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pinned Leidos’s five-decade existence as an
under-the-radar but important Pentagon
contractor. With $10.2 billion in revenues
last year, the company is ranked 311 on the
Fortune 500 for 2019—its third straight ap-
pearance on this list.
While defense and intelligence work gen-
erates nearly half of revenues, Leidos has its
hands in virtually every aspect of the federal
government’s technological and logistical
efforts, including running the Frederick
National Laboratory for Cancer Research,
designing a microwave system for military
vehicles to detect IEDs, and building a digi-
tal medical records system for the Defense
Department. Analysts expect the firm’s
revenue to rise 5% this year, to $10.7 billion,
with earnings climbing 8%, to $627 million.
For now, Sea Hunter isn’t even a blip
on Wall Street’s radar screen, but it could
become a big growth driver if Leidos wins
a major role in the Navy’s upcoming plans
to add a dozen or more autonomous ships.
That’s a big if. Just because Leidos designed the prototype for Sea
Hunter doesn’t guarantee it a role in the multibillion-dollar con-
tracts to come. In the ruthless world of defense contracting, lawsuits
and protests are common; Leidos was bumped from one $2 billion
bidding battle for a Justice Department IT contract in 2018 when a
competitor complained that a pricing spreadsheet had some blank
cells. “What keeps me up at night is someone else claiming they can
do better,” says Rus Cook, Sea Hunter’s senior program manager.
“That would just be a huge waste of the taxpayers’ money.”
The A.I. software it has developed so far could give Leidos a big
leg up. No other company has publicly demonstrated anything close.
“They’ve got the archetype out there in the water, doing its thing on
the open ocean,” says Bryan McGrath, a retired 21-year Navy veteran
who is now deputy director of the Center for American Seapower
at the Hudson Institute. “It’s really exciting for the future.”L
ONG A WELL-REGARDED government contractor, Leidos
predecessor SAIC suffered from almost 10 years of
problems after the 2004 ouster of founder and CEO
Beyster, who opposed taking the company public. The
Obama-era defense budget cuts hammered the company’s revenue
growth and contributed to the first-ever operating loss in Leidos
history. And most damaging, a massive scandal involving a NewROBOSHIP AT REST
The Sea Hunter
docked in San Diego,
its home-base harbor.