Leidos

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Leidos Holdings, Inc.
Public
Traded as
Industry national security, health and engineering
Predecessor
Founded June 1969; 49 years ago (1969-06)
La Jolla, San Diego, California, U.S.
McLean, Virginia, U.S.
Founder J. Robert "Bob" Beyster
Headquarters Reston, Virginia, U.S.
Key people
Roger Krone (CEO)
Revenue Increase US$10.17 billion[1] (2017)
Increase US$559 million[1] (2017)
Increase US$364 million[1] (2017)
Number of employees
32,000[1]
Website www.leidos.com
Footnotes / references
[1][2][3][4][5]
Headquarters at Reston Town Center.

Leidos, formerly known as Science Applications International Corporation (SAIC),[6] is an American defense, aviation, information technology, and biomedical research company headquartered in Reston, Virginia, that provides scientific, engineering, systems integration, and technical services. Leidos works extensively with the United States Department of Defense (4th largest DoD contractor FY2012), the United States Department of Homeland Security, and the United States Intelligence Community, including the NSA, as well as other U.S. government civil agencies and selected commercial markets.

Leidos has four central divisions: Civil, Health, Advanced Solutions, and Defense & Intelligence. The Civil Division focuses on integrating aviation systems, securing transportation measures, modernizing IT infrastructure, and engineering energy efficiently, the Health Division focuses on optimizing medical enterprises, securing private medical data, and improving collection and data entry methods. The Advanced Solutions Division is centered around data analysis, integrating advanced defense and intelligence systems, and increasing surveillance and reconnaissance efficiency, the Defense & Intelligence Division focuses on providing air service solutions, geospatial analysis, cybersecurity, intelligence analysis, and supporting operations efforts.[7]

On September 27, 2013, SAIC changed its name to Leidos and spun off a new and independent $4 billion government services and information technology company which retained the Science Applications International Corporation name; Leidos is the primary successor to the original SAIC.[2][3] Before the split, Leidos employed 39,600 employees and reported $11.17 billion in revenue and $525 million net income for its fiscal year ended January 31, 2013,[6] making it number 240[8] on the Fortune 500 list. In 2014, Leidos reported US$5.06 billion in revenue.[3] In 2017, Leidos reported US$10.17 billion in revenue.

In August 2016, the deal to merge with the entirety of Lockheed Martin's Information Systems & Global Solutions (IS&GS) business came to a close, more than doubling the size of Leidos and its portfolio, and positioning the company as the global defense industry's largest enterprise in the federal technical solutions sector.[9] As of December 2017, the company has 32,000 employees.[1]

History[edit]

Company Logo, 2010
Leidos employees in 2017 Capital Pride in Washington, D.C.

The company was founded by J. Robert "Bob" Beyster in 1969 in the La Jolla neighborhood of San Diego, California, as Science Applications Incorporated (SAI).[10][11] Beyster, a former scientist for the Westinghouse Atomic Power Division,[12] and Los Alamos National Laboratory[13] who became the chairman of the Accelerator Physics Department of General Atomics in 1957,[14] raised the money to start SAI by selling stock he had received from General Atomics, combined with funds raised from the early employees who bought stock in the young enterprise.[15]

Initially the company’s focus was on projects for the U.S. government related to nuclear power and weapons effects study programs. The company was renamed Science Applications International Corporation (SAIC) as it expanded its operations. Major projects during Beyster's tenure included work on radiation therapy for the Los Alamos National Laboratory; technical support and management assistance to the development of the cruise missile in the 1970s; the cleanups of the Three Mile Island Nuclear Generating Station after its major accident, and of and the contaminated community of Love Canal; design and performance evaluation of the Stars & Stripes 87, the winning ship for the 1987 America's Cup; and the design of the first luggage inspection machine to pass new Federal Aviation Authority tests following the terrorist bombing of Pan American flight 103 over Lockerbie, Scotland.[16]

