BAE Systems's Intelligence and Security business won its biggest contract last year and that wasn't the only big news; it also survived a corporate review that explored selling the unit off.
Winning the largest contract award in the sector’s history is a big reason why BAE Systems’ Intelligence and Security (I&S) business calls 2015 a successful year, especially considering part of it was almost sold off.
“Last year, we defended our ground on recompletes — winning a significant number of our recompetes across the business, said DeEtte Gray, president of the sector, in an email. “We aggressively pursued new strategic opportunities for growth and realigned our people and resources to better serve our organization’s changing needs — all while achieving the largest contract award in our sector’s history.”
I&S has 7,500 employees and $1.7 billion in annual revenue. It’s earned the No. 18 spot on this year’s Top 100 list, up one from 2015.
The record-breaking contract win came in the form of an indefinite-delivery, indefinite-quantity contract valued at more than $1 billion over 10 years.
“Due to the program’s potential size, complexity and strategic importance, the program has since been established as the core of its own business area,” Gray wrote. “We’re now executing on the first of several task orders under that program, and we are ramping up our hiring activities as we anticipate substantial growth.”
The company also won a five-year contract worth an estimated $278 million to provide logistics and sustainment engineering services for the Instrumentation Radar Support Program, which supports several agencies and foreign governments that use similar radar optical and telemetry systems.
Additionally, the analysis business won a five-year recomplete contract worth up to $145 million to continue providing counter-terrorism intelligence services.
Organic growth came in the form of a $174 million award from the Air Force’s Ballistic Missile Integration Support Contractor program for additional engineering scope change proposals. “Since winning the program in 2014, the team has supported eight successful missile test launches,” Gray wrote.
One challenge last year came in April in the form of a strategic review as company executives considered selling I&S’ manpower and services activities businesses. Officials opted to retain the business.
“The review has concluded that retaining the businesses delivers greater value,” a November trading update states. “The business continues its good performance and order intake.”
Other challenges include competing with commercial firms for talented employees and looking for ways to reduce costs to customers, Gray wrote.
“Whether it’s by consolidating office spaces, identifying system redundancies or investing time to implement operational efficiencies, we are always seeking ways to optimize our business processes,” Gray wrote. “This has helped us create a culture of ‘continuous improvement’ within our business.”
That means challenging employees to identify ways they can make a difference for their customers, colleagues and communities. Besides empowering employees, the approach has helped I&S find ways to lower overhead costs — “a key factor that affects our ability to win new work,” Gray said — without cutting employee training and development initiatives.
“In fact, this year we’re offering more online training courses and certification assistance than ever before, making it even easier for our global workforce to participate,” she wrote. “Developing our talent helps ensure our company’s future success.”
What’s more, I&S realigned its business between 2015 and 2016 by moving the geospatial-intelligence and intelligence, surveillance and reconnaissance business into the more product-focused Electronic Systems sector of BAE Systems. “We also created a new business area focused on delivering virtualized applications and specialized IT services — important growth drivers for the future of our sector,” Gray added.
Looking ahead, Gray said she sees opportunities for growth in adjacent markets.
“We strongly believe that organic growth coupled with winning new business is our path to long-term sustained growth,” she wrote.
To that end, I&S is pursuing targeted expansion in mission data analytics and using its past successes to push for more DOD and intelligence community business. It’s also looking to expand its mission application development and sustainment services business and take advantage of its expertise in high-performance computing.
“We also see significant opportunities for our sector to grow in the Special Operations, maritime, strategic defense and missile defense markets,” Gray wrote. “Additionally, we’ve made strategic investments that will enable us to pursue new systems integration and support contracts in order to enhance the mission readiness of our customer’s military tactical vehicles.”
She does not anticipate much slowdown as a result of the upcoming presidential elections. The next president will face the same, if not tougher, challenges in cybersecurity and terrorism.
“Following Congress’ agreement to raise spending above the Budget Control Act’s cap, defense and domestic program spending appears to be stabilizing,” she wrote. “There will always be a need for a strong defensive posture to protect our nation — the challenge is to determine what that will cost.”
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