Graham Warwick

It can be difficult for a small aerospace and defense company to grow, and many fail to make the transition to the world of open competition from the small-business status that gave them preferential access to government contracts.

With 1,300 employees and annual revenues of $270 million, Huntsville, Ala.-based Dynetics is in the final stages of that transition as it ventures beyond its base of high-tech engineering services into systems integration and product development.

From its beginnings, which involved reverse-engineering radar hardware for the U.S. Army, to its role as integrator of the Stratolaunch satellite air-launch system being developed by billionaire Paul Allen, designer Burt Rutan and commercial booster pioneer SpaceX, the company has extended its reach.

“To be healthy as a company, you have to grow,” says David King, executive vice president. “Our customers are typically the Army and the intelligence community, but they are getting more diverse and that is driving the company into new areas” such as space and cyber. King says Dynetics has gone past the small-business stage, for the most part. “We have been able to grow through the transition, but it is difficult. You need really good mechanisms to compete for business—'full and open' is a meaningful term.”

A hollowing out of the middle of the aerospace industrial base, as companies have consolidated into the major primes, has created opportunities for smaller players like Dynetics. “We are now large enough to take on bigger programs, but not so big that we think like the government's larger contractors,” he says. “There were mid-tier companies in the past to do that. It is why we have been successful in new domains like space and cyber.”

King says CEO Marc Bendickson's commitment to “do the right thing for the customer” frees up employees to make the right decisions. “It is not always about the bottom line.” Because the company is 100% employee-owned, the staff is free to focus on the long-term, King says.

Dynetics continues to be run like a small business. King notes that “there are things we have to do like a large business . . . but we still allow people to make decisions and not constrain them with rules and policies beyond what is essential.”