2015 TOP 100

Top 100: Raytheon doubles down on cybersecurity

Raytheon Co. was more fortunate than some prime contractors in 2014 because the capabilities in its defense portfolio aligned well with those areas into which the Defense Department funneled its lean resources, such as missile defense, cybersecurity, electronic warfare and C4ISR.

The company ranks at No. 4 on the 2015 Washington Technology Top 100 with $4.8 billion in prime contracts.

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“We continued to do well in the areas that were the priority focus for the DOD,” said David Wajsgras, president of Raytheon’s Intelligence, Information and Services business.

That’s not to say that the Waltham, Mass., contractor did not have to go through the same internal calisthenics that other defense prime contractors had to go through to increase efficiency and remain competitive. In recent years, Raytheon consolidated business lines, improved its supply chain and trimmed overhead. The company put a heavy emphasis on “being more efficient as we move forward,” Wajsgras said.

But that alone, although a herculean effort, was not enough to boost sales. Like other defense primes have done in recent years, Raytheon sees international defense, intelligence and cybersecurity markets as a way to continue to grow revenue and offset flat U.S. defense spending. The proof is in the numbers. In 2005 Raytheon’s international sales totaled $3.2 billion, but in 2014 they totaled $6.5 billion, Wajsgras said. 

In the last year Raytheon had a string of impressive contract wins on both the domestic and international fronts. The company landed a $2.4 billion contract with Qatar to furnish new production fire units for the Patriot Air and Missile Defense System, a $1.7 billion contract to upgrade Saudi Arabia’s Patriot Air and Missile Defense System to the latest configuration and a $770 million contract with South Korea to upgrade its Patriot System batteries to the latest configuration. 

On the domestic front, Raytheon won a $700 million contract with NORAD to maintain and operate a modernized Cheyenne Mountain facility, nabbed a $1.5 billion Air Force contract through a joint venture with General Dynamics to operate and support the Ranged Generation Next launch ranges and won a $350 million contract from the Federal Aviation Administration to continue to upgrade the nation’s air traffic control centers to the Standard Terminal Automation System. On top of that, the company won a total of $893 million worth of contracts for TOW missiles, $706 million for AMRAAM missiles and $316 million for Tomahawk missiles.

As for new opportunities, Raytheon is keenly interested in the Missile Defense Agency’s Long Range Discrimination Radar program, which would greatly enhance the nation's Ground-based Midcourse Defense system, which serves as the primary U.S. territorial missile shield. MDA wants LRDR to furnish persistent, around-the-clock precision tracking and discrimination capability. “We believe we are well positioned” on LRDR, Wajsgras said.  

Raytheon is investing heavily in cybersecurity to meet the needs of its domestic and international customers. Wajsgras said that digital advances such as the Internet of Things, cloud computing and mobility have expanded the surface area for cyberattacks, and therefore raised the demand across-the-board for new cybersecurity products and services. “That is an area that we see is in need of the type of security capabilities that Raytheon offers,” he said.

In November 2014, the company strengthened its cybersecurity and intelligence portfolio with the purchase of Herndon, Va.-based Blackbird Technologies. The $420 million acquisition expands Raytheon’s special operations capabilities in tactical intelligence, surveillance and reconnaissance, secure tactical communications and cybersecurity. 

Raytheon also entered into a joint venture that created a new company that merges the Raytheon Cyber Products business unit with Websense’s Triton cybersecurity platform to sell defense-grade commercial cybersecurity products to international customers. To create the new company, Vista Equity Partners sold Websense to Raytheon. Raytheon invested $1.57 billion in the new company and has majority ownership.

“I believe that was a very important event and one that I would easily term a game changer in commercial cybersecurity,” Wajsgras said. “It was very unique for a defense company to do, but we believe it will add value for customers and shareholders well into the future.”

About the Author

William Welsh is a freelance writer covering IT and defense technology.

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