Leidos awarded $823 million DISA task order to operate and sustain modernized DoDNet

Rhea-AI Summary

Leidos (NYSE:LDOS) has been awarded an $823 million task order from the Defense Information Systems Agency (DISA) for the Defense Enclave Services (DES) Department of Defense Network (DoDNet) program. This five-year task order is part of a larger $11.5 billion, 10-year contract to optimize network services for Fourth Estate Defense Agencies and Field Activities (DAFAs).

Leidos will provide operations and sustainment for DoDNet, expanding support from 30,000 to over 160,000 users, including 14 additional DAFAs. The company will ensure DoDNet's security, scalability, and operational status by offering IT solutions, cybersecurity support, and network management. DoDNet is expected to support approximately 370,000 DAFA users once fully implemented.

Positive

• Secured $823 million task order from DISA
• Part of a larger $11.5 billion, 10-year contract
• Expanding support from 30,000 to over 160,000 users
• Potential to support approximately 370,000 DAFA users

Negative

• None.

Insights

Financial Analyst

The $823 million task order awarded to Leidos by DISA represents a significant revenue boost for the company. This contract, part of a larger $11.5 billion, 10-year indefinite delivery, indefinite quantity agreement, solidifies Leidos' position as a key player in the defense technology sector.

From a financial perspective, this award is particularly noteworthy for several reasons:

• The five-year duration of the task order provides a stable, long-term revenue stream, enhancing predictability in Leidos' financial forecasts.
• The contract's scope is set to expand from 30,000 to 160,000 users, indicating significant growth potential and possible future contract expansions.
• The ultimate goal of supporting 370,000 DAFA users suggests further opportunities for Leidos to secure additional task orders within the $11.5 billion contract framework.

Investors should note that this contract strengthens Leidos' relationship with DISA, potentially leading to more opportunities in the defense sector. However, it's important to consider the challenges of managing such a large-scale project, including potential cost overruns or delays that could impact profitability.

Overall, this news is likely to have a positive impact on Leidos' stock performance in the short term, while also bolstering its long-term growth prospects in the defense technology market.

Tech Expert

The DoDNet program represents a significant technological undertaking, with Leidos at the helm of a complex digital transformation initiative. Key aspects of this project from a technical standpoint include:

• Network Consolidation: Migrating multiple legacy systems into a unified, modernized network infrastructure is a monumental task. This consolidation aims to enhance efficiency and security across Defense Agencies and Field Activities (DAFAs).
• Scalability: The system's design to support a user base growing from 30,000 to potentially 370,000 demonstrates impressive scalability requirements.
• Cybersecurity Focus: In today's threat landscape, the emphasis on providing robust cybersecurity support is important for protecting sensitive defense information.
• Virtual Desktop as a Service (VDaaS): This new offering aligns with modern trends in cloud computing and remote work capabilities, potentially improving flexibility and resource utilization.

The "anytime, anywhere, any device" vision for DoDNet aligns with current industry trends towards mobile-first, cloud-native architectures. However, implementing such a system within the stringent security requirements of defense agencies presents unique challenges.

Leidos' success in this venture will depend on their ability to seamlessly integrate various technologies while maintaining high levels of security and performance. The outcome of this project could set new standards for large-scale government IT modernization efforts.

Defense Industry Analyst

This contract award to Leidos underscores the ongoing digital transformation within the U.S. Department of Defense (DoD). The DoDNet program is a critical component of the DoD's efforts to modernize its IT infrastructure, with several important implications for the defense sector:

• Consolidation of IT Services: By centralizing network services for Fourth Estate DAFAs, the DoD aims to reduce redundancies, improve efficiency and potentially realize significant cost savings over time.
• Enhanced Interoperability: A standardized network across multiple agencies should facilitate better information sharing and collaboration, potentially improving overall operational effectiveness.
• Cybersecurity Posture: The emphasis on a secure, scalable environment reflects the DoD's recognition of evolving cyber threats and the need for robust, adaptable defense mechanisms.
• Modernization Pace: The timeline for expanding from 30,000 to 160,000 users over five years, with an ultimate goal of 370,000, indicates a measured approach to this large-scale transformation.

This contract also highlights the competitive advantage of companies like Leidos that can manage complex, large-scale IT projects in the defense sector. As other nations also modernize their military IT infrastructure, successful execution of DoDNet could position Leidos and similar U.S. companies favorably in the global defense technology market.

However, the complexity and scale of this project also present risks. Any significant delays or security breaches could have far-reaching consequences for both Leidos and the broader defense technology sector. Stakeholders should closely monitor the progress of this program as it could set precedents for future defense IT modernization efforts.

RESTON, Va., July 29, 2024 /PRNewswire/ -- Leidos (NYSE:LDOS), a Fortune 500® innovation leader, was recently awarded an $823 million task order from the Defense Information Systems Agency (DISA) to provide operations and sustainment for the Defense Enclave Services (DES) Department of Defense Network (DoDNet) program. DISA is working with Leidos through the single-award, $11.5 billion, 10-year indefinite delivery, indefinite quantity DES contract to optimize network services for Fourth Estate Defense Agencies and Field Activities (DAFAs) as they migrate from their legacy systems to the modernized, consolidated DoDNet.

This five-year task order award establishes the long-term operations and sustainment construct that will expand support from just over 30,000 users to more than 160,000 users, including 14 additional DAFAs to be migrated to DoDNet. Leidos will help ensure the DoDNet environment is secure, scalable, and operational by providing resilient and flexible IT solutions, including cybersecurity support, systems engineering, network architecture and management, and comprehensive technical support. DoDNet is projected to support approximately 370,000 DAFA users and workstations once implementation is complete.

This effort provides a more diverse and scalable service offering for the DoDNet user community, including a new Virtual Desktop as a Service solution, supporting DISA's strategic vision of DoDNet to deliver a highly available and reliable network anytime, anywhere, and for any device.

"As one of DISA's largest IT service providers, Leidos is focused on leveraging our innovation, speed, and agility to deliver an exceptional user experience and establish a strong foundation of operations and maintenance support to expand the DoDNet user community," said Steve Hull, Leidos digital modernization sector president. "By delivering the standardized DoDNet, our goal is to enable more efficient service delivery and support across DAFAs to advance the mission of our nation's warfighters and secure our combat operations around the world."

Leidos has been leading operations for the DES program since February 2022.  

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 47,000 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.

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

View original content to download multimedia:https://www.prnewswire.com/news-releases/leidos-awarded-823-million-disa-task-order-to-operate-and-sustain-modernized-dodnet-302208946.html

SOURCE Leidos Holdings, Inc.

FAQ

What is the value of the task order awarded to Leidos (LDOS) by DISA?

Leidos (LDOS) was awarded an $823 million task order from the Defense Information Systems Agency (DISA) for the DoDNet program.

How long is the task order for Leidos (LDOS) to operate and sustain DoDNet?

The task order awarded to Leidos (LDOS) for DoDNet operations and sustainment is for a five-year period.

How many users will Leidos (LDOS) support through the DoDNet program?

Leidos (LDOS) will expand support from just over 30,000 users to more than 160,000 users, with DoDNet projected to support approximately 370,000 DAFA users once fully implemented.

What services will Leidos (LDOS) provide for the DoDNet program?

Leidos (LDOS) will provide IT solutions, cybersecurity support, systems engineering, network architecture and management, and comprehensive technical support for the DoDNet program.