TOP 100: Jacobs looks for complexity as it expands its IT footprint

Global professional services outfit Jacobs Engineering Group has quickly gained a foothold over the past decade in the government market and it saw its position swelled even more in December with its acquisition of former rival CH2M Hill.

Jacobs’ public sector presence also includes a sizeable government IT footprint that has shifted from the company’s initial predominant identity as a contractor to the Air Force to support the weapon system development lifecycle.

The business has grown more complex as it has migrated to higher-end integration, sustainment and other support work for not just IT but large government space and nuclear programs.

And that growth is poised to accelerate going forward as the company recorded a streak of large takeaway IT and professional services wins over the past year, plus succeeded in keeping one of its flagship contracts to support key NASA programs.

“We’ve evolved our portfolio over the last 10 years to try and get at bigger pots of money and get more toward mission-forward opportunities,” said Darren Kraabel, senior vice president and general manager for Jacobs’ mission solutions business that houses much of its government IT work.

“We made a very concerted effort in migrating from a services business to a solutions business, that’s fundamentally important to services companies like ours,” he said.

Jacobs stays at the No. 25 slot for the 2018 Washington Technology Top 100 rankings on $1.1 billion in fiscal year 2017 prime contracts.

The obligations number looks more likely than not to swell in future years when looking at this sample of takeaway wins over the previous year:

• A consolidated $480 million Defense Information Services Agency test-and-evaluation contract with at least eight incumbents.

• A $771.3 million Special Operations Command IT support contract previously held by General Dynamics and CACI International.

• A $4.6 billion Missile Defense Agency IT and research-and-development contract previously held by Northrop Grumman

“In each one of those cases, those clients were looking to do something different, they were looking for a creative solution to a particular problem,” Kraabel said. “And we didn’t always do so at a lower cost.”

DISA sought a new approach to using analysis and machine learning to further optimize their test protocols that are mostly simulated. MDA wanted to migrate some of its applications to cloud computing environment and a more robust IT infrastructure for cybersecurity.

In all of those cases, Kraabel said the company specifically sought to offer both a technical and process-based approach to what the agencies were trying to do.

“We’re winning these things because we’re finding a way to deliver differentiated value whether that’s taking an analytical approach to solving a problem, taking advantage of a capital investment the client has already made as opposed to telling them they have to install new tools and widgets,” Kraabel said.

“Instead of doing that, taking advantage of what’s already there, utilizing what they already spent money on and figuring out how to use that in a different way to get at age-old problems,” he said.

This is emblematic of a broader shift in Jacobs’ portfolio that Kraabel outlined where the company decided to take a more solutions-oriented approach for its services offerings.

And a piece of that strategy can also be seen in its September 2017 acquisition of Blue Canopy that brought to Jacobs a new footprint across civilian agencies such as the Treasury, education and health care arenas. The deal also added key skill sets in cyber analytics and machine learning algorithms.

“That cyber thrust has been part of our growth strategy for the last couple of years,” Kraabel said.

Other large contractors have sought to make the same solution-oriented move in part through acquisitions of managed services capabilities. This allows them leverage technology in a different way versus time-and-material or labor-hour based work. Managed services work for the most part generates higher margins and also requires more technical differentiation to stand out in a crowded field.

“The difference is when you think about services, it’s easy to fall into a commodity trap and it’s hard to differentiate,” Kraabel said. “If you think about providing a solution to a particular problem, it changes the way of thinking and moves you up the value chain in most cases. It’s fundamental to changing your perspective.”

Where Jacobs differentiates itself from other original equipment manufacturers is that they can essentially take a fresh look at an agency’s platforms and bring in outside technologies for the upgrade and sustainment piece.

The Defense Department in particular is increasingly moving away from OEMs doing the bulk of sustainment work and “a lot of federal agencies have followed suit with that over the last couple of years,” Kraabel said.

Another key item for Jacobs in the past year was its sixth successful recompete of a $1.1 billion contract for science and engineering services at NASA’s Marshall Space Flight Center. That award continues the work for eight more years.