Leidos closed on its acquisition of Lockheed Martin’s IT business last week, nine months after the national security firm announced the deal and shook up the IT contracting world, proving size still offers significant advantages for contractors dealing with the federal government.
Through the acquisition, Leidos effectively doubled its size and diversified its customer base to include civilian government agencies, such as NASA, the Federal Aviation Administration and the Social Security Administration, and commercial clients, according to the company’s SEC filings.
Leidos could “expand its footprint” in contract vehicles including the Veterans Affairs Department's Transformation Twenty-One Total Technology, the National Institutes of Health’ CIO SP3 and the Air Force’s Future Flexible Acquisition and Sustainment Tool, according to Deniece Peterson, director of federal market analysis for Deltek.
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By virtue of its acquisition, Leidos also gains prime access to several contracts it didn’t hold before, such as General Services Administration’s Alliant, SSA's Information Technology Support Services Contract and the Army’s Strategic Sourcing Contract.
“Looking at the federal business of each, this puts Leidos at the top of the federal IT contractor list,” Peterson said.
Leidos also becomes the de facto leader in federal health IT contracting, a growing market up 27 percent since fiscal 2011, according to an analysis from big data and analytics firm Govini. Leidos had already scored a major coup in that market by securing the Pentagon’s $9 billion Defense Healthcare Management Systems Modernization contract when it announced its acquisition of Lockheed Martin’s IT business.
Leidos has earned $2.5 billion in federal health IT spending since 2011, according to Govini, but seems primed to earn far more in the coming years with the acquisition. Even without the massive Pentagon health records contract, which it has partnered with Cerner and Accenture to develop, the acquisition gives Leidos prime access to all the big-spending health IT agencies, including the Health and Human Services Department, the Food and Drug Administration and VA.