No. 4: Raytheon extends its range

Defense specialist moves into information security

Raytheon Co.

Top 100 revenue: $5.2 billion

2007 revenue: $21.7 billion

2007 net earnings: $2.6 billion

2006 revenue: $20.3 billion

2006 net earnings: $1.3 billion

Employees: 72,000

http://www.raytheon.com

After 25 years of providing data and network
protection services to its defense and intelligence
customers on an as-needed basis,
Raytheon Co. has taken the next step and
announced its status as an official information
security vendor.

In April, the Waltham, Mass.-based company
added an information security practice to its
Intelligence and Information Systems business,
a move that will allow the company to
focus more intently and bring more resources
to bear on a long-standing but still-emerging
challenge for its federal customers.

The decision was made partly because
Raytheon's defense and intelligence customers,
particularly military installations, had
an unprecedented number of ever-changing
cyberattacks that are
increasingly sophisticated
and complex.

Bernie Elero, vice president
of business development
at Raytheon, said
tapping the estimated
$7 billion annual government
information security
market will help Raytheon
continue on its recent
growth track. The company leapfrogged to
No. 4 on Washington Technology's 2008 list
of Top 100 federal contractors, growing from
$4.1 billion in prime contracting revenues in
2007 to $5.2 billion.

"For years, we've played in pieces of the larger
information security puzzle," Elero said.
"Now we're filling out the rest of the puzzle."

Raytheon's core capabilities largely match
the needs of its customers in this market, he
said, but there are some gaps. To fill them, the
company is making acquisitions. In October,
it acquired Oakley Networks Inc., a Salt Lake
City software developer of tools that prevent
data leaks and insider threats. In April,
Raytheon purchased SI Government Solutions
Inc., a provider of proprietary
software solutions
that enable information
security vulnerability
assessments and computer
network defense.

Although additional
acquisitions are planned,
the practice's strategy for success won't simply
involve pulling in outside companies. "We're
looking to stitch together the best and the
brightest, internally and externally, and leverage
what we do with the
most current technologies
to create synergies," Elero
said.

Initially, the company
will focus on marketing its
new practice to existing
defense and intelligence
customers. However, Elero
said the goal is to expand
to go after information
security opportunities in civilian federal, state
and local agencies and governments of U.S.
allies.

"We will work with the customers early on
to figure out what they've been experiencing
in the way of cyberattacks and cyberintrusions
and begin to figure out how we can best help
them," he said. "We're not going to wait for a
[request for proposals] to come out before we
come up with solutions to customer problems."

Elero said this approach means being a mission
partner, a relationship-centric strategy
that has served Raytheon well. The company
won a number of diverse contracts this past
year that took advantage of its core capabilities
and took it into new markets.

For example, in early April, the company
delivered the first increment of the FBI
National Data Exchange law enforcement
information system that will let law enforcement
agencies share incident reports, correlate
crime data and collaborate on investigations.
By meeting this first milestone, Raytheon will
provide 50,000 users with the ability to capture
case data on incidents and arrest data and
search through multiple records for known
aliases of suspects and defendants.

Other highlights that illustrate Raytheon's
broad range include a $350 million General
Services Administration Schedule 70 task
order from the Navy's Fleet Numerical
Meteorology and Oceanography Center to
provide information technology support for
operational and oceanographic analysis and
forecast product, and a $50 million one-year
option on the Industrial Prime Vendor indefinite-
delivery, indefinite-quantity contract
from the Defense Logistics Agency to support
Army depots in Anniston, Ala., and Red River,
Texas.

Raytheon also was one of the winners of
GSA's $50 billion Alliant contract, which is
delayed as the agency re-evaluates proposals.

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