Contrary to traditional business models, Beyster originally designed SAIC as an employee-owned company,[10][11] this shared ownership was accompanied by shared responsibility and freedom in business development, and allowed SAIC to attract and retain highly educated and motivated employees that helped the company to grow and diversify. After Beyster's retirement in 2003, SAIC conducted an initial public offering of common stock on October 17, 2006,[17] the offering of 86,250,000 shares of common stock was priced at $15.00 per share. The underwriters, Bear Stearns and Morgan Stanley, exercised overallotment options, resulting in 11.25 million shares. The IPO raised US$1.245B.[17] Even then, employee shares retained a privileged status, having ten times the voting power per share over common stock.[18]

In September 2009 SAIC relocated its corporate headquarters to their existing facilities in Tysons Corner in unincorporated Fairfax County, Virginia, near McLean.[19]

In 2012 SAIC was ordered to pay $550 million to the City of New York for overbilling the city over a period of seven years on the CityTime contract;[20] in 2014 Gerard Denault, SAIC's CityTime program manager, and his government contact were sentenced to 20 years in prison for fraud and bribery related to that contract.[21]

In August 2012, SAIC announced its plans to split into two publicly traded companies,[22][23] the company spun off about a third of its business, forming an approximately $4 billion-per-year service company focused on government services, including systems engineering, technical assistance, financial analysis, and program office support. The remaining part became a $7 billion-per-year IT company specializing in technology for the national security, health, and engineering sectors, the smaller company was led by Tony Moraco, who beforehand was leading SAIC’s Intelligence, Surveillance and Reconnaissance group, and the bigger one was led by John P. Jumper.[24] The split has allowed both companies to pursue more business, which it could not pursue as a single company which would have resulted in conflicts of interest;[25] in February 2013, it was announced that the smaller spin-off company would get the name "Science Applications International Corporation" and stay in the current headquarters, while the larger company would change its name to Leidos,[26] (created by clipping the word kaleidoscope) and would move its headquarters to Reston.[27]

Management[edit]

After more than 30 years of Beyster's leadership, Kenneth C. Dahlberg was named the CEO of SAIC in November 2003. In May 2005, the company changed its external tagline from An Employee-Owned Company to From Science to Solutions.

The third CEO was Walt Havenstein, who pushed for tighter integration of the company's historically autonomous divisions, which led to lower profit and revenue, the strategy was reversed by the (fourth) CEO, retired Air Force general John P. Jumper, appointed in 2012.[30] On July 1, 2014 Leidos announced that Roger Krone will become its CEO on July 14, 2014,[28] as of 2017, Krone is the Chairman and CEO of Leidos.[29]

Operations[edit]

The Defense Intelligence Agency (DIA) transitioned a Remote Viewing Program to SAIC in 1991 which was renamed Stargate Project.

In March 2001 SAIC defined the concept for the NSA Trailblazer Project; in 2002, NSA contracted SAIC for $280 million to produce a "technology demonstration platform"[clarification needed] for the agency's project, a "Digital Network Intelligence" system to analyze data carried on computer networks. Other project participants included Boeing, Computer Sciences Corporation, and Booz Allen Hamilton.[31] According to science news site PhysOrg.com, Trailblazer was a continuation of the earlier ThinThread program.[32] In 2005, NSA director Michael Hayden told a Senate hearing that the Trailblazer program was several hundred million dollars over budget and years behind schedule.[33]

In fiscal year 2003, SAIC did more than $2.6 billion in business with the United States Department of Defense, making it the ninth-largest defense contractor in the United States. Other large contracts included a bid for information technology for the 2004 Olympics in Greece[34]

From 2001 to 2005, SAIC was the primary contractor for the FBI's unsuccessful Virtual Case File project.[35]

During fiscal year 2012 (latest figure available), SAIC had more than doubled its business with the DoD to $5,988,489,000, and was the 4th-largest defense contractor on the annual list of the top 100.[36]

Subsidiaries[edit]

