Headquartered in Reston, Virginia, Leidos is a technology, engineering and science solutions and services provider serving the defense, intelligence, civil and health markets. The company consists of 43,000 employees and reported revenues of approximately $12.3 billion in FY2020, an increase of $1.2 billion (11%) compared to FY2019.
Originally formed in 2013 when SAIC Inc. separated its system integration business into what became Leidos. In recent years, Leidos has made some strategic acquisitions, gained large-scale work across numerous federal markets, and executed key take away wins from incumbent contractors.
Brief History of Mergers and Acquisitions
Figure 1 – A brief history of Leidos acquisitions and sales.
The company has made several acquisitions since its creation, the most consequential of which was their purchase of Lockheed Martin IS&GS business unit in 2016, which doubled the size of their business and created the core of Leidos as we know it today. Other notable and recent acquisitions include:
|Acquired company||Date of acquisition||What does the company do?|
|Gibbs and Cox||February 2021||Specializes in naval architecture and marine engineering services.|
|1901 Group||January 2021||Focused on cybersecurity, digital modernization, managed IT services and cloud solutions.|
|Dynetics||December 2019||Applied research and national security solutions business that provides hypersonics, space, and weapons solutions.|
Figure 2 – Recent and very visible acquisitions made by Leidos.
Each of these acquisitions highlight Leidos’ attempt to further invest in areas of differentiation (R&D, cloud and IT managed services) and to expand their footprint in growing, in-demand markets. Each of these acquisitions provide a specific advantage to Leidos:
- Gibbs and Cox enables Leidos to expand into the maritime market, where Leidos has stated it lacks a substantial footprint. The acquisition additionally enables Leidos to grow in the autonomous maritime market and adds valuable engineering talent, including naval architects and digital engineers.
- 1901 Group answers Leidos’ call for more robust capabilities in cloud and managed IT services, which Leidos recognizes as in-demand and the path for the future.
- Dynetics enables Leidos to gain more manufacturing and rapid prototyping capabilities, intended to complement the LInC and further enhance the company’s expertise in R&D and innovation.
Noteworthy Takeaway Wins
One of the more noteworthy points to highlight about Leidos is their string of recent large-scale, takeaway wins serving federal civilian and defense customers. They include:
- National Aeronautics and Space Administration (NASA) End-User Services & Technologies (NEST) – In June 2019, Leidos was awarded a 10-year, potential $2.9 billion ceiling value contract to support enterprise-wide IT systems for NASA. Leidos will deliver IT managed services for 66,000 end users across 18 sites. This was a takeaway win from legacy Perspecta (via legacy HP Enterprise Services).
- U.S. Department of the Navy, Naval Information Warfare Systems Command (NAVWAR), Next Generation Enterprise Networks Recompete, Service Management, Integration and Transport (NGEN-R SMIT) – In February 2020, Leidos was awarded an eight-year, $7 billion potential ceiling value contract to unify, operate, and maintain shore-based networks and data management for the Navy’s Program Executive Office, Enterprise Information Systems (PEO EIS) and the Naval Enterprise Network Program Office (PMW 205) to improve capability and service under an enterprise network construct. This was a takeaway win from legacy Perspecta.
- National Aeronautics and Space Administration (NASA), Advanced Enterprise Global Information Technology Solutions (AEGIS) Contract – In June 2021, Leidos was awarded a 10-year, potential $2.5 billion ceiling value contract to provide telecommunications, cloud and data center services across all of NASA’s centers and facilities. This was a takeaway win from SAIC, who held the previous iteration of this work, the NASA Integrated Communications Services (NICS) contract. SAIC protested the award of AEGIS twice, but both protests were dismissed by the GAO.
- National Aeronautics and Space Administration (NASA), Ames Research Center, Fully Integrated Lifecycle Mission Support Services 2 (FILMSS 2) – In August 2021, Leidos was awarded the five-year, potential $270 million FILMSS 2 contract to provide NASA program, science, engineering, operations and project management support at the agency’s Ames Research Center in California. This was a takeaway win from KBR (via legacy Wyle Laboratories).
These series of wins highlight that Leidos can be a serious disrupter in large-scale IT services contracts and has the capability to wage and win capture efforts against incumbents. Note that these wins have greatly enhanced Leidos’ market share and influence within the U.S. Navy and NASA.
According to their recent investor day presentation, Leidos has invested in technical differentiation and repeatable solutions around AI/ML and full-spectrum cyber, recognizing them as areas for growth that can enhance its delivery of services.
For AI/ML specifically, Leidos states it is driving AI/ML into all of their core capabilities using unique algorithms and deployment methodologies. The company in particular highlights the part AI/ML will play in their cyber work, as a means to secure IT and cloud environments and aid in detection and response.
Moreover, these investments are also being pushed at the employee level, with Leidos stating it is enhancing employee skills in AI/ML, data science and digital engineering.
The FedSavvy Strategies Takeaway
- Leidos’ recent acquisitions of Dynetics, 1901 Group and Gibbs & Cox address new areas of intended growth for Leidos, including cloud and managed IT services, autonomous systems, as well as R&D and rapid prototyping.
- The company’s major wins in recent years highlight Leidos’ ability to compete with incumbent contractors on high-value opportunities and successfully wage takeaway captures against entrenched incumbents.
- Leidos has articulated a strategic focus on investing in AI/ML and cyber to further enhance its service offerings in digital modernization, cyber operations, mission software systems, integrated systems, and mission operations.
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