Leidos awarded $276 million Defense Department contract to research and develop critical minerals and materials for use in munitions

Rhea-AI Summary

Leidos (NYSE:LDOS) has secured a $276 million task order from the Department of Defense (DOD) Information Analysis Center to conduct research and development of critical minerals and materials for munitions and promote energetics supply chain resiliency. This contract, awarded under the DoDIAC multiple-award contract vehicle, aims to enhance the DTIC repository and support the R&D and S&T community. Mike Diggins, Leidos senior vice president, emphasized the importance of a resilient energetics supply chain for national security and reducing dependence on foreign sources. Leidos, with over 30 years of experience in energetics R&D at Picatinny Arsenal, will assist the DOD in synthesizing and scaling up domestic minerals and materials production.

Positive

• Secured a $276 million contract from the Department of Defense
• Contract focuses on critical R&D for munitions and energetics supply chain
• Leverages 30+ years of experience in energetics R&D at Picatinny Arsenal
• Potential to reduce U.S. reliance on foreign sources for critical minerals and materials

Negative

• None.

Insights

Defense Industry Analyst

The $276 million contract awarded to Leidos is a significant development in the defense sector. This R&D initiative focuses on critical minerals and materials for munitions, which is important for national security and supply chain resilience. The contract's size indicates a substantial commitment from the DOD to reduce dependence on foreign sources.

For Leidos, this contract represents a major revenue boost and strengthens its position in the defense market. With a 5.7% revenue increase in Q2 2024, this contract could further accelerate growth. Investors should note that such long-term R&D contracts often lead to follow-on opportunities and can enhance a company's competitive edge in future bids.

However, R&D projects carry inherent risks, including potential cost overruns and uncertain outcomes. Shareholders should monitor project milestones and any impact on Leidos' profit margins in upcoming quarters.

Materials Science Expert

The DOD's focus on critical minerals and materials for munitions highlights a strategic shift in defense manufacturing. This research could lead to breakthroughs in advanced materials that enhance munition performance and durability. The emphasis on domestic production aligns with broader trends in reshoring critical industries.

Key areas likely to be explored include:

• Rare earth elements for precision-guided munitions
• High-performance alloys for armor-piercing rounds
• Novel energetic compounds for enhanced explosive yield

Success in this R&D could position Leidos as a leader in defense materials innovation, potentially opening up new market opportunities beyond the initial contract scope. However, the technical challenges in synthesizing and scaling up production of these materials should not be underestimated.

Geopolitical Strategist

This contract reflects a broader geopolitical strategy to reduce U.S. dependence on foreign suppliers for critical defense materials. It's a response to vulnerabilities exposed in global supply chains, particularly concerning China's dominance in rare earth elements production.

The initiative could have significant implications:

• Strengthening domestic defense industrial base
• Potential for economic benefits through new high-tech jobs
• Possible tensions with current international suppliers

For investors, this signals a long-term shift in defense procurement strategies. Companies involved in domestic mining, processing and advanced materials manufacturing could see increased opportunities. However, success depends on overcoming technical hurdles and economic viability compared to existing international sources.

RESTON, Va., Aug. 5, 2024 /PRNewswire/ -- Leidos (NYSE:LDOS), a Fortune 500^® innovation leader, has been awarded a $276 million task order to support the Department of Defense (DOD) Information Analysis Center to conduct research and development (R&D) of critical minerals and materials for use in munitions and to promote energetics supply chain resiliency. Leidos was awarded this contract under the Department of Defense Information Analysis Center's (DoDIAC) multiple-award contract (MAC) vehicle. These IAC MAC task orders (TOs) are awarded by the U.S. Air Force's 774th Enterprise Sourcing Squadron to develop and create new knowledge for the enhancement of the DTIC repository and the R&D and S&T community.

"A resilient energetics supply chain will help ensure our warfighters are ready for any conflict, while reducing our nation's reliance on foreign sources," said Mike Diggins, Leidos senior vice president and homeland and force protection business area leader. "With more than three decades supporting energetics R&D at Picatinny Arsenal, our team will help the DOD synthesize and scale-up domestic minerals and materials production."

About DODIAC Program

The DoDIAC, sponsored by the Defense Technical Information Center, provides technical data management and research support for DoD and federal government users. Established in 1946, the IAC program serves the DoD science & technology (S&T) and acquisition communities to drive innovation and technological developments by enhancing collaboration through integrated scientific and technical information development and dissemination for the DoD and broader S&T community.

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 global workforce of 48,000 collaborates to create smarter technology solutions for customers in heavily regulated industries. 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 29, 2023, 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.

Disclaimer: This material is based upon work supported by the DoD Information Analysis Center Program (DoDIAC), sponsored by the Defense Technical Information Center (DTIC) under Contract No. FA807518D0009. Approved for Public Release, Distribution Unlimited. Any opinions, findings and conclusions or recommendations expressed in this material are those of the author(s) and do not necessarily reflect the views of the DoD.

Contact:

Melissa Lee Dueñas
(571) 526-6850
duenasml@leidos.com

Alyssa Pettus
(571) 526-6743
alyssa.t.pettus@leidos.com

Brandon Ver Velde
(571) 526-6257
brandon.p.vervelde@leidos.com

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SOURCE Leidos Holdings, Inc.

FAQ

What is the value of the contract Leidos (LDOS) was awarded by the Department of Defense?

Leidos (LDOS) was awarded a $276 million task order by the Department of Defense Information Analysis Center.

What is the main purpose of the contract awarded to Leidos (LDOS)?

The main purpose is to conduct research and development of critical minerals and materials for use in munitions and to promote energetics supply chain resiliency.

How long has Leidos (LDOS) been supporting energetics R&D at Picatinny Arsenal?

Leidos (LDOS) has been supporting energetics R&D at Picatinny Arsenal for more than three decades.

What potential benefit does this contract bring to national security, according to Leidos (LDOS)?

According to Leidos (LDOS), this contract will help ensure warfighters' readiness for any conflict while reducing the nation's reliance on foreign sources for critical minerals and materials.