Leidos CEO shares insights on his commercial strategy

The history of government contractors trying to succeed in commercial markets and not finding much success -- especially in cybersecurity -- is almost as long as the history of the GovCon market itself.

Leidos can be included in that group of GovCon firms that was once in commercial cybersecurity and then found a new home for the business after discovering the pace and cadence of that market is very, very different than what they find in the government cyber realm.

But health care is a far different story for Leidos. It is reporting some success there and sees similarities between its commercial work and the work it is doing for the Defense Health Agency and Veterans Affairs Department. Both are deploying a new electronic health record systems with Leidos and partner Cerner.

At a Thursday conference in Washington, D.C., CEO Roger Krone explained Leidos’ broad strategy for commercial markets such as energy and health care as much like in the federal government in that the company has specific customer characteristics it looks for.

“We look for highly-regulated, very complicated acquisition processes… very, very sophisticated customers who differentiate based not on price, but differentiate on innovation,” Krone said at the event hosted by George Mason University’s Center for Government Contracting.

It should be noted that Reston, Virginia-based Leidos’ divestiture of its commercial cyber business earlier this year did not necessarily mean an entire exit. Leidos still has cyber work with energy and health care customers, checking the box of highly-regulated sectors.

“Health care as we all know, because we’re in the system, is more regulated every day,” Krone said, adding that providers typically have “a complicated RFP (request for proposal) process.”

“The commercial health providers are struggling with the same issues that the VA is and DHA is. So it makes sense to go after it on the surface,” Krone added. “The acquisition process, although sort of RFP tender driven, is very different. If you look at a commercial hospital and say ‘I can treat that like a VA or DHA contract,’ then you’ll fail.”

But with that said: once Leidos is in with a commercial health care customer such as a hospital or other provider, the work is almost the same as it would be with a government agency. Krone highlighted writing code for software, agile development and other services on the back end as examples of similarities between government and commercial health clients.

“Our largest software development facility: we do work for all four of our operating units in the same physical space, because the value stream and processes we use to do software development today are common,” Krone said, whereas “the business development side has to be very different.”