Budget Cuts Prompt GovCon’s Identity Shift

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Responding to recent budget changes from the new administration, government contractors like Northrop Grumman and Lockheed Martin are increasingly diversifying their national defense strategy to include civillian and business assets. The new administration’s defense budget includes major cuts to Missile Defense, Future Combat Systems and Navy shipbuilding operations, as well as killing controversial programs to build a new presidential helicopter and a new communications satellite system, delaying the development of a new bomber and includes only four more of the advanced F-22 fighter jets.

So how do traditional contracting giants like Lockheed Martin and Northrop Grumman survive the cuts and continue growing? By branching out into at least three sectors in which the government has pledged to boost spending: Cybersecurity, Health IT, and Green Technology.

First, Lockheed is amping up their cybersecurity efforts with the creation of the Center for Cyber Security Innovation headed by Lee Holcomb. Northrop Grumman is offering a Cyber Warrior training course, that teaches techniques that hackers use and how to defeat them, how to combat spyware, and how to set up a secure wireless network, among other skills.

Second, Northrop Grumman has been in the business of Electronic Health Records (EHRs) and Health Information Networks (HINs) since before President Bush called for interoperable health databases back in 2004. Notable projects include the Defense Operational Environmental Health Readiness System (DOEHRS), designed to enhance occupational health care services and reduce health threats to military and civilian personnel.

Third, Lockheed has already begun cornforming to the rigorous Leadership in Energy and Environmental Design (LEED) Green Building Rating System, which it says will cut costs long-term through reduced energy and water bills, as well as act as effective recruiting tools, as employees are increasingly conscious of their office’s carbon footprint.

Bottom line: GovCon players in the DoD space will begin to shift focus toward  broad, non-military markets.

Larry Prior: Beltway Game Changer Moves to ManTech

Larry Prior
Larry Prior

We called him a Beltway Game Changer in March, and now he’s President and COO of ManTech. A former Marine Corps Intelligence officer, he told us in ’07 that Intel was “in [his] genes.” He takes a hands-on, team-first approach to management that paid big dividends at SAIC during his tenure as COO: increasing revenue to over $8 billion in the ’08 fiscal year, up 11% from ’07.

What does he attribute his success to? “People, people, people! …Our whole business is bringing talent to our customers to take on really tough challenges.” In his estimation, “aggressively marrying the best of science and technology with…deep domain expertise” can solve the toughest problems. This jives well with Chopra’s comments at HIMSS’s DC Conference last Friday, when he called for innovative IT solutions to the healthcare crisis.

His advice to small contractors: “First, think about your offering to the customer. What distinguishes you in terms of your understanding of that customer’s problem? How you are going to solve it with a service or technology? Then call me.” If his performance at SAIC is any indicator, that culture of platform-independence should give ManTech a leg up in earnings in the coming fiscal year.

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