Tetra Tech has historically focused on sustainable environmental solutions and engineering support services, placing science at the forefront of both. Through targeted acquisitions, they have expanded their focused to include significant support for international development and nascent offerings focused on information technology (IT) services.
In 2018, Tetra Tech reported revenue of $2.9 billion and, unlike many government contractors, they are fairly evenly split between U.S. government and non-U.S. government sales. Their Government Services Group (GSG), which provides consulting and engineering services to U.S. government clients (including federal, state, and local) and worldwide development agencies, accounted for 55% of their revenue (or $1.6 billion). Their Commercial / International Services Group (CIG), which provides the same services to U.S. commercial clients and international clients (bother commercial and governmental) accounted for 45% of their revenue ($1.3 billion).
Tetra Tech has built itself through acquisitions. In the late- to mid-2000’s, they focused on companies providing international development support services. Recently, they’ve shifted towards IT focused companies in an effort to expand their service offerings and invest in new growth areas.
eGlobalTech – Acquired in April 2019, eGlobalTech is a provider of high-end IT solutions, cloud migrations, cybersecurity, and management consulting. eGlobalTech also provides a laboratory incubator (eGT Labs) that will allow Tetra Tech to pilot and apply emerging techniques that incorporate artificial intelligence, data analytics, and advanced cybersecurity solutions.
Glumac – Acquired in October 2017 for $38 million, Glumac is a leader in sustainable infrastructure design based in Portland, OR. Their 300+ employees were integrated into Tetra Tech’s GSG segment
INDUS Corporation – Acquired in March 2016 for $19 million, INDUS is an IT solutions firm focused on water data analytics, geospatial analysis, secure infrastructure, and software applications management for U.S. federal government customers. INDUS was integrated into Tetra Tech’s GSG segment
Coffey International Limited – Acquired in October 2015 for $76 million, Coffey International Limited was an Australian firm providing international development, geotechnical engineering, and project management services. The acquisition includes Management Systems International (MSI), a Coffey subsidiary that provides international development and consulting services to USAID. MSI’s operations were included in Tetra Tech’s GSG segment and the remainder of Coffey’s activities are included in the CIG segment.
PRO-telligent LLC – Acquired in September 2011, PRO-telligent provided technical support services to the U.S. Department of State (DOS) worldwide. They support the strategy and planning work that precedes Tetra Tech’s foreign policy implementation work for the U.S. Agency for International Development (USAID).
DPK Consulting – Acquired in October 2008, DPK Consulting provided technical, management, and consulting services to help developing and transitioning governments improve regulations and the rule of law.
ARD, Inc. – Acquired in October 2007, ARD provided consulting and technical services for international aid agencies and other governmental bodies. ARD managed large, complex international development projects that help countries respond to a range of water, energy, environmental and institutional challenges.
As can be seen in Figure 2 below, USAID dominates Tetra Tech’s federal obligations with 42% over the past five fiscal years (greater than Tetra Tech’s next 15 largest federal customers combined). While the recent acquisition of eGlobalTech provides a boost to Tetra Tech’s DHS work (note the TSA, USCIS, and FEMA in the lower right corner), the still have significant work to do to truly balance this portfolio.
A sample of contracts defining Tetra Tech
Considering how diversified Tetra Tech is as a business, this is not a simple matter. We’ll sample a select group of contracts to demonstrate how broadly capable Tetra Tech is today.
- Naval Facilities Engineering Command (NAVFAC), Biological, Natural, and Cultural Resources Management and Compliance and Related Environmental Planning Services Multiple Award IDIQ – This broadly defined IDIQ is indicative of the environmental sciences and engineering work done by Tetra Tech. Awarded in 2013, they realized $51 million in obligations against a $75 million ceiling.
- Power Africa Transactions and Reforms Program (PATRP) – Tetra Tech provides technical assistance, capacity building, and transaction support services under Power Africa. PATRP focuses on transaction advisory assistance across sub-Saharan Africa. PATRP also does traditional power sector reform, commercialization activities, and institutional support to the Power Africa Coordinator’s Office. This is a major infrastructure initiative across Africa which has impacted over 15 African countries. Awarded in 2014, this is coming to an end in 2019 with $140 million in obligations against a $148 million contract ceiling.
- Afghanistan Engineering Support Program (ESP) – This contract provides design, construction supervision, quality assurance and other support for infrastructure development across sectors including agriculture, energy, water, transportation, environment, health, democracy and governance, telecommunications and facilities, and education. Awarded in 2016, this has obligated $82 million against a $125 million ceiling ending in 2021.
- Afghan Justice Sector Support Program (JSSP) – Working on behalf of the U.S. Department of State, Bureau of International Narcotics and Law Enforcement Affairs (INL), Tetra Tech has been supporting the development of an Afghan professional cadre that is capable of sustaining, equipping, managing, and enabling its own criminal justice organizations. Tetra Tech is implementing INL’s JSSP in line with the U.S. Government’s Rule of Law Strategy, in the development of an institutionalized, legitimate and transparent nationwide criminal justice system. This OASIS task order has obligated $23 million against a $113 million ceiling ending in 2023. This was also a takeaway from PAE in 2017.
- Transportation Security Administration (TSA) Information Technology Security Support Services (ITSSS) – This $32 million award ($27 million obligated thus far) made in 2017 is under TetraTech’s acquisition of eGlobalTech (before the acquisition). The ITSSS contract works to help TSA to enhance its risk management program, develop security policies, and provide Information System Security Officer (ISSO) services and security control assessment (SCA) support.
Our take on Tetra Tech
In an era of spin-offs and re-focus of core business, Tetra Tech seems to embrace a different philosophy. They are very much an increasingly diversified business with potential to deal with risks from having a small group of customers and a narrowly defined offering. Further, considering Tetra Tech has been operating “under the radar” from many U.S. Government contractors, we have to consider the competitive threat of a business that is challenging to pin down. That’s not a criticism, but this type of threat is the one you don’t see coming. Those unconventional threats can lead to a “where did these guys come from?” reaction as you process a loss.
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