Government-related computer contracts growing; El Segundo company nearly doubles its revenues.

El Segundo-based Computer Sciences Corp. has developed information management software that helped it land a long-term $744 million contract with the U.S. Department of Defense last December. But its main competitors, Martin Marietta Corp. and Electronic Data Systems Corp., are also vying for the growing market.

Analysts say military, government and corporate need for custom computer information storage and management systems has turned into a multibillion-dollar industry, one that is growing and hiring employees while many other segments of the computer industry are laying off staff.

The CSC contract with the Department of Defense and a similar pact with the San Diego division of St. Louis-based General Dynamics, helped CSC boost its revenue to $2.2 billion in the fiscal year ended April 1 from $1.7 billion in the previous year. And according to analysts, CSC is competing for another $2 billion in Department of Defense contracts.

"CSC gets about half of the (the software design and systems integration) defense contracts that come up each year. Its main competitors are Electronic Data Systems and IBM," said Alexander P. Paris, a consultant with Chicago-based Barrington Research Associates.

San Diego-based Science Applications International Corp. (which has an office in Century City) and Bethesda, Md.-based Martin Marietta Corp. also pitch the Defense Department business, but Paris said CSC and Dallas-based EDS dominate the field right now.

The CSC custom computer programs let the Department of Defense store thousands of tons of printed documentation electronically. Once it is coded, and transferred to tape or disk, it can quickly be modified and stored in a much smaller space.

"CSC has been good at developing custom software and assembling the best configurations of computer hardware for different divisions of the Armed Services," Paris said. "The same skills CSC uses to help the military run more efficiently help them land contracts with non-military agencies."

CSC officials claim the key to their success is the ability to write custom software that helps customers, such as aiding the Department of Defense in modifying specifications and producing documentation publications without typesetting and printing new volumes. The systems CSC designs also help customers, government and civilian significantly cut their inventories with just-in-time programs.

Just-in-time or JIT programs use computers to track how quickly inventory is used and when it should be reordered, so the user minimizes the amount of costly inventory on hand at any given time.

A military officer told CSC officials its programs made its resource management so much better it was "like having another 100 airplanes in the fleet," said John Gulick, spokesman for the CSC Defense Systems Group, Falls Church, Va.

"The documentation the Navy has to file and update for one nuclear-powered submarine weighs 40 tons. We have designed software that lets them easily update these materials on a computer terminal," Gulick said.

CSC has worked with the Department of Defense since it won a one-year contract with the U.S. Air Force to help manage inventory and purchasing in 1984. It was chosen over EDS and Martin Marietta, Gulick said.

"We developed the software for the system to run on IBM hardware. The eight-year contract was worth $100 million," Gulick said.

Despite early success, CSC officials at its El Segundo headquarters admit EDS has made inroads.

Even so, "our volumes in defense and non-defense government business ($2.3 billion in 1991) grow each year. As state and local governments trim their budgets, they're using companies like ours on an as-needed basis and reducing staff," said CSC's El Segundo-based manager of investor relations Bill Lackey.

Employment at CDS's El Segundo headquarters dipped from 700 in 1990 to 650 in 1992, mainly because of re-assignments, Lackey said. Companywide, CSC employment rose from 21,600 in 1990 to 26,500 in 1992, Lackey said.

As with CSC, designing computer systems for the Defense Department has helped EDS annual sales grow from $6.1 billion in 1990 to $7.1 billion in 1991. The company should end 1992 with total sales of $8 billion, said Carlene LaVosser, EDS's Sacramento-based spokeswoman for its California operations.

Los Angeles subsidiaries of EDS collectively increased employment from 558 in January 1991 to 1,349 in January 1992. As of Sept. 1, that had grown to 1,438, LaVosser said.