TOP 100: CACI's CEO charts the path from services to tech-centric solutions

CEO John Mengucci has led CACI through a period of change and growth.

CEO John Mengucci has led CACI through a period of change and growth. Courtesy of CACI International.

John Mengucci described the company's strategic shift, approach to acquisitions and technology priorities in this Q&A at Washington Technology's event on the 2024 Top 100.

CACI International CEO John Mengucci often likes to tell the story of the company’s founding in 1962.

There was no office. Instead, the founders Herb Karr and Harry Markowitz staked out a payphone to field customer calls.

Mengucci shared that story as part of a Q&A with Editor Nick Wakeman (me) on multiple topics such as growth, partnering and talent acquisition during the Washington Technology Top 100 event on June 13.

CACI is ranked No. 10 with $4.25 billion in unclassified prime tech and services obligations.

Below is transcript of that conversation, edited for length and clarity.

WASHINGTON TECHNOLOGY: You joined the company in 2012 as a chief operating officer, then became CEO in 2019. How has the company changed?

MENGUCCI: I started in the middle of Better Buying Power 1.0. It was LPTA and then sequestration. A word that none of us could spell and few of us understood what it meant.

If you were in the services world, it meant that you got cut quicker and sooner because you can't stop a large-scale production line.

At the time we were a large government services company with 80% of our work from labor hours and 20% from technology.

We hit this crossroads because the customer stopped asking for past performance. That was our differentiator.

Now, the customer was differentiating on price and when they do that to you, you don’t invest and you become a commodity.

It was a pivotal moment, we could either get involved in a race to the bottom or we could go in a different direction.

We have had some customers for 30, 40 and 50 years. We sold them expertise. They knew us well. We performed well. So why can’t we move into the technology stream and start delivering outcomes? And that’s really where the business changed.

WT: Where did you start?

MENGUCCI: We looked at how we serviced our current customers today with something different and where we should invest.

We changed the whole model about how we want the customer set to buy, and we went from a $1.6 billion (annual revenue) company to nearly an $8 billion-company with margins far greater we ever thought that we would achieve. We are now 55% tech to 45% expertise.

We have always been a highly acquisitive company. Strategy is where we start, so how do we fill gaps with the customer and our capabilities, and how to use our wildly successful M&A program.

WT: How has that shift to tech changed the company?

MENGUCCI: We looked at where we could make inroads on the technology side, but that also forced us to become much more discriminating about what we bid on. The mix changed but so did the things we bid on.

On the expertise side, you can win a $10 million piece of business. But your reward is that you get to come back in a year and bid for less. That gets tired very quickly.

On the technology side, the customer gives us an outcome and we hire the people. But those people are very fungible across the business. We can move people easily from program to program.

WT: Where are your gaps?

MENGUCCI: I ask our business leaders to look at where the market’s going? What are our capabilities? What is the customer buying?

If you find a gap, and if we fill it, can we grow faster? Can we bid on something larger? Can we bid as a stronger prime?

To fill the gaps, we’ll invest. We’ll acquire. And we’ll partner.

We only make acquisitions for capability and customer gaps. A lot of companies buy acquisitions for revenue. If you do that, what you find is at the end of a 10 or 20-year period, you’ve got a bunch of companies that generate revenue, but they're all in different areas. You’re in 15 markets.

So we are very focused on avoiding that.

If we have time, we’ll invest. When we don’t have time, we’ll acquire.

With partnering, it is usually something that we could build but there is another company that already does it extremely well.

WT: Are there circumstances where you do all three?

MENGUCCI: A good example of that is the acquisition of LGS in 2019. They had the pieces we wanted to make a large step into space. We believed that optical communications would be a place for us. It had to be software based.

We took one acquisition and combined it with investments we had already made and then we made a second acquisition about three years later and they took our defense product and made it more commercial.

It isn’t as risky as it sounds if you have a strategy and you always have an eye on the customer. Then it is a safe path.

WT: What other areas are you looking to invest in?

MENGUCCI: We’re a deep electromagnetic spectrum house. Things like signal intelligence and electronic warfare. When you see what is going on with Russia and Ukraine and Israel and Hamas, you have people launching bunches of drones. Even people not in the fight are launching drones.

That is all in the electromagnetic spectrum.

There are reports in Ukraine where they have a lot of U.S. equipment that was working and now it’s not. It’s being jammed.

The munition on the best target has zero value if you can’t find the target because you can’t get the signal.

Anything in the electromagnetic spectrum, anything electronic warfare related, cyber. We are always looking for those capabilities.

WT: When you look at yourself and your peers, what do you see as keys to being successful going forward?

MENGUCCI: First, you need a culture that works. We always say there are three C’s. Capabilities, customer relationships and culture.

You have to have a great culture because you have to have great talent.

You have to create that place where talent wants to come and that’s on us. That’s not on the customer. It’s not on budgets. It’s not on the market.

You have to want to protect the nation we all live in. You have to have a national security bent.

Aside from a great culture, you have to have a phenomenal business development team. You have to continually find your advantage.

You have to invest. The customer wants to see the investment and they want to see a lot of innovation, even if they may not say that, but that’s what they are looking for.