How GD sees the market with CSRA in the fold
By
Ross Wilkers
Almost one year since the blockbuster CSRA deal, General Dynamics IT still has some integration work to do but is mostly looking outward at market opportunities that underlined the acquisition's thesis.
General Dynamics’ IT services business is approaching the one-year anniversary of its blockbuster acquisition of CSRA on April 3 and still has some work to do in terms of integrating both businesses through consolidating real estate and IT systems.
The now-$8.3 billion-revenue business also did some portfolio reshaping with the sale of its former citizen-facing call center division in the fall.
But now with a new operating model and overall approach largely inherited from CSRA, GDIT is turning more attention outward to pursue a wider addressable market they see as full of large opportunities, executives told a group of reporters Friday at the business’ new headquarters in Falls Church, Virginia.
Bernie Guerry, chief operating officer of GDIT, said the business plans to bid on $50 billion in contract opportunities this year and currently has $15 billion in proposals under evaluation, mostly for new business.
Many of the bids under that umbrella are for contracts worth at least $500 million for large, complex IT jobs across the defense, civilian, homeland security and intelligence arenas that the newly-recasted GDIT feels better positioned for with the larger scale CSRA brought to the table and in what is viewed as an improving market dynamic.
“That’s significantly more than historically either company had been doing just a year ago,” Guerry told reporters. “There’s a healthy budget across each of our markets, particularly in the IT space and IT modernization, and you really need to be able to scale for many of these opportunities.”
GDIT’s new growth and operating model is “really the model that legacy CSRA was following and it’s one of the reasons why they were so attractive to us,” GDIT Chief Financial Officer Alison Harbrecht said. “We’ve leveraged what they had started to build and expanded that concept because we knew that growth model was going to be necessary to go after the large-scale deals in the market.”
These large contracts come after a long period of a “flat budget environment” as Guerry described it, and particularly as defense spending wound down in the early part of this decade. Agencies are packaging together those larger contracts for complex technology upgrades with added budget dollars and policy pressures to modernize their IT infrastructures.
Guerry said that umbrella of opportunities includes a telecommunications modernization program for the Defense Department, cloud computing initiatives at the intelligence community and an IT system management effort for the Federal Aviation Administration.
GDIT is also awaiting the outcome of the at-least $3 billion recompete of the Navy's Next Generation Enterprise Network services contract to maintain and modernize the branch's global internal IT network. That award is due sometime in the spring.
One key aspect of CSRA’s operating model that was attractive to GDIT -- and two other prospective bidders in the Winter 2017-18 auction process -- and viewed as important to keep was partnerships with other technology companies as a way to bring commercial tools and practices into government agencies.
That approach is unchanged and one that the recasted GDIT has embraced, according to Chief Technology Officer Yogesh Khanna, who held the same role at CSRA before the acquisition.
“We take a very holistic partner ecosystem approach because we’re not a product house as such, we don’t make any hard products,” Khanna said. “Partners are our lifeblood and we heavily rely on everything that they bring including their engineering prowess to collaborate with us and (bring) outside thinking.”
The partnership aspect includes within General Dynamics itself: particularly the company’s $4.7 billion-revenue mission systems segment that is essentially the IT hardware business. Mission Systems specializes in communications and other equipment primarily for defense, space and public safety customers.
Khanna said the idea there is to “fuse that with the power of IT” given not just the "GDMS" business' engineering and mission support work, but the other General Dynamics defense divisions as well.
Another key piece of the integration also was a physical location change. GDIT shifted its headquarters at the end of January to the new Falls Church site in the proximity of General Dynamics’ corporate headquarters from the former hub in Fairfax.