DRS Technologies

DRS Technologies, originally called Diagnostic/Retrieval Systems, was established in 1968 by two engineers, Leonard Newman and David Gross. They developed a device that greatly improved the ability of a surface ship to hide its position while using sonar to detect submarines. This technology made their company a key electronics supplier to the U.S. Navy’s anti-submarine program during the latter part of the Cold War. In addition to its sonar signal processor, the company later received a contract to develop advanced display workstations for anti-submarine vessels.

With the end of the Cold War, the company joined the consolidation wave that took place among military contractors. In 1994 it created a joint venture with Laurel Technologies to produce electronic assemblies for military systems, and the following year it acquired the assets of Opto Mechanik, a manufacturer of targeting systems for TOW missile launchers. In 1997, the same year it changed its name to DRS Technologies Inc., the company purchased Hadland Photonics, a British producer of ultra-high-speed cameras, and the military communications business of Canada’s Spar Aerospace.

The buying spree continued in 1998 with the purchase of NAI Technologies, a supplier of computers and telephone equipment to military customers. DRS also bought two electro-optical operations that Raytheon was divesting to satisfy antitrust considerations arising from its purchase of the defense operations of Hughes Electronics. These deals were followed by the purchase of General Atronics Corp., a navy technology contractor, and of an electronic sensor business from Boeing.

In the wake of 9/11, DRS’s surveillance and intelligence-related offerings were even more sought after by federal government customers. The company continued to grow through acquisitions and new contracts. It bought Meggitt PLC’s unmanned aerial vehicle (UAV) operation, which played an important role in Pentagon plans to attack the Taliban in Afghanistan. DRS went on to buy the naval controls division of Eaton Corp., Nytech Integrated Infrared Systems, Paravant Inc., and Power Technology Inc.—all of them relatively small but key contractors for U.S. military and intelligence agencies. It later moved up the food chain by acquiring larger contractors such as Integrated Defense Technologies in 2004 and Engineering Support Systems Inc. in 2005.

In 2006 DRS announced that it was teaming up with the Israeli company Plasan Sasa Ltd. to sell tactical vehicle armor systems to the Pentagon. That same year, U.S. Army awarded DRS a $222 million contract to supply a “scaleable, integrated, open-standards Command and Control Information Technology Infrastructure (C2ITI)” for troops in Iraq.

The combination of contracts and consolidation has allowed DRS to grow at breathtaking speed. A company with less than $50 million in revenue in 1993 leaped to $391 million in 2000, and since then it has grown more than eight-fold, reaching $3.3 billion in the fiscal year ending in March 2008.

DRS, which came close to being taken over in 2000 and 2004, finally agreed in May 2008 to a $5.2 billion offer from the Italian military company Finmeccanica. The deal will need approval from various U.S. government agencies.