  • Leidos Biomedical Research, Inc., formerly SAIC - Frederick, a wholly owned subsidiary of Leidos manages Frederick National Laboratory for Cancer Research.[37]
  • MEDPROTECT, LLC supports US government health-payer organizations[37]
  • Reveal, develops dual-energy X-ray computed tomography systems for explosives-detection at airports and similar facilities[38]
  • CloudShield Technologies a wholly owned subsidiary, specializing in cyber-security
  • Varec, Inc., liquid petroleum asset management company
  • Leidos Health
  • Leidos Canada, formerly SAIC Canada, wholly owned subsidiary, works with Canadian government.[37]
  • Leidos Australia (Leidos Pty Ltd), wholly owned subsidiary, specializing in document technologies and cyber-security.[37] Produces TeraText software.
  • Leidos UK (Leidos Innovations UK Ltd, Leidos Europe Ltd, Leidos Supply Ltd & Leidos Ltd), wholly owned subsidiary, specializing in managed IT Services & Solutions, developing of bespoke products. Produces, supports & maintains the Chroma Airport Suite, also responsible for the MOD's Supply Chain.
  • Leidos Engineering, LLC, formerly SAIC Energy, Environment & Infrastructure LLC, assembles the legacy of engineering capabilities of Benham Investment Holdings, LLC, R. W. Beck Group, Inc.,[39] and Patrick Energy Services.
  • QTC Management, Inc., acquired by merging with Lockheed Martin IS&GS.
  • Systems Made Simple (SMS), acquired by merging with Lockheed Martin IS&GS.
  • Leidos Cyber, Inc., formerly Lockheed Martin Industrial Defender, acquired by merging with Lockheed Martin IS&GS.

Former subsidiaries[edit]

AMSEC LLC, a business partnership between SAIC and Northrop Grumman subsidiary Newport News Shipbuilding divested on July 13, 2007.[citation needed] Network Solutions was acquired by SAIC in 1995,[40] and subsequently was acquired by VeriSign, Inc. for $21 billion.[41]

Customs and Border Control contract[edit]

In late 2016, the U.S. Department of Homeland Security's Customs and Border Protection (CBP) agency awarded Leidos with a $66 million contract. Leidos will provide mobile scanning systems to CBP, which will help border agents find illegal materials in vehicles and cargo, the scanners are called VACIS M6500. They allow agents to perform non-intrusive inspections of vehicles and cargo, each day, CBP screens over 67,000 cargo containers. The contract calls for delivery of 22 VACIS M6500 scanners.[42]

Controversies[edit]

Revolving door[edit]

The company has had as part of its management, and on its Board of Directors, many well known ex-government personnel including Melvin Laird, Secretary of Defense in the Nixon administration; William Perry, Secretary of Defense for Bill Clinton; John M. Deutch, President Clinton's CIA Director; Admiral Bobby Ray Inman who served in various capacities in the NSA and CIA for the Ford, Carter and Reagan administrations; and David Kay who led the search for weapons of mass destruction after the 1991 Gulf War and served under the Bush Administration after the 2003 Iraq invasion.

In 2012, 26 out of 35 SAIC Inc. lobbyists previously held government jobs.[43][44]

Campaign contributions[edit]

SAIC is among the 8 top contributors to federal candidates, parties, and outside groups with $1,209,611 during the 2011–2012 election cycle according to information from the Federal Election Commission, the top candidate recipient was Barack Obama.[45]

FBI software dispute[edit]

In June 2001 the FBI paid SAIC $122 million to create a Virtual Case File (VCF) software system to speed up the sharing of information among agents, but the FBI abandoned VCF when it failed to function adequately. Robert Mueller, FBI Director, testified to a congressional committee, "When SAIC delivered the first product in December 2003 we immediately identified a number of deficiencies – 17 at the outset. That soon cascaded to 50 or more and ultimately to 400 problems with that software ... We were indeed disappointed."[This quote needs a citation]

SAIC executive vice president Arnold L. Punaro claimed that the company had "fully conformed to the contract we have and gave the taxpayers real value for their money." He blamed the FBI for the initial problems, saying the agency had a parade of program managers and demanded too many design changes. He stated that during 15 months that SAIC worked on the program, 19 different government managers were involved and 36 contract modifications were ordered.[46] "There were an average of 1.3 changes every day from the FBI, for a total of 399 changes during the period," Punaro said.[47]

