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Proactive steps sharpen L-3 focus

Company spins off unit, restructures in face of tough market

Last July L-3 Communications Inc. spun off its Engility Holdings Inc. unit and combined its cyber, intelligence and security solutions businesses into a newly formed National Security Solutions group.

Although it is still a work in progress, said Les Rose, president of NSS, “Clearly the spinoff of Engility was a success from L-3’s perspective” because it allowed L-3 to focus its efforts on cyber, intelligence and operational infrastructure solutions, the areas that the company believes has the greatest potential for growth in a tough government market.

“More importantly, what we were doing was changing from strictly a service-based situation to one of services and solutions,” he said. “And the solutions [side] is critical as you go forward in terms of where you are in the market space.”

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The spinoff and refocused efforts landed L-3 at No. 10 on the 2013 Top 100 with $2.5 billion in prime contracts and the Engility spin-off captured the No. 87 spot with $225.9 million.
 
Rose said the looming cloud of sequestration in the beginning of 2012 was not the impetus for L-3’s moves. “We were pretty confident that the budget situation in the Department of Defense would not continue to be at the levels it was during the last 10 years.  Therefore, positioning ourselves for a reduced budget in the DOD space was really part of what we were trying to do.”

Among the initiatives L-3 took last year was establishing partnerships with several academic institutions including an exclusive cyber security relationship with Virginia Tech Research Center in Arlington, Va.

Although L-3 has a long list of contract opportunities it is pursuing, Rose said L-3 knows that some of them will be delayed because of the continuing resolutions and current budget uncertainty.

“So one of the things we’ve done in the last year is significantly increase the number of IDIQ or GWAC vehicles that we hold as a prime [contractor],” he said, a position that greatly increases L-3’s ability to leverage its products and solutions in the federal marketplace. “We’ve been successful in winning a number of new IDIQ contract vehicles in 2012 that positions us, I believe for the government’s buying trends that they’re going to in using those vehicles.”

Among L-3’s contract wins in 2012 were: A prime spot on the Army’s Global Tactical Advanced Communications Systems Contract five-year, $10 billion award for turnkey tactical integrated communications systems;  a prime spot on a five-year, $300 million rapid cyber technology acquisition award from the Air Force Research Laboratory; an 18-month, $314 million recompete contract to provide program management support for full spectrum cyber operations, including systems engineering, intelligence analysis and other support services, The client and program are classified.; a two-year, $50 million task order for intelligence analysis and operations support for U.S. forces in Afghanistan; and two five-year task orders from the DOD to provide IT security management and information assurance worth $67.8 million.

In addition, L-3 has created an organization called Multiple-Award Resource Center. It’s managed by NSS but available to the entire company. It’s tactical in nature and more dependent on proposals, Rose said, than simply an internal capture management group. “It allows us to do centralized bidding and winning of IDIQ vehicles,” he explained.

Rose said the intent is to leverage L-3 products and bring in solutions “as opposed to selling our products through some other channel to the end customer. We’ve been working toward the IDIQ management [concept] for more than a couple of years now and we’re starting to see payoff in recent times.”

Although it’s too early to speak definitively, Rose said, “In 2013, we’re off to a good start.” L-3 has won some significant contracts and is on track to meet its business plan. However, sequestration has had an effect. “We continue almost on a daily basis to have another customer that’s impacted” by the government action.

“Minus that, we’re in a reasonable position,” Rose added. “So far we’ve done very well and believe that there are greater things ahead for us.”

About the Author

David Hubler is the former print managing editor for GCN and senior editor for Washington Technology. He is freelance writer living in Annandale, Va.

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