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By Nick Wakeman

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Nick Wakeman

Death of former Northrop CEO marks end of an era

If you want to know how much government contractors have changed, just read Thomas V. Jones’ obituary.

Jones led what was then known as Northrop Corp. from 1960 through 1990. He died last week in Los Angeles at 93.

The New York Times described him as one of the “last of the swashbuckling breed-aerospace-industry titans.”

No disrespect intended, but I can’t think of a single executive I’ve interviewed at the major defense companies in the last 17 years that I would describe as a “swashbuckler.”

But it is different when you go a level or so down into more of the IT contractors. I might not call the executives swashbucklers, but there are some definite characters.

I mean this with great respect, but I’m talking about current and retired executives such as Jack London at CACI International, George Pederson at ManTech International, Ernst Volgenau at SRA International, Robert Beyster at Science Applications International Corp. and Charles Rossotti, founder of American Management Systems.

I call them characters because it is nearly impossible to separate them from their companies. They are the companies, and the companies are them.

You don’t see that in the defense industry any longer. Look at the leadership transitions we’ve seen at Lockheed Martin and General Dynamics in recent years, and the ongoing changes at BAE Systems.

There is no cult of personality there. No individual is more important than the corporation.

The big difference today between the defense-aerospace segment of the industry and the IT services segment is a matter of maturity.

To stretch the metaphor a bit, most companies in the IT segment are teenagers with all the energy, promise and brashness you’d expect, while the defense segment is more staid and methodical.

I’m not saying you won’t see innovation and change from the defense segment; The Washington Post is correct when it says the industry is on the cusp of transformation, but the way that transformation will be realized will be different than in the past, or even from how the transformation in the IT segment will come to fruition.

It’s hard to imagine another Tom Jones staying at the helm of a major corporation the way he did at Northrop.

He survived a variety of scandals, including bribery and illegal campaign contributions. He also spent $1.2 billion of Northrop’s money developing a fighter jet that no one ever bought, according to the Washington Post article on his death.

But there were great successes, such as the investments he made in stealth technology that laid the groundwork for Northrop building the B-2 stealth bomber. He also saw the potential of drone jets, making acquisitions that set the stage for Northrop Grumman to become of the leaders in unmanned aerial vehicles.

He didn’t hesitate to spend money on research and development with the hope that the company would later land a customer who would buy their technology.

No, we aren’t likely to see the likes of Tom Jones again, just as we probably won’t see another Jack London or George Pedersen again.

That’s neither good nor bad; it’s just part of the maturation process of the market. We’ll always have entrepreneurs in the IT space, but I don’t think we’ll see any personality-driven companies make it past the mid-tier, particularly as the larger players will either be publicly traded or held by private equity firms.

The risk is just too great.

Posted by Nick Wakeman on Jan 13, 2014 at 9:23 AM

Reader Comments

Mon, Jan 13, 2014 Casual Observer Washington, D.C.

The reason one sees no "swashbucklers" is that the services business has become heavily commoditized, and the "metal-bending" or hardware biz has become so regulated and surveilled by stakeholders of all types. There is far less risk allowed by shareholders or even private owners like a Carlyle. Further, the government is ever so gentle with excessive cost-plus contracting and going easy on marginal contract performance. Indeed, since the government almost always is heavily involved as a causative force in contractor problems (see healthcare.gov) that it is rare for contractors, even in firm fixed price work, to ever pay the price of major financial loss. Even losing one's reputation is hard. See how easy it is for companies making the worst mistakes to bob back up above the waterline and get that next contract or option year or task. Past performance? Banish the thought. With such favorable conditions, there is no need for swashbucklers to bet-the-firm in order to make decent money. The only price to pay is the submergence of corporate identity as the labor market feeding both Federal hires and companies becomes almost entirely convergent. Ditto for management skill and mindset. Swashbucklers would never tolerate this. It would make them sick.

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