Federal IT Top 100 Rank: No. 3
Federal IT executive: Jonathan Scholl, president, health and infrastructure sector
Leidos is set to undergo its second major corporate transition in three years — one that will make it a powerhouse in the government information technology services space.
In 2013, what was then known as Science Applications International Corp. spun off a major part of its government services business into what is now known as SAIC, and rebranded itself as Leidos. Under its new name, the 18,000-employee spin-off focused on national security, health systems and infrastructure services.
Now, Leidos plans to merge with Lockheed Martin’s Information Systems and Global Solutions business, a move that will make the combined company the leader in federal IT services with an estimated $10 billion in annual revenue. The merger also will give Leidos increased scale, a more competitive cost model, better sales and service support, and complementary capabilities to meet near- and long-term customer needs and requirements, according to company officials.
Factoring out non-IT related revenues, IDC Government Insights estimates the company generated $4.74 billion in revenues from the sale of IT products and services to the federal government during the government’s fiscal year 2015, making the company No. 3 in the 2016 Federal IT Top 100 rankings. (Read the full story here.)
The Lockheed unit will bring to Leidos a significant federal customer base in the departments of Health and Human Services, and Homeland Security; the Federal Aviation Administration, the Defense Information Systems Agency; and Social Security Administration. It also will bring expertise in large-scale IT projects, such as network modernization programs, complementing Leidos’ top-flight strength in cybersecurity for Defense customers.
The revenue mix for the new company will include more than a third in civilian-agency business, where Leidos continues to win key contracts. It recently garnered a prime contract from the Federal Highway Administration to provide technical support services to the agency’s FHWA Office of Operations Research and Development and the Saxton Transportation Operations Laboratory. The contract has a five-year period of performance and a total value of $75 million.
Meanwhile, Leidos is looking to small business as a way of expanding into new markets. The company recently held a small business symposium at its Reston, Virginia, headquarters. Representatives from 23 local small businesses participated in the daylong event.
Ron Baham, head of corporate business development for Leidos, said the company wanted to identify and continue to build working relationships with small businesses that have access, affinity and presence within potential expansion markets. By investing in small businesses, Leidos can gain a bridge into growth markets where we currently have little or no presence, he said.
— Richard W. Walker