How Peraton sees the world of enterprise IT contracts
"We used to think that bidding on a $50 million-to-$100 million job was a really big deal. Now we have 100 jobs that are in excess of $100 million, many that are in excess of several billion dollars,” says Peraton CEO Stu Shea. Courtesy of Peraton.
By
Ross Wilkers
The company's focus is on instutionalizing how it wins multi-billion dollar opportunities, Peraton's leader has told the investment community.
Peraton made itself into the company it is today in part with the idea that scale and scope helps its positioning for large enterprise IT contracts at federal agencies.
Both of Peraton's big integrations involving Perspecta and Northrop Grumman's IT services arm are behind the team that now stands at around 18,000 employees in a roughly $7 billion-annual revenue company.
That fast expansion has also changed the company's thinking about what makes for success on the business development and capture front. At a Feb. 15 investor conference hosted by investment bank Cowen, Peraton CEO Stu Shea contrasted the past with the present regarding the company's priorities on contract pursuits.
"We used to think that bidding on a $50 million-to-$100 million job was a really big deal," Shea said. "Now we have 100 jobs that are in excess of $100 million, many that are in excess of several billion dollars and we now have the muscle memory to go after those. A lot of our focus is on making sure that we now institutionalize that process of growth."
Regarding those billion dollar-plus opportunities: the number of competitors pursuing them can be counted on two hands at most and sometimes one when considering the investment and capacity needed for execution.
The kind of scale Peraton and others have allows that corner of the government market "to be a smaller marketplace," Shea said at the 2023 Cowen Aerospace/Defense & Industrials Conference.
Several big-ticket government IT contracts have hit the marketplace over the past five years in particular with many of the most contested awards in excess of $5 billion in ceiling value or more.
Look no further than the Navy's $7.7 billion NGEN network services contract won by Leidos and the Defense Information Systems Agency's $11.5 billion contract called "Enclave," also won by Leidos.
All big-ticket award conversations should also include DISA's $4.4 billion award called DEOS to General Dynamics for cloud-based collaboration tools, and the Air Force's $5.7 billion "Enterprise IT as a Service Wave 1" contract awarded to CACI International. The latter is currently under protest from Peraton.
Shea was happy to tout to investors Peraton's own award activity on the enterprise IT and modernization front that includes a $2 billion award at the Defense Health Agency to do just that kind of work, plus a $2.7 billion win to help the Homeland Security Department optimize its cloud computing environment.
Those figures also represent the upper end of the anges Peraton expects to see in future for similar work and with the same competitors involved. Shea acknowledged they are "all chasing kind of the same programs."
"I don't know that you're going to see the next $10 billion programs that are out there, but you'll see a lot of programs in the $500 million-to-$2 billion range and we're positioned for many of those," Shea said.
As Shea sees things, those IT modernization and digital transformation programs represent a wave of change across government agencies that are deciding "we really need to get with the current times."
"There are a huge number of those programs that are tucked away across all the agencies," Shea said. "The military services all kind of grew up and had their modernization progs, now all the defense (and) civilian agencies are doing the same thing and they'll be the next generation."
But that next generation of IT environments agencies are looking to move toward also puts a lot of requirements on integrators like Peraton to piece them together.
"Each of those are bringing the organizations to a different level of competency in terms of technology, moving towards more integrated operations, taking advantage of big data, taking advantage of differentiated communications where you can move data around more freely, having the deep analytics that allows you to exploit that data for a different benefit, and also linking together disparate orgs to share some common technology or common uses," Shea said.