Sexual harassment and racial bias[edit]

In a heavily-redacted report dated January 3, 2018, the Inspector General for the Department of Defense determined that a supervisor at Leidos made “inappropriate sexual and racial comments to” a female contractor, and that when she complained of a hostile work environment, Leidos retaliated by excluding her from further work on an additional contract.[48] The report found that Leidos’s claim that the contract employee “exhibited poor performance throughout her employment lacks supporting evidence.” It recommended that U.S. Secretary of Defense Jim Mattis “consider appropriate action against Leidos,” such as “compensatory damages, including back pay, employee benefits and other terms and conditions of employment” that the contractor would have received under the additional contract.

See also[edit]

References[edit]

  1. ^ a b c d e f "Leidos Holdings, Inc. Reports Fourth Quarter and Fiscal Year 2017 Results" (PDF). February 28, 2018. 
  2. ^ a b Aitoro, Jill R. (September 27, 2013). "What to expect from Leidos and SAIC when they start trading Sept. 30". Washington Business Journal. Retrieved September 29, 2013. 
  3. ^ a b c Aitoro, Jill R. (September 27, 2013). "Exclusive: John Jumper explains why the Leidos-SAIC split had to happen". Washington Business Journal. Retrieved September 26, 2013. 
  4. ^ "www.leidos.com". Retrieved September 29, 2013. 
  5. ^ "SAIC, Inc.'s Board of Directors Approves Spin-Off of its Services Business". September 9, 2013. Retrieved September 29, 2013. 
  6. ^ a b Science Applications International Corporation. "Fiscal Year 2013 annual report on Form 10-K" (PDF). Retrieved August 9, 2013. 
  7. ^ "Defense & Intelligence". Leidos. Retrieved 2017-06-24. 
  8. ^ SAIC. "Industry Rankings". Retrieved August 9, 2013. 
  9. ^ "Leidos Deal Closes, Spawning Vast Solutions Enterprise". Retrieved 23 August 2016. 
  10. ^ a b Dr. J. Robert Beyster with Peter Economy, The SAIC Solution: How We Built an $8 Billion Employee-Owned Technology Company, John Wiley & Sons (2007) p.xiii
  11. ^ a b Glass, Jon W. (April 3, 2007). "SAIC creator's book touts employee ownership". The Virginian-Pilot. Retrieved 27 November 2014. Beyster, 82, retired as SAIC's chairman in July 2004. A nuclear physicist by training and a self-described "evangelist" for employee-owned companies, Beyster said he wrote the book to provide entrepreneurs and business executives a model, he wrote it with Peter Economy, an author or co-author of several business books. 
  12. ^ http://www.federalnewsradio.com/130/3768420/SAIC-Leidos-founder-dead-at-90
  13. ^ http://www.sddt.com/News/article.cfm?SourceCode=20141223cza&_t=SAIC+founder+J+Robert+Beyster+dies+at+age+90#.VJms1sDhA
  14. ^ https://www.leidos.com/feature/the-solutions-man
  15. ^ http://www.utsandiego.com/news/2014/dec/22/beyster-saic-dies/
  16. ^ "Our History". Leidos. Retrieved 16 June 2018. 
  17. ^ a b SAIC - News & Media - "SAIC, Inc. Announces Closing of Initial Public Offering" Archived October 9, 2007, at the Wayback Machine.. Investors.saic.com. Retrieved on August 17, 2013.
  18. ^ Bigelow, Bruce V (2 September 2005). "Long owned by employees, SAIC says it's going public". San Diego Union-Tribune. Retrieved 16 June 2018. 
  19. ^ "SAIC Moves Corporate Headquarters to McLean, Virginia" Archived October 1, 2009, at the Wayback Machine.
  20. ^ Paul McDougall (March 15, 2012). "SAIC Pays $500 Million In Record Settlement With NYC". InformationWeek. Retrieved September 25, 2013. 
