TOP 100

Top 100: Harris digests Exelis acquisition, plans to leverage new scale

Nowadays, you cannot think of Harris and not think about its gargantuan acquisition of Exelis that closed in late May 2015.

Combined with a couple of good contract wins, the deal helped Harris land the No. 9 spot on Washington Technology's 2015 Top 100 Federal Prime Contractors list with $2.6 billion in prime contracts.

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Harris’ $4.75 billion deal for Exelis added significant scale to Harris: $3.25 billion in total revenue to Harris’ already $5 billion, as well as another 10,000 employees.

On paper, the deal made sense; the two companies had a number of similarities and complementary capabilities including radios, air traffic management, advanced sensing and communications. Harris and Exelis both also have significant international and commercial sectors.

But the deal also made sense because it made Harris the perfect size—big enough to take advantage of its scale to innovate solutions for customers, but also small enough to be entrepreneurial and responsive in a competitive industry, said Harris CEO William Brown.

“Expanding our engineering base by 50 percent and significantly growing our technical portfolio gives us a bigger canvas to invent solutions for the long term,” Brown said.

Moving forward, the CEO said that mergers and acquisitions will continue to be part of the company’s strategy, but that for now, Harris is focused on maximizing and integrating the Exelis acquisition.

Even without Exelis, the company had a rock star year with major contract wins, including a pair of $450 million contracts—one in August and another in March—to support DISA’s crisis management system, which provides government leaders with video and voice communications.

On top of that, the company won a spot on the coveted $7.9 billion Air Force NetCents 2 network operations and infrastructure contract to support legacy infrastructure, networks, systems and operations.

As for the market in the future, the company is optimistic; “We believe that the U.S. government spending cycle has bottomed, and even under a worst-case full sequestration scenario, the budget is up modestly in [fiscal 2016] with steady growth in the out years,” Brown said, who believes that current world events will also stress the importance of defense and national security spending.

The key to being successful for a technology-based company like Harris, Brown said, is consistently meeting customer expectations by delivering technology that is pragmatic but also affordable. “To accomplish that, we invest more than 5 percent of our own funds in research and development,” he said.

By investing in R&D, Brown said, the company is able to create solutions before a solicitation is ever issued. The company sees its commitment to research and development investment and its customer-based, flexible approach as being critical to its success.

Going forward, it will be business as usual at the company. Harris’ main objective over the next few months is integrating the Exelis acquisition in order to leverage its new scale to continue meeting customers’ missions.

About the Author

Mark Hoover is a senior staff writer with Washington Technology. You can contact him at mhoover@washingtontechnology.com, or connect with him on Twitter at @mhooverWT.

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