Raytheon holds onto $920M DHS cyber contract as protests end

Raytheon will hold onto an almost $1 billion Homeland Security Department cyber services contract as an almost two-year battle with rival Northrop Grumman over that award involving multiple protests throughout appears to be over.

DHS issued the more recent re-award of the seven-year, $920 million contract known as "Domino" on June 9. A Raytheon spokesperson confirmed to Washington Technology Monday the company has an "imminent" start date for work under the contract.

This latest award from DHS ends Northrop's fight to wrestle the contract away since the initial Domino decision in September 2015 and subsequent protest. DHS made a second attempt in June 2016 when it upheld the initial award to Raytheon.

Northrop then filed four protests against that decision that were dismissed in August, because DHS said it would take another look via a corrective action. Northrop also lost another protest in February of this year that sought reimbursements of its protest costs. Northrop did not respond to a request for comment.

Domino covers cyber services to at least 100 civilian agencies in an effort to defend networks, websites and email addresses on the .gov domain from hackers and other intrusions. Raytheon said in a release it will incorporate automation and analytics functions into DHS' National Cybersecurity Protection System that is used to defend civilian IT networks.

Automation and analytics have been cornerstones of Raytheon's acquisition strategy since the mid-2000s to significantly diversify into the cyber market beyond its longstanding brand as a missile and weapons maker. The Waltham, Mass.-based company has made more than a dozen cyber acquisitions and put $1.9 billion into the Forcepoint commercial cyber product venture, which Raytheon holds an 80-percent stake in.

The Domino award validates Raytheon's strategy on those fronts to "develop a stronger cyber posture that includes a predictive component," Joey Cresta, public sector IT analyst at Technology Business Research, told Washington Technology in an email. Domino's size and scope also gives Raytheon an avenue to grow its exposure and create new agency relationships for business development, he said.

"This is a big statement for Raytheon and indicates that they kind of have the inside track when it comes to the major national security priority of shoring up cyber weakness across government," Cresta wrote. "We’ve always viewed Raytheon as an innovative leader in the federal cyber market, and now that the protracted protest situation is cleared up, they can really reap the benefits of their targeted investment approach, which has always kind of shied away from traditional lower-end enterprise IT-type services."

Domino also figures to add a growth platform for Raytheon's $6.2 billion intelligence, information and services business segment that projects an approximate 3.2-percent decline this year. The contract can help mitigate the winding down of Raytheon's "Warfighter Focus" training services contract with the Army in the second half of this year and help IIS' 2018 outlook, Cresta told Washington Technology.

From Northrop's perspective, the company differs from Raytheon in that it focuses its cyber portfolio largely on government agencies compared to Raytheon's footprint in both public sector and commercial. The opportunity for Northrop in cyber extends beyond network security and includes electronic warfare, according to Cresta.

"There’s going to be plenty of opportunity for Northrop to support cyber and electronic warfare initiatives as victory in the cyber domain remains an underpinning of the Third Offset Strategy," he said.