  21. ^ Calder, Rich (29 April 2014). "CityTime head, accomplices sentenced to 20 years in prison". New York Post. Retrieved 14 May 2014. 
  22. ^ Censer, Marjorie (August 30, 2012). "SAIC to split into two public companies". Washington Post. Retrieved March 4, 2013. 
  23. ^ "SAIC, Inc. (SAI) to Spin Off Services Business". streetinsider.com. September 9, 2013. Retrieved September 9, 2013. 
  24. ^ Censer, Marjorie (November 5, 2012). "When SAIC splits, Jumper and Moraco will head companies". Washington Post. Retrieved April 15, 2014. 
  25. ^ Censer, Marjorie (March 3, 2013). "SAIC to name technology business Leidos". Washington Post. Retrieved March 4, 2013. 
  26. ^ Censer, Marjorie (February 25, 2013). "SAIC to name solutions business Leidos". Washington Post. Retrieved March 4, 2013. 
  27. ^ SAIC. "Leidos Headquarters To Be In Reston, VA". Retrieved August 15, 2013. 
  28. ^ a b "Leidos Announces Roger A. Krone As CEO". wspa.com. 1 July 2014. Retrieved 1 July 2014. 
  29. ^ a b "Leadership Leidos.com". Retrieved Jan 4, 2017. 
  30. ^ Censer, Marjorie (August 30, 2012). "SAIC to split into two public companies". The Washington Post. Retrieved January 8, 2013. 
  31. ^ Patience Wait (October 21, 2002). "SAIC team gets demonstration phase of Trailblazer". Washington Technology. Archived from the original on March 2, 2008. 
  32. ^ "NSA datamining pushes tech envelope". PhysOrg.com. May 25, 2006. 
  33. ^ Martin Sieff (August 18, 2005). "NSA's New Boss Puts Faith In Hi Tech Fixes". Space War. 
  34. ^ "After Olympics contractors leave behind IT legacy". Washington Technology. Archived from the original on May 6, 2006. Retrieved August 13, 2006. 
  35. ^ Eggen, Dan; Witte, Griff (August 18, 2006). "The FBI's Upgrade That Wasn't". Washington Post. Retrieved February 8, 2007. 
  36. ^ "top-100-lists 2013". Washington Technology, info business for government contractors. June 2013. Retrieved February 14, 2014. 
  37. ^ a b c d "Companies". Leidos. Retrieved February 24, 2014. 
  38. ^ "Reveal CT-800 Baggage Inspection System". Retrieved December 19, 2013. 
  39. ^ "R. W. Beck Is Now SAIC Energy, Environment & Infrastructure, LLC". Retrieved March 25, 2013. 
  40. ^ "Science Applications International Corporation vs. Comptroller of the Treasury" (PDF). txcrt.state.md.us. Retrieved April 17, 2008. 
  41. ^ "Company History". networksolutions.com. Archived from the original on March 12, 2016. Retrieved March 29, 2008. 
  42. ^ "Leidos receives $66 mln order from DHS for scanning systems for CBP ports of entry". Homeland Preparedness News. 2016-12-01. Retrieved 2016-12-02. 
  43. ^ The Center for Responsive Politics. http://www.opensecrets.org/orgs/summary.php?id=D000000369a. Accessed 6/9/13.
  44. ^ "Lobbyists representing Leidos Inc, 2013:". Open secrets.org. Retrieved 27 February 2014. 
  45. ^ The Center for Responsive politics. http://www.opensecrets.org/orgs/summary.php?id=D000000369a. Accessed 6/9/13.
  46. ^ "Robert S. Mueller, III, Director of FBI Appropriations Subcommittee on Commerce, Justice, State and the Judicial". FBI. 2005-02-03. Retrieved 2014-02-22. 
  47. ^ "SAIC Says FBI Should Deploy its Software". SignOnSanDiego.com. Retrieved September 18, 2008. 
  48. ^ Capaccio, Anthony (2 May 2018). "Leidos's Treatment of Female Whistle-Blower Gets Pentagon Review". Bloomberg News. Retrieved 17 June 2018. 

Further reading[edit]

  • The SAIC Solution: How We Buil