Leidos defense group chief says unit is now more focused on 'innovation and disruptive investments'

July 2, 2019

By Marjorie Censer

Leidos' defense group, reshaped last year as part of a company-wide reorganization, is seeking to make "disruptive investments" in new technology, according to its chief.

Gerry Fasano was tapped to lead the reshaped defense group last year, after the company restructured into four business groups. The former defense and intelligence business was split in half, and the defense half group absorbed about two-thirds of the previous advanced solutions group, which had been focused on developing new technology.

Fasano, during an interview at Leidos' Reston headquarters last week, told Inside Defense the reshaped defense group ensured that military customers were working with one Leidos unit, rather than two.

"This was a very natural next step in our evolution as an organization . . . to put customers back together," he said.

Previously, Fasano said, the defense group's more traditional services work had been separated from its "solutions" -- or technology-focused -- work. The reorganization also put those pieces back together.

As an example, "our airborne group -- we do operate and own over 120 different aircraft that are performing airborne ISR . . . every day in theater for our customers," Fasano said. "We do the aircraft design, we'll train the pilots, we'll rip out the seats and stuff them full of sensors, and then we do the training and maintenance . . . and all the field support."

"Before, they were in two different groups," he said. "Same thing for our maritime group."

The defense group now will have "more focus on innovation and disruptive investments," Fasano added. The unit will make "much more investment in innovation."

He pointed to Leidos' work on the Sea Hunter unmanned surface vehicle as an example, noting that was "birthed five years ago with disruptive investments."

"What we're doing now is that next set of investments," Fasano said.

Fasano also said the defense group is benefiting from a faster pace of contracting. He said the group is on pace to submit bids worth more than $20 billion in 2019, three times the value of bids submitted last year.

"It's just a tremendous pace," he said.

Meanwhile, Fasano said the recent mergers in the defense industry could generate chances to pick up some business units or employees.

"People are going for scale now and having come out of [a] merger, it is an unsettling time and not all those folks are going to succeed," he said.

Fasano noted that the recently completed merger between Harris and L3 Technologies and the planned one between Raytheon and United Technologies will likely generate "portfolio shaping," or activity that results in some businesses going up for sale.

He also predicted industry consolidation will continue.

"I think there will be companies that will not exist three years from now that are in that Fed 100 list of top companies," he said.