TOP 100

Lockheed keeps No. 1 spot amidst changes

New leadership, tougher market don't cloud view from the top

This year marks Lockheed Martin Corp.’s 19th straight appearance as the No. 1 ranked company on the Washington Technology Top 100, but this past year also marks a year of great change at the company.

The Bethesda, Md.-based defense contractor has a new CEO in Marillyn Hewson. She replaced Bob Stevens, who remains chairman, at least for now. Hewson is slated to become chairman later this year.

The company also has new leadership at its Information Systems & Global Solutions group, which accounts for the bulk of the $14.9 billion in prime contracts that secured the company's top spot on the Top 100. The long-time leader of that group, Linda Gooden, retired this spring, and has been replaced by Sondra Barbour.

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The leadership changes come at a time when the market is undergoing a fundamental shift, as government agencies look to lower costs and increase efficiencies as well as the significant drops in defense spending that are going on because of the completed drawdown in Iraq, and the continuing drawdown in Afghanistan.

Against this backdrop, IS&GS, under Barbour, is executing a strategy focused on maintaining its position with current customers while actively moving into new markets and customer sets.

“Our top priority is performing the important mission of our customers and growing our business,” Barbour said.

Cybersecurity is an important business opportunity because it cuts across multiple customers, and offers the chance to reach new market segments, she said.

Other growth areas that the company is focused on are energy and health care, Barbour said.

Energy is part of the cyber opportunity in securing the energy grid, but also in improving energy usage. In health care, the company is focused on data analytics.

“Our major focus is now looking at how we can take data and use analytics to help predict what might occur in a patient or predict outbreaks,” Barbour said.

The data analytics approach plays to Lockheed’s engineering strengths and tradition, she said.

The company celebrated two large wins in 2012: the capture of the National Science Foundation’s Antarctica support contract worth $2 billion, and the prime position on the Defense Information Systems Agency’s Global Information Grid Services Management Operations contract, valued at $4.6 billion.

Barbour also said this coming year, Lockheed faces several significant recompetes with the Air Force, NASA and the Homeland Security Department.

The specter of lowest price, technically acceptable contracts hangs over nearly everything the company competes for, Barbour said, but Lockheed’s approach is to submit bids that are fully compliant, technically sound and offer the best value. She said that she expects there may be competitions where Lockheed will not bid because it won’t make the sacrifices on quality just to win.

“I don't think we've had any to date, but I fully expect as things start to tighten we might see some of that,” Barbour said.

The international market also is an active one for Lockheed Martin, as it looks for adjacent markets. The company won a contract in the United Kingdom for cloud computing services, and a $26 million command and control contract with the Royal Jordanian Air Force.

Australia is another important market where Lockheed has made several acquisitions that strengthened its intelligence and defense capabilities in that region.

Air traffic control is another international opportunity for the company.

“We are looking at some large bids in Australia, the Middle East and the U.K. focused on air traffic control, command and control and some other areas that I can’t disclose,” Barbour said.

As the market tightens because of budget cuts, sequestration and an emphasis on price, the position of an incumbent isn’t as strong as it once was.

Barbour’s answer to that goes back to her focus on performance, and to finding savings for customers before a contract is up for a recompete.

“You can’t wait until it’s up for bid. Your customers will say, 'why didn’t you suggest that before?'” she said. “Your approach has to be, ‘How do we continuously improve by implementing innovation?’”

That’s a common conversation that Lockheed is having with its customers, particularly in light of sequestration.

“We are certain there will be cuts, but we’re not certain as to where they will be made, so we’re working through it with our customers,” she said. “We’re confident we’ll be able to help them.”

About the Author

Nick Wakeman is the editor-in-chief of Washington Technology. Follow him on Twitter: @nick_wakeman.

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