Strategic discipline drives Leidos’ continued Top 100 dominance

Leidos continues its multi-year run atop the Washington Technology Top 100 rankings but despite being the perennial No. 1, CEO Tom Bell is charting the company toward a more focused approach centered on key technology areas.

Bell established the NorthStar 2030 strategy around five growth pillars:

• Space and maritime
• Energy infrastructure
• Digital modernization and cyber
• Mission software
• Managed health services

Those five pillars will guide where the company invests its time and energy, said Chief Growth Officer Jason Albanese.

“It doesn’t mean we aren’t going to do things in other areas, but this is where we're going to spend a disproportionate amount of our investment and our time,” Albanese told WT.

No. 1 Leidos

$11.7 billion in prime contracts

One recent example came with Leidos’ $300 million acquisition of cyber firm Kudu Dynamics, which was the company’s first purchase in three years.

“We're looking for mergers and acquisitions that are going to accelerate the areas we are focused on,” he said. “And cyber touches everything we do.”

Kudu also represents an addition to Leidos’ cyber capabilities because the former focuses on the offensive aspects.

“We are really strong in defensive cyber. We defend large networks for our customers, things like NGEN and GSMO,” Albanese said.  “But offensive cyber is a very different space.”

NGEN references the Navy's $7.7 billion Next Generation Enterprise Network contract, while GSMO is the Defense Information Systems Agency's $6.5 billion Global Solutions Management Operations II contract.

Offensive cyber contracts tend to be measured in the low millions, not billions, and they turn over much faster.

“The focus is on building capabilities that our customers can deploy to take advantage of vulnerabilities in our adversaries’ networks,” Albanese said.

But the capabilities, once deployed, have a shelf life, because eventually the adversary figures out what’s happening.

“The capability you developed is now useless, so you have to go develop another, new capability,” Albanese said.

The ability to do that takes a unique team and unique mindset.

“That is exactly what Kudu brings to Leidos,” he said. “It’s a great example of where we are doubling down.”

NorthStar 2030 and its five pillars and the NorthStar 2030 strategy guide Leidos on where it wants to go, and also the paths it does not want to go down.

A more recent case in point is the company’s decision not to pursue the recompete of an Antarctica support contract it has held since 2012.

The National Science Foundation contract for work in Antarctica has requirements that include building and maintaining airstrips on ice and snow, managing remote field camps, and maintaining icebreaking vessels.

“Those things are not space and maritime, energy, digital modernization, critical mission software or managed health services,” Albanese said. “Executing a huge contract like Antarctic support takes cycles, and it takes energy and everything else. We think that energy, that focus, is better served on the growth pillars and where we're going in the future.”

Leidos has made and will continue to make investments in each of its five pillars, either acquisitions such as Kudu or partnerships.

One example of teaming sees Leidos work with SourceGraph to use artificial intelligence in software development.

“For a key intelligence customer, we’ve seen a 30% savings in the time it takes to develop code,” he said.

Leidos started creating the NorthStar 2030 strategy before the Trump administration took office. Approximately one month ago, Albanese said he briefed Leidos’ board of directors.

“One of the things I led with was, ‘It’s logical to ask if the North Star strategy is still relevant,’” Albanese said. His answer was yes.

“The strategy is resilient and probably more relevant than it was even six months ago,” he added.

Leidos sees the strategy's focus on efficiency and cost savings as aligning with Trump administration priorities, along with greater adoption of new technologies.

Using the space and maritime pillar as an example, Albanese said the administration’s desire to modernize the Navy and grow the fleet as playing into into Leidos’ autonomy capabilities.

“We have the only autonomous ships that have circumnavigated the globe without a single human being on them,” he said.

Leidos is also positioning itself for another Trump initiative for the government to lean on performance-based contracts, as opposed to more traditional cost-plus and time-and-material contracts. But effort is needed by the customer and the contractor for the shift to occur, Albanese said.

“If you want a contractor to invest in a program or a capability, the best thing to do is align on goals and objectives,” he said. “You need to create a win-win scenario with industry where you get better outcomes, and industry does better as well.”

More customers are leaning into the concept, Albanese said.

“We are bringing our customers ideas on how to contract that way and it’s a cultural shift for them because that’s just not how they’ve historically done business,” he said.

One of Leidos' methods is to carve out a small portion of the scope of a contract and make it performance-based as a way to demonstrate the benefits.

“Our customers are more and more open to that,” he said. “The encouragement from the administration as well as encouragement and feedback from industry, will help more of our customers pivot there more quickly.”