Small cap growth expert Jim Oberweis Jr. eyes two firms that help government agencies reduce costs -- one in health care, one in defense. Here's the latest from The Oberweis Report.

"HMS Holdings Corp. (NASDAQ: HMSY) provides a variety of cost management services for government-sponsored health and human services programs.

"These services help customers recover amounts due from third parties, avoid and reduce costs, and ensure regulatory compliance.

"HMS’s customers are State Medicaid agencies, government-sponsored managed care plans, child support agencies, the Veterans Health Administration, the Centers for Medicare & Medicaid Services (CMS), and other public programs.

"The company helps these programs contain healthcare costs by identifying third party insurance coverage and recovering expenditures that were the responsibility of the third party, or that were paid in error.

"The identification of other insurance coverage also helps these programs avoid future expenditures. The company’s services focus on containing costs by reducing error rates.

"In the company’s latest reported third quarter, sales increased approximately 30% to $49.0 million from $37.7 million in the third quarter of last year. HMS Holdings reported earnings per share of $.23 in the latest reported third quarter versus $.16 in the same quarter of last year.

"VSE Corp. (NASDAQ: VSEC) provides engineering and technical support services to government agencies that reduce costs and improve the reliability of systems and equipment.

"VSE’s primary customers are agencies of the Federal Government, with the US Navy representing their largest client, in addition to the Army, Air Force, Dept. of Energy and the Dept. of Treasury.

"VSE was recently awarded a $194 million contract to support Letterkenny Army Depot as its prime contractor on the modernization program for Route Clearance Vehicles (RCV’s) to improve the US military’s defense against roadside mines and Improvised Explosive Devices (IED’s).

"In the company’s latest reported third quarter, sales increased approximately 76% to $306.8 million from $174.7 million in the third quarter of last year. VSE reported earnings per share of $1.04 in the latest reported third quarter versus $.66 in the same quarter of last year.

"Clients of Oberweis Asset Management own approximately 70,000 shares of HMS Holdings and about 90,000 shares of VSE Corp.. The shares of both stocks may be appropriate for risk oriented investors."