Hansen wins big software contract

Buoyed by a resurgence in state and local government spending on technology projects, Hansen Information Technologies announced Thursday that it has won its largest deal ever -- a $21.1 million contract to provide a software management system to San Antonio's water utility.

As the prime contractor in the deal with the San Antonio Water System, Rancho Cordova-based Hansen will provide billing, permitting, maintenance and other software to the utility, which serves more than 325,000 water customers and 350,000 wastewater customers.

Even after paying its subcontractors, including Oracle Corp., Hewlett-Packard Co. and Microsoft Corp., Hansen's share of the deal will exceed $12 million, said company Chairman Chuck Hansen.

That tops Hansen's $5 million share of a Caltrans contract in 2002.

The deal comes as local governments are loosening their wallets to fund new technology upgrades, experts said.

"There's kind of a rebirth in the state and local government market … in contrast to the dark days of 2000 and 2001, when you had a lot of red ink," said Rischi Sood, an analyst with Gartner Inc. who tracks government technology sales.

Sood said this bodes well for Hansen, which specializes in software for utilities and transportation agencies. In a market littered with niche regional players, "Hansen is one of three or four vendors that has built a national presence," he said.

Hansen said that's partly the result of backing from Golden Gate Capital, an investment fund that paid more than $50 million for a majority stake in Hansen last February.

The cash gave Hansen the financial muscle to bid on the San Antonio contract against such heavyweights as SAP Corp. and IBM, Hansen said. Part of the bid required Hansen to post a $21 million performance bond, which cost the company somewhere in "six figures," Hansen said. "We would never have been able to do that without the Golden Gate money," he said.

In pursuing this deal and others, Hansen has hired five additional programmers and another 15 to 20 project management employees in the Sacramento area, bringing local employment to 210, with 315 companywide. He said the company will likely add 20 to 30 additional employees over the next quarter.

The San Antonio contract could result in other similar contracts, according to Hansen. "This is the kind of deal every water utility was watching," he said. "They all wanted to see what San Antonio was going to do."

Hansen's pursuit of new contracts is aided by several major trends, he said. A relatively strong economy and a run-up in real estate values nationwide have funneled more property tax revenue into municipal coffers, analysts said.

Municipalities, "like the state, have seen tax revenues come in unexpectedly strong," said Howard Roth, chief economist at the state Department of Finance.

Yet evidence that the housing market is cooling could hurt municipal governments. "The chickens are going to come home to roost in the next year or two," said Stephen Levy of Palo Alto's Center for Continuing Study of the California Economy.

But Gartner analyst Sood said government spending won't wither anytime soon. Gartner forecasts that tech sales to state and local governments will go from $47.25 billion this year to $54.96 billion in 2008, he said.

One factor unlikely to fade is $3-a-gallon gasoline, which is pushing more people to ride mass transit. That could help increase demand for Hansen software that helps transit companies manage maintenance on their bus fleets.

Hansen said he is seeing more requests for bids from public transit agencies, and he expects more business from the eight major transit agencies that are Hansen customers.

About the writer:

• The Bee's Clint Swett can be reached at (916) 321-1976 or cswett@sacbee.com.