The acquisition on Wednesday by CACI International [CACI] of Ascent Vision Technologies (AVT), a developer and supplier of imaging technology and counter-drone systems, further adds to the company’s technology and products portfolio, which has become its highest growth area, CACI officials said on Thursday.

Currently, about half of CACI’s $5.7 billion in annual sales come from technology products and solutions and the rest from the company’s traditional services work for the government, John Mengucci, CACI’s president and CEO, told Defense Daily during an interview.

CACI’s broad framework for its capabilities and markets is described as a quadrant, with its capabilities divided between expertise and technology and its markets consisting of enterprise and mission.

In the company’s fiscal year 2021 that began on July 1, sales of technology solutions are expected to grow in the double-digits compared to low single-digits for its expertise-related work, Thomas Mutryn, CACI’s chief financial officer, said on the company’s fourth quarter fiscal 2020 earnings call Thursday morning. Operating margins for technology solutions and products are three to four percentage points higher than the traditional expertise work, he said.

CACI’s sales in FY ’21 are expected to be between $6 billion and $6.2 billion.

In 2012, when Mengucci joined CACI, sales from traditional services made up about 80 percent of overall revenue versus 20 percent from technology, he said in the interview after the earnings call. But every time the government had a shutdown, that exposed the services side of the business and impacted sales whereas the technology work, which is typically done under longer-term contracts and is less affected by a government stoppage, continued to forge ahead, he said.

In addition to potential shutdowns, government services work began to come under pressure through initiatives such as the Defense Department’s Better Buying Power and a move toward lowest price, technically acceptable, all of which drove down margins, Mengucci said. So, in 2014, the company put a focus on mission technology that has included several acquisitions to bolster its capabilities in that area of its quadrant framework as well as the enterprise section, he said.

Those deals include Six3 Systems, which provided capabilities in signals intelligence, the National Security Solutions business of what is now L3Harris Technologies, providing capabilities in enterprise technology, Mastodon, which also has capabilities in signals intelligence, and LGS Innovations, another technology company in the spectrum solutions and C4ISR space.

CACI paid $350 million for AVT, a deal that includes an expected $40 million net tax asset that lowers the enterprise value of the transaction down to $310 million, and expects the new business to bring in about $50 million in sales during the next 10-plus months remaining in FY ’21.

About two-thirds of AVT’s sales are from its EO/IR imaging products and the rest from its counter-unmanned aircraft systems (CUAS), Mengucci said in the interview.

CACI already has a legacy CUAS business, which generates close to $200 million in sales across the federal government, Mengucci said on the earnings call. Later, in the interview, he said roughly $100 million of this revenue comes from the intelligence community, about $75 million from the Defense Department and roughly $25 million from non-DoD and non-intelligence community customers.

In June, the Army-led Joint Counter Small UAS Office selected eight systems to be used by DoD for drone security and defeat. CACI’s legacy CORIAN system was one of three fixed-site systems selected and AVT’s mobile/mounted Light-Mobile Air Defense Integrated System was also picked.

Mengucci said he expects sales of CUAS systems to grow from here. CACI also offers the SkyTracker CUAS system, which is geared for deploying in the U.S. because it is adapted for operating within tighter radio frequency requirements for domestic applications, he said.

While the deal for AVT further burnishes CACI’s CUAS capabilities, on the earnings call Mengucci touted the company’s overall technology prowess and its suite of EO/IR products.

Some of the key technology differentiators that AVT has include advanced, digital EO/IR capabilities for airborne, ground and maritime applications based on proprietary software that processes imaging data on the sensor, he said. Another key capability is the “advanced artificial intelligence, intuitive command and control and exquisite machine learning algorithms in it as well,” he said.

AVT’s capabilities fall squarely in CACI’s mission technology quadrant, Mengucci said. No matter the sensor, there is a trend for automated capability that requires digital technology and onboard processing to “find smaller things faster,” he said.

Mengucci told Defense Daily that he’s looking forward to populating AVT’s capabilities in AI elsewhere in CACI.

On the earnings call, he said that CACI will combine its expertise in signals intelligence and radio frequency technologies, which are resident in its CUAS systems, with AVT’s EO/IR capabilities for fixed and mobile CUAS platforms and elsewhere.

AVT is based in Montana and has 73 employees, including 30 in Australia. AVT’s senior management will continue to lead the unit.