TOP 100: Leidos enters post-integration phase to focus on growth

Leidos has put its integration of the Lockheed Martin IS&GS business in the rearview mirror and is now chasing opportunities to apply that newfound scale and technical expertise.

Leidos may have dropped a single spot to No. 2 for this year's Washington Technology Top 100 rankings, but the company sees the past year as nothing but a success.

And 2018 will be even better, company executives said.

“We spent 2017 with one hand tied behind our back,” said Gerry Fasano, chief of business development and strategy for Leidos.

Much of the year was spent integrating the Lockheed Martin Information Systems & Global Solutions business into Leidos. The merger closed in August 2016 and combined two businesses of roughly $5 billion in revenue each.

“We’ve been doing integration, building organizations and new processes, training people,” Fasano said. “We had multiple HR systems, multiple ledgers, but all of that is behind us now.”

While its prime contract revenue dropped slightly as measured by our Top 100 analysis, Fasano said that 2018 will show a payoff for all of that work.

The company believes it now has a better cost structure that will help competitiveness and that its broad set of capabilities have been integrated.

“We redefined our processes, our go to market strategies, our pipeline, our culture. Nothing was off the table,” he said. “All that happened in ’17 and at the end of the year, the numbers were still super solid.”

The company booked $6.8 billion in prime contracts for fiscal year 2017, according to our analysis.

Leidos also captured several important wins during FY 2017:

  • A $988 million contract with the National Geospatial-Intelligence Agency for enterprise IT.
  • A $239.5 million Army Corps of Engineers task order for IT support.
  • A $472 million Veterans Affairs contract for infrastructure modernization.
  • A $728 million Army contract to support the Afghanistan air force.
  • A $102 million Army contract for an advanced fire control system.

But the big win in that period was a recompete that Leidos won to continue its 28-year relationship with the Social Security Administration.

“Linda Gooden won that a long time ago,” Fasano said, referring to the long-time Lockheed executive who led IS&GS.

Leidos is one of three recipients on that $7.8 billion SSA contract and the company's ceiling for it is $2.3 billion.

For some of these wins like the NGA award and the Army fire control contract, Leidos and IS&GS might not have won them as independent businesses. “It’s not obvious that we’d be as successful separately,” Fasano said.

Part of it is scale but there also is the company’s new cost structure and technical capabilities. “We can bring innovations, past performance, and talent that we didn’t have separately,” he said.

Leidos is looking for more large wins and currently has six proposals in the works for contracts worth more than $1 billion each.

One of those is the Navy Next Generation Enterprise Network. That contract known as NGEN is held by Perspecta, which was created in a three-way merger involving DXC Technology’s U.S. public sector business, Vencore and KeyPoint.

Fasano declined to talk about Leidos' strategy for NGEN. But Leidos has previously announced that it is teaming with IBM, Unisys and Verizon to pursue NGEN.

Another major contract on the horizon is an incumbent contract with the Defense Department worth $4.6 billion to manage operations for the Global Information Grid, known as GIG Services Management Operations or GSMO.

Ironically, Leidos (then Science Applications International Corp.) protested Lockheed's victory in 2012, then inherited GSMO through the merger with IS&GS.

"I don't think we've publicly announced it but anyone can figure out we'll bid on that again," he said.

The timing of Leidos completing its integration process is fortuitous because the government also is in the process of revving up its procurement engine now that there is a two-year budget agreement, which brings increased spending for defense and civilian agencies.

“Our submittals are up 50 percent from the same time last year,” Fasano said.

The company has $18 billion worth of submitted proposals right now. Awards are a bit slow, however. “There is an acquisition backlog that we hope will begin to unwind itself,” he said.

Leidos was able to increase its submitted bids so substantially in part because the integration is completed but also because of internal investments in bid and proposal processes and resources, he said.

Moving forward, Leidos’ scale will be important and particularly for the heritage Leidos part of the business.

“Lockheed didn’t have a scale challenge for bidding large jobs,” Fasano said. “But on the flip side, the passion for innovation and technology investment on the part of legacy Leidos is welcomed.”

Leidos sees its scale being differentiator as IT modernization trends move forward and agencies look to migrate applications to new systems, consolidate data centers, and improve networks.

“However you want to segment it, we have the breadth and scale to support it,” he said. “Customers want past performance with size. You want a service desk that can handle half a million calls. You want to be able to demonstrate that you can consolidate hundreds of data centers down to a handful.”

And Leidos has those qualifications, he said.

In the defense area, Fasano said Leidos is focused on helping the Defense Department regain technological superiority, maintain operational readiness and modernize its IT infrastructure.

“Those are three areas we see getting hot in the market,” he said. “Traditional adversaries are back and the rogue regimes are still there.”

While the company is very satisfied with where it is, it isn’t taking a victory lap, Fasano said.

“If you think we collaborated decently in 2017, you’ll see us do that an order of magnitude better going forward.”

Mergers and acquisitions also are part of the company’s strategy but they will be smaller, tuck-in type of deals, he said.

“We constantly look at our portfolio of capabilities. We look at where we are and where do we need to get stronger,” he said. “We are looking to add differentiation and bring new capabilities.”

The company recently acquired Aranea Solutions, which holds a spot on the Army’s $34 billion Responsive Strategic Sourcing for Services multiple award contract. Aranea brings capabilities in information management in the C4ISR domain.

“You’ll see us continue to look for ways to add value to our customers,” Fasano said. “2018 is all about positioning to accelerate growth.”

NEXT STORY: Kforce promotes Coyle to CEO

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.