Solutions, the company also operates a Swedish subsidiary called EuroSim AB.
Privately held GSE Systems is 45 percent owned by ManTech International Corp. of Fairfax, Va., and 35 percent owned by National Patent Development Corp. of New York. Columbia-based General Physics Corp. and Vattenfall AB of Sweden each hold 10 percent stakes.
Boosted by the acquisition of a Hunt Valley software company, GSE Systems Inc. of Columbia yesterday reported that second-quarter earnings more than doubled as sales went up 91.6 percent.
The company, which makes computer programs to control industrial processes and simulate power plant controls and factory operations, reported quarterly earnings rose to $826,000, or 33 cents per share, compared with $375,000, or 15 cents per share, for the same period a year ago. Sales jumped to $22.8 million from $11.9 million.
The company's stock yesterday rose 25 cents a share to close at $15.50.
GSE Systems, which has 515 workers in Columbia and Hunt Valley, went public July 27 with the sale of 1.5 million shares of stock at $14 a share that raised $21 million.
Even though there has been some recent slowdown in manufacturing, GSE sees growth in its international business and among companies trying to modernize. "We still see the industry continuing to grow," said William E. Kuhlmann, GSE's chairman and chief executive officer.
Of the quarterly sales increase, $9.3 million came from the Process Solutions operation, which was bought by GSE from Texas Instruments Corp. in December for $8.8 million. The Baltimore County business produces computer software to control industrial processes.
The addition of the business also boosted revenues for the first six months by $16.8 million to $41.8 million -- 81.7 percent higher than the same period a year ago when sales were $23 million.
Net income for the first six months was $1.4 million, or 56 cents per share, compared to $854,000, or 34 cents a share, for the first six months of 1994.
July 2 2002 - Buys Aegis Research Corp.
"The ManTech International Corporation, a military contractor that first sold shares to the public in February, has agreed to buy the closely held Aegis Research Corporation for $70 million in cash. Aegis Research provides technical support services for the Defense Department and the national intelligence community, ManTech said yesterday. The company is expected to have about $60 million in revenue this year. The acquisition will add about 2 cents a share to ManTech's 2002 earnings and about 13 cents next year, the company said. The acquisition is expected to close this month and will be paid for using the proceeds of ManTech's initial public offering, the company said."
LAS VEGAS — The Web site of ManTech International, a $2.6 billion computer security company that won a major F.B.I. contract, sells its services this way:
“Whether an intrusion is conducted by a skilled outsider with criminal intent, an adolescent hacker seeking a thrill or a disgruntled employee bent on revenge or espionage, the potential risks to the organization are enormous.”
Last Friday, ManTech was that organization.
A band of Internet vigilantes calling itself Anonymous said it had sneaked into ManTech’s computers to demonstrate the company’s insecurity. The group released what it said were internal company documents and, in language that suggested the handiwork of an adolescent hacker seeking a thrill, taunted the company online: “It’s really good to know that you guys are taking care of protecting the United States from so-called cyber threats.”
ManTech is in good company. In recent months, several security firms and consultants have been hit by the very intruders they are hired to keep at bay.
Think of these companies as the new Pinkertons: Instead of taking on 19th-century outlaws in the Wild West, they are hired today to protect corporate and government data, including the most confidential intelligence information, across a vast virtual frontier. The string of embarrassing attacks on them demonstrates how vulnerable everyone is online, including those who are paid to be the protectors.
Many technology professionals who have long warned about such security risks say so-called hacktivist groups like Anonymous, which publicize their attacks to make a point, are the least worrisome of the many potential intruders out there.
“With the rise of hacktivism, now the people who break into you tell you they break into you,” said Jeff Moss, founder of the Black Hat conference, which drew nearly 6,500 technologists, largely security professionals, to Las Vegas this week. “A little bit of public humiliation is going to go a long way in helping the security industry clean up.”
Other times, the attackers are mysterious and more worrying entities, as in the case of the still unknown organization that in March breached the systems of RSA, whose electronic security tokens are used across many industries.
RSA’s parent company, EMC, has said that replacing tokens and cleaning up the mess has cost it roughly $90 million so far this year. Hackers used information obtained in the RSA attack to break into Lockheed Martin, the largest military contractor in the country.
On Wednesday the security company McAfee said it had uncovered a campaign of computer break-ins at 72 organizations and companies worldwide. McAfee called it the handiwork of a nation-state intent on acquiring, among other things, American military designs. Military contractors in the United States made up a disproportionately large share of the companies selected — 12 in all.
Anonymous, for its part, has made it plain that it goes after defense and intelligence contractors to expose their security vulnerabilities, not for financial or strategic gain. Booz Allen Hamilton, a $5.6 billion company based in McLean, Va., that does computer security work for the Defense Department, was hit by the group in early July; the hackers released the e-mail addresses of 90,000 military personnel.
