Leidos awarded $267 million Army C5ISR and COTS systems task order

Rhea-AI Summary

Leidos (LDOS) secures a $267 million Army C5ISR and COTS systems task order to provide technology-enabled services, hardware sustainment, modernization, refresher training, and logistics support. The task order has a base period of 11 months and a maximum value of $267 million if all options are exercised. Leidos experts will assess Army hardware capabilities, build out configurations, implement upgrades, and provide equipment warehousing, shipping, and warranty repair.

Insights

Defense Industry Analyst

The contract awarded to Leidos signifies a substantial commitment by the U.S. Army towards maintaining and enhancing their C5ISR capabilities. C5ISR refers to Command, Control, Communications, Computers, Cyber, Intelligence, Surveillance and Reconnaissance. It's a domain that integrates and manages the flow of information and oversees battlefield operations. The scale of the contract, with a maximum value of $267 million, suggests an extensive scope and indicates the Army's prioritization of technology in warfare.

For investors, this contract represents a stable revenue stream for Leidos over the near to mid-term, assuming all options are exercised. The task order not only includes hardware sustainment but also logistics support, which indicates a holistic approach to the Army's C5ISR needs. From a broader perspective, this deal reaffirms Leidos' standing in the defense sector and may strengthen investor confidence in the company's ability to secure similar contracts in the future.

However, it's important to remain cautious about the competitive landscape. Such contracts are often subject to strict performance criteria and any slips could impact both Leidos's reputation and its financial performance. The defense industry is also heavily influenced by federal budgets and policy shifts, creating an uncertain long-term outlook that requires continuous monitoring.

Financial Analyst

The immediate financial implication of this contract for Leidos is a potential increase in the cash flow, which can contribute positively to the company's valuation. Given the contract's duration and the option for extension, this provides a forecastable revenue stream. The market generally looks favorably on companies with strong backlogs of government contracts, which provide more predictable future earnings compared to other more volatile sectors.

Investors should be aware of the impact this contract might have on Leidos' capital expenditures as well. The company will likely need to invest in labor and possibly new technologies to fulfill the contract's requirements. While this has implications for short-term costs, it could also position Leidos better for future contracts due to an enhanced service offering.

In terms of stock market impact, the announcement of this deal might have a positive effect on Leidos' share price, as market participants often react to news of secured contracts. Yet, the full impact will depend on Leidos' execution of the contract and their ability to manage costs effectively while meeting the Army's needs.

RESTON, Va., April 15, 2024 /PRNewswire/ -- Leidos (NYSE:LDOS), a Fortune 500® innovation leader, was recently awarded a follow-on prime contract to provide the U.S. Army with technology-enabled services, including hardware sustainment, modernization, refresher training, and logistics support. The Responsive Strategic Sourcing for Services (RS3), indefinite delivery/indefinite quantity (IDIQ) task order, has a base period of 11 months, and a maximum value of $267 million, if all four one-year options are exercised.

Under the task order, Leidos experts in Command, Control, Communication, Computers, Cyber, Intelligence, Surveillance, & Reconnaissance (C5ISR) will assess Army hardware capabilities against performance parameters, build out hardware configurations, and implement upgrades. Leidos will also help to coordinate equipment warehousing, shipping, and warranty repair.

The task order was awarded by Army Contracting Command-Aberdeen Proving Ground. Work performed by Leidos will support the Communications Electronics Command, Integrated Logistics Support Center, Field Support Directorate, and Force Modernization Division. Since February 2011, the Leidos team has fielded nearly 9,000 C5ISR systems and provided nearly 13,000 training courses to more than 167,000 soldiers.

"These are critical capabilities and training our customer needs to deliver and modernize tactical network environments for the warfighter at the point of need," said Jason McCarthy, Leidos senior vice president, Engineering, Integration & Operations. "We are proud to provide the Army with the digital workflows needed to support C5ISR hardware services."

About Leidos

Leidos is a Fortune 500® innovation company rapidly addressing the world's most vexing challenges in national security and health. The company's 47,000 employees support vital missions for government and commercial customers. Headquartered in Reston, Virginia, Leidos reported annual revenues of approximately $15.4 billion for the fiscal year ended December 29, 2023. For more information, visit www.Leidos.com.

Certain statements in this announcement constitute "forward-looking statements" within the meaning of the rules and regulations of the U.S. Securities and Exchange Commission (SEC). These statements are based on management's current beliefs and expectations and are subject to significant risks and uncertainties. These statements are not guarantees of future results or occurrences. A number of factors could cause our actual results, performance, achievements, or industry results to be different from the results, performance, or achievements expressed or implied by such forward-looking statements. These factors include, but are not limited to, the "Risk Factors" set forth in Leidos' Annual Report on Form 10-K for the fiscal year ended December 30, 2022, and other such filings that Leidos makes with the SEC from time to time.  Readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. Leidos does not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements were made.

Contact:	Melissa Dueñas (571) 526-6850 duenasml@leidos.com
	Alyssa Pettus (571)526-6743 alyssa.t.pettus@leidos.com
	Greg Hellman (571) 526-7592 Greg.hellman@leidos.com

 

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SOURCE Leidos Holdings, Inc.

FAQ

What contract was Leidos recently awarded?

Leidos was recently awarded a follow-on prime contract to provide the U.S. Army with technology-enabled services, including hardware sustainment, modernization, refresher training, and logistics support.

What is the maximum value of the task order awarded to Leidos?

The task order has a maximum value of $267 million if all four one-year options are exercised.

What will Leidos experts assess under the task order?

Leidos experts will assess Army hardware capabilities against performance parameters, build out hardware configurations, and implement upgrades.

Who awarded the task order to Leidos?

The task order was awarded by Army Contracting Command-Aberdeen Proving Ground.

How many C5ISR systems has the Leidos team fielded since February 2011?

The Leidos team has fielded nearly 9,000 C5ISR systems since February 2011.