Engility reaping benefits of its investment strategy
For executives at Engility Corp., winning the Air Force’s $67 million GPS contract isn’t just the biggest contract the company has won since it was spun out of L-3 Communications in 2012; it’s a vindication of its strategy.
When Engility was formed, its “investment thesis” as CEO Tony Smeraglinolo calls it was to bring high quality services to the government in a cost-effective manner and to use that business model to take business away from incumbents.
Beating incumbents is critical because the overall market isn’t growing, so new business opportunities are rare.
The Air Force contract for systems engineering and integration services to support the Air Force’s management of the Global Positioning System matches Engility’s model in several ways, company executives said.
First, it’s a win by TASC, a company Engility acquired earlier this year. TASC is known for its high-end systems engineering and integration work, and when Engility bought the company for $1.3 billion, the idea was to marry those end services to Engility’s cost efficiencies, Smeraglinolo said.
Second, the contract is large. It’s starts at $67 million, but with options, the price tag rises to $200 million over six and half years.
And third, it is a takeaway from an incumbent--in this case, Leidos.
“In 2013, we made a concerted effort to focus on large takeaway opportunities,” said Craig Reed, senior vice president for strategy and corporate development.
This is the second major takeaway for the company. In November, the company announced it had won a $61 million contract to provide engineering services to the Naval Air Warfare Center, a contract taken away from Jacobs Engineering.
The Air Force GPS win puts an “exclamation mark on our investment thesis and our acquisition of TASC,” Smeraglinolo said.
The company’s pipeline is very robust, he said, as they continue to put a focus on finding larger opportunities, many of which are currently held by competitors.
During its last quarterly investor call, the company reported that it had $2.4 billion in outstanding bids. Smeraglinolo wouldn’t comment on what that pipeline looks like now. The company will next report on Aug. 6, when its second quarter results are out.
My guess is that the number will be larger.
“We’re submitting bids faster than the government is making awards,” he said.
Posted by Nick Wakeman on Jul 29, 2015 at 10:30 AM