The Daily Item, Sunbury, PA

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November 16, 2013

HealthCare.gov lead developer's hires bungled other jobs

(Continued)

He added, "Our clients choose CGI because of this delivery rigor and our proven track record as a problem-solver willing to take on the most complex IT challenges. The acquisition of AMS has been critical to the success of CGI in the U.S."

By 2004, contracting problems had helped drive down AMS' revenue amid management shake-ups and layoffs. Media accounts talked of the firm's declining reputation.

But CGI saw an opportunity.

Founded in 1976, the Montreal-based firm catered to banks and telecommunication companies but had done little U.S. government work. Given AMS' experience, the purchase "was mostly a strategic decision to get a foot in the door into U.S. government contracting,'' said Ray Bjorklund, who followed the transaction at the time as an analyst for a McLean, Va. corporate research firm.

Brands, the former AMS chief executive, recalled, "The AMS group had the federal experience and expertise and skill set, and CGI, coming in without being familiar with that marketplace, had to basically depend entirely on AMS' expertise."

In a May 2004 earnings call for investors, CGI founder and chief executive Serge Godin raved about AMS' software and leadership team. "Given the similarities and values of the two companies, these are cultures that will marry very well,'' said Godin, who added that "AMS provides us with a much greater presence in the U.S. market.''

Under the deal, AMS' defense and intelligence contracting units were spun off and sold to Arlington, Va.-based contractor CACI International. (As a foreign-owned company, CGI might have faced difficulties conducting work for the U.S. government in the national security realm.) CGI acquired the rest of AMS for $584 million.

The two firms merged their U.S. operations into a single entity called CGI-AMS. Its first president, 25-year AMS executive Donna Morea, emphasized publicly that CGI and AMS "share core values and philosophies.''

Inside AMS, recalled the former AMS employee, "everybody who was working on a federal contract that wasn't on the defense or intelligence side just became CGI, and they kept their benefits and longevity.''

The AMS name was dropped in 2006, and CGI Federal was incorporated in Virginia.

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