Dr. Craig Reed is Engility Corporation's senior vice president of strategy and corporate development and has held executive positions at DynCorp International, Northrop Grumman, Lockheed Martin and in the US Department of Energy.
He was the founder and managing member of Growth Strategy Leaders, LLC before he joined L-3 Communications in April to help lead the formation and spin-off of Engility as an independent publicy-traded company.
In his interview with ExecutiveBiz, Reed spoke about Engility's leadership team and the company's focus on becoming the best pure-play government services provider. He also discussed the company's pending realignment, which takes effect January 2013, and shared his thoughts about possible M&A activity and the nature of the competitive government services market space.
ExecutiveBiz: Craig, you have a broad background in business development and growth strategy, especially with companies that work for the federal government. What about your background let you know that Engility was a good opportunity for you?
Craig Reed: Let me first say that I have been extremely fortunate to have worked in places that were making important contributions to our country's national mission.
Whether it was in submarine warfare, civil space, energy, intelligence, or training and supporting the mission in Afghanistan during the war, I've had great opportunities to serve in organizations that were supporting some of those important program areas. Even in what we all understand is going to be a time of tighter federal budgets, the government services space is nevertheless also going to remain a particularly important area..
The Engility opportunity looked to me like a chance to help build a company that truly provides a differentiated capability to serve the government's important mission and do it in a manner that is extremely cost-competitive and cost-efficient.
ExecutiveBiz: Can you talk more about that? What does the Engility model bring to the market and what is different about it from other companies?
Reed: In the planning that went into forming Engility, some 18 months ago at L-3, there was clear recognition and anticipation that the environment was going to be evolving and that we would be facing a tougher budget environment and the ramping down of activities in Afghanistan and Iraq.
It was with this backdrop that our President and CEO Tony Smeraglinolo, who was a leader in the L-3 Services Group at the time, set out to form Engility and create the best of the best in government services providers.
Engility's focus has been to position this organization as a pure-play services provider. So we are different from other companies in our space that have pursued both solutions and services. Companies who provide solutions, like cyber and cloud computing and mobile solutions, need to invest in technology elements of their solutions, and every dollar they spend on infrastructure and technologies to develop those solutions diminishes their ability to provide their pure play services offerings to their customers at the lowest possible price.
We have also seen a number of the firms in our space that have chosen to de-emphasize their services offerings in order to focus more on the solutions and products side. We see those kinds of decisions as beneficial to our strategy, which as I said, is to focus on being the best pure play government services provider that we can be and offering those services to our customers by the most cost-effective means possible.
ExecutiveBiz: In the last two months Engility has had a number of contract wins. Can you explain what is behind these wins and what technologies or contracts you plan to focus on going forward?
Reed: We have had some good wins recently and I'll use one as an example in a moment. These wins reflect that we have started bidding on our programs with the new Engility in mind. They are a great predictor of the future success we expect to have leveraging the new Engility model that I have just described.
As I mentioned, this is something that Tony started crafting back in 2011. This model leverages our track record of high-level, highly-skilled professionals who have excellent intimacy with our customers. Our goal is to build upon these skill sets and relationships and then to be able to deliver those capabilities to our customers at a highly competitive cost.
The SSES NexGen contract for the US Army up at CECOM, providing support to the Software Engineering Center there, is a great example. We have been performing work for that customer for a long time; we've had a great record of success supporting them. Winning a prime role on this important IDIQ contract vehicle helps re-enforce that longstanding, successful relationship and positions us I think to play a great leadership role as a cost-effective prime contractor with that important customer for the future.
ExecutiveBiz: You had said you expected Engility to finish re-alignment by the end of the year and that you'd begun the planning for the spin-off 18 months ago. Is that goal in sight as of right now?
Reed: L-3 announced the spin-off back in July of 2011 and our goal is to have the re-alignment effective by the first of January 2013. We have undertaken a number of those key steps on that path and I would say we are meeting or are ahead of all our key milestones. We have identified the top talent for the new organization. We have also identified an aggressive and highly-focused organization structure, which as we announced in September, focuses our energies on the key markets that we will emphasize going forward.
We're filling the organization with the best-of-the-best in the industry, and we are doing this by hiring within the current company and by recruiting top talent from outside. We're also getting our processes and procedures in place that will allow us to hit the ground running on day one after the re-alignment becomes effective.
ExecutiveBiz: You have a background in mergers and acquisitions, do you foresee Engility performing M&A activity going forward?
Reed: I'd answer that two ways. First, right now we're very focused on getting the new Engility in place and very focused on trying to establish the structure of the go-to-market approach for the new Engility. As part of our approach going forward we'll have a disciplined, strategic planning process which we will use to identify key areas for our growth strategy both through organic growth and acquisition.
Through this process, I can envision identifying key market areas where we're underrepresented. In such circumstances we would look to flesh-out our portfolio and our capabilities through acquisitions in some key, defined niche areas. I think that it's certainly something that we will look at but as part of a disciplined strategic planning process.
Second, we have already seen a number of companies in our space like SAIC and others doing or considering similar spin-offs like we've done. We view the SAIC spin-off as a sort of validation of our model. And we think we'll see more of that type of activity throughout the industry. We will keep a close eye on how the industry starts to change shape and evolve as a result of the market pressures that other firms will find themselves facing. As conditions evolve, we expect to be playing a role in shaping the future market, not reacting to it.
ExecutiveBiz: Considering the competitive budget environment, a lot of companies have focused on international sales. Considering you attended one of the best international affairs schools, SIPA at Columbia University, you probably have a good idea of what is going on internationally. Do you see Engility going forward with foreign sales?
Reed: The international capacity development market is a key element of our portfolio and it's one of our four major market thrusts that we will highlight under the new Engility. We are doing some very meaningful and important work in many countries overseas on behalf of USAID and other customers. We think our achievements in this space will provide a very sound platform for additional growth in international business.
ExecutiveBiz: Is there anything you wanted to say about yourself or your company?
Reed: I joined this company in large measure because of the leadership that I saw Tony Smeraglinolo bringing to the table. All companies take go on some form of a journey and the success of that journey depends in large measure on the strengths and character of their leaders. I think Tony’s got a great vision for Engility's journey.
He is a savvy and strategic thinker who brings energy, enthusiasm and unimpeachable integrity to the role. I think the entire leadership team that he has brought on board is very excited to be a part of that journey with him. We all are excited by the opportunity to help to craft the shape of the new Engility and position it for its future success.