The $1.1-billion purchase of commercial and government contractor American Management Systems in 2004 gave CGI a leg up in the American security and defence market. And in 2010, CGI purchased a U.S. military IT contractor, Stanley Inc., also for $1.1 billion. The Stanley deal, according to Cormark Securities analyst Richard Tse, helped entrench CGI in multiple federal roles. “They are quite embedded,” he explains. “Stanley was an entity that was really effectively managing many of the back-office systems for government and military. They are the company that processes a lot of U.S. passports and visas.” Accordingly, CGI has “built offices all over Virginia,” Tse says.
But the Logica acquisition has reduced the proportion of CGI’s business that is American. George Schindler, president of CGI’s U.S. and Canada operations, says about 5% to 8% of overall company revenue is in the defence and intelligence realm. Of that, a significant amount would be American, since Schindler says CGI’s stateside business is roughly half civilian and half not. But while the company handles sizable quantities of military and intelligence data (CGI was the first company to be accredited as a cloud provider for the U.S. government), the nature of these contracts is hard to establish.
This is not surprising. Canadian software companies involved in U.S. defence work must tread carefully, as Pratt & Whitney Canada, a subsidiary of United Technologies Corp., discovered in 2012 when the parent company was fined $75 million for providing software for the development of a Chinese attack helicopter. According to a recent Pentagon report, Chinese cyberwarriors represent a major threat to the United States—a threat that the Pentagon increasingly relies on IT contractors like CGI to counter.
And work in Washington is highly politicized. This is a client, after all, that increasingly relies on IT to propel weaponry like drones, and to conduct cyberattacks on targets such as Iranian nuclear facilities.
All told, it’s no wonder that when Serge Godin is asked whether CGI works on military front lines, he is quick to deflect the issue. “I hate that kind of a question.” He adds, “the guys are empowered locally. We are not involved because we have proper structure. All that kind of information is highly protected locally. Even from us. Even Mike [Roach] and me, we don’t have a right to see that.”
Schindler joined CGI in 2004 after nine years with American Management Systems. Until 2011, he ran CGI Federal, which handles CGI’s U.S. government contracts. But Schindler also declines to answer questions about the nature of CGI’s U.S. military contracts, citing confidentiality agreements. That said, CGI’s defence contracts represent just a fraction of CGI’s total business, Schindler emphasizes. “It’s got to be put in perspective.”
But CGI’s global role in assisting controversial military activities undoubtedly expanded into new spheres with its acquisition of Logica, notes Frank Slijper, a Netherlands-based ethical investment adviser who specializes in military industries. Logica played a crucial role in developing IT systems for the British military, says Slijper, and it played an important part in the British-Israeli drone program, which supplied the British forces with drones used in Iraq and Afghanistan.
While executives won’t discuss whether CGI contracts involve warfare, company job postings and press releases suggest this may be the case. A search of the CGI careers website for “electronic warfare” in May turned up 74 jobs. One posting calls for a “cyber warfare specialist.” Another recent posting called for an employee located at a U.S. base in Kuwait to assist with operations in Iraq and Afghanistan. In Afghanistan itself, CGI sought an air transport logician capable of passing a U.S. Army physical examination.
Asked about press releases that have touted the company’s “mission-critical operations” for the “warfighter,” Schindler deferred to Roach, who replied, “we don’t comment on sensitive business with our customers.”
Which is reassuring. Intimacy, after all, requires a good measure of discretion.
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