The most notorious breach of a security company came early this year after an executive at HBGary Federal, a relatively small consultant eyeing a government contract, boasted publicly of his ability to unmask the members of Anonymous. In response, hackers made off with a large trove of the company’s e-mail messages and dumped them online, exposing details of its business transactions.
Greg Hoglund, who is the chief executive of HBGary, the parent company that owns a minority stake in HBGary Federal, said that the breach was the result of “a human mistake” and that his firm, along with other security companies, had fortified their systems since then.
“It was a wake-up call for the entire security industry,” Mr. Hoglund said. “It probably needed to happen. I wish I didn’t have to be the sacrificial lamb.”
As unlikely as it may seem, HBGary Federal still has a contract to help an unnamed federal agency sniff out spies inside its organization. And HBGary continues to sell its software, intended to ferret out the circumstances of a network intrusion.
For its part, ManTech posted a vague statement on its site last Friday after the Anonymous attack, saying that it addresses threats to its information systems and pointing out the obvious: “All organizations attract cyber threats in our highly networked world.”
An academic who studies computer security, who declined to be named because he consults for the government, described the Anonymous attacks on security companies in blunt terms: “They’re pulling their pants down publicly.”
The spate of attacks — and the fear of more — could actually end up buoying the fortunes of the global security industry. A nationwide survey of company technology managers, conducted by Forrester Research, found that computer security had increased as a share of the total information technology budget of companies, to 14 percent this year from 8.2 percent in 2007. Of those surveyed this year, 56 percent said it was a high priority to “significantly upgrade.”
“The landscape is more menacing now,” said Eve Maler, principal analyst for security and risk at Forrester. “Even the most experienced practitioners are in the process of upping their game.”
All of the major defense and intelligence contractors have expanded their digital security wings in recent years. They are simply following the money. The business of security for government agencies is growing by an enviable 9 percent a year, according to the research firm Input/Deltek. Federal government contracts alone amount to over $9 billion today and are projected to grow to $13.3 billion by 2015. “Cybersecurity,” Deltek concluded in a recent report, “is somewhat immune to spending and budget cuts.”
For better or worse, said Jonathan L. Zittrain, a Harvard Law School professor, securing the Internet has been largely left to private players — and even government information is increasingly guarded by private companies, whose actions can be difficult to monitor and hold accountable.
“In the absence of larger public order, we’ve seen do-it-yourself approaches: the technologically savvy can configure their own firewalls, and corporations can try to buy security,” he said. “But this can be as figuratively dicey as trying to get and maintain security contractors in Baghdad immediately following the fall of Saddam Hussein.”
GSE Systems announced that it had been awarded contracts worth over $7 million for nuclear power plant simulator work, including the construction of the first plant-specific Westinghouse AP1000 plant simulator in the USA.
The company announced a year ago that it had signed a contract with Westinghouse to model the central nuclear systems of the AP1000 pressurized water reactor for use by US customers. These code modules, it said, would be common to all American AP1000s and would help Westinghouse to demonstrate plant design and control room factors to regulators and potential buyers.
The rest of the systems to make finished simulators will vary in detail from plant to plant. The company noted that a simulator at each new build site is included in the scope of work between Westinghouse and its US customers.
Huge areas at Vogtle are already prepared for the reactors and necessary construction offices and material stocks (Image: Southern)
GSE has now announced the first plant-specific contract to construct an AP1000 simulator in the USA. This is to be for Southern Company's Vogtle site in Georgia, where preliminary site work has already started for the two AP1000 units, slated to begin operation in 2016 and 2017, subject to regulatory processes already underway. In February of this year, Vogtle units 3 and 4 became the first new nuclear power plant construction projects to be offered conditional loan guarantees by the US Department of Energy (DoE).
John Moran, CEO of GSE, commented: "For GSE, the contract for the first domestic AP1000 plant simulator marks the true start of the nuclear renaissance in America. Of the 25 applications formally filed with the NRC to build new reactor plants in the United States, 13 have selected the AP1000 design."
In September 2007, Westinghouse and its partners the Shaw Group received authorization to construct four AP1000 units China: two at Sanmen in Zhejian province and two more at Haiyang in Shandong province. Around that time, GSE was awarded a contract to construct a simulator at the Sanmen plant. In April 2008, GSE said that it had been awarded a multimillion dollar contract to initiate work on a simulator for the Haiyang plant.
That contract was based upon the Haiyang and Sanmen plants being almost identical designs. However, GSE said that as the Haiyang design progressed it deviated from Sanmen. The company said that it has now been awarded a contract to implement the "uncommon" design features of Haiyang in the simulator.
In April 2005, GSE agreed with Westinghouse GSE to cooperate on the development of AP1000 simulators as well as the "verification and validation" of the AP1000 human-machine interface, on which several phases of regulatory tests have been completed.
In addition to the Vogtle and Haiyang contracts, GSE said that it had been awarded a contract by the US Nuclear Regulatory Commission (NRC) to upgrade one of the simulators operated by the NRC at its Chattanooga Training Centre in Tennessee.