Leidos

SAIC company logo (2010)

The company was founded by J. Robert "Bob" Beyster in 1969 in the La Jolla neighborhood of San Diego, California, as Science Applications Incorporated (SAI).[7][8] Beyster, a former scientist for the Westinghouse Atomic Power Division[9] and Los Alamos National Laboratory,[10] who became the chairman of the Accelerator Physics Department of General Atomics in 1957,[11] raised the money to start SAI by selling stock he had received from General Atomics, combined with funds raised from the early employees who bought stock in the young enterprise.[12]

Initially the company's focus was on projects for the U.S. government related to nuclear power and weapons effects study programs. The company was renamed Science Applications International Corporation (SAIC) as it expanded its operations. Major projects during Beyster's tenure included work on radiation therapy for the Los Alamos National Laboratory; technical support and management assistance to the development of the cruise missile in the 1970s; the cleanups of the Three Mile Island Nuclear Generating Station after its major accident, and of the contaminated community of Love Canal; design and performance evaluation of the Stars & Stripes 87, the winning ship for the 1987 America's Cup; and the design of the first luggage inspection machine to pass new Federal Aviation Administration tests following the terrorist bombing of Pan American flight 103 over Lockerbie, Scotland.[13]

Contrary to traditional business models, Beyster originally designed SAIC as an employee-owned company.[7][8] This shared ownership was accompanied by shared responsibility and freedom in business development, and allowed SAIC to attract and retain highly educated and motivated employees that helped the company to grow and diversify. After Beyster's retirement in 2003, SAIC conducted an initial public offering of common stock on October 17, 2006.[14] The offering of 86,250,000 shares of common stock was priced at $15.00 per share. The underwriters, Bear Stearns and Morgan Stanley, exercised overallotment options, resulting in 11.25 million shares. The IPO raised US$1.245B.[14] Even then, employee shares retained a privileged status, having ten times the voting power per share over common stock.[15]

In September 2009 SAIC relocated its corporate headquarters to their existing facilities in Tysons Corner in unincorporated Fairfax County, Virginia, near McLean.[16]

In 2012 SAIC was ordered to pay $550 million to the City of New York for overbilling the city over a period of seven years on the CityTime contract.[17] In 2014 Gerard Denault, SAIC's CityTime program manager, and his government contact were sentenced to 20 years in prison for fraud and bribery related to that contract.[18]

Leidos employees in 2017 Capital Pride in Washington, D.C.

In August 2012, SAIC announced its plans to split into two publicly traded companies.[19][20] The company spun off about a third of its business, forming an approximately $4 billion-per-year service company focused on government services, including systems engineering, technical assistance, financial analysis, and program office support. The remaining part became a $7 billion-per-year IT company specializing in technology for the national security, health, and engineering sectors. The smaller company was led by Tony Moraco, who beforehand was leading SAIC's Intelligence, Surveillance and Reconnaissance group, and the bigger one was led by John P. Jumper.[21] The split has allowed both companies to pursue more business, which it could not pursue as a single company which would have resulted in conflicts of interest.[22] In February 2013, it was announced that the smaller spin-off company would get the name "Science Applications International Corporation" and stay in the current headquarters, while the larger company would change its name to Leidos,[23] (created by clipping the word kaleidoscope) and would move its headquarters to Reston, Virginia.[24] The split was structured in a way that SAIC changed its name to Leidos, then spun off the new SAIC as a separate publicly traded company. However, Leidos is the legal successor of the original SAIC and retains SAIC's pre-2013 stock price and corporate filing history.[25]

On September 27, 2013, SAIC changed its name to Leidos and spun off a new and independent $4 billion government services and information technology company which retained the Science Applications International Corporation name; Leidos is the direct successor to the original SAIC.[2][3] Before the split, Leidos employed 39,600 employees and reported $11.17 billion in revenue and $525 million net income for its fiscal year ended January 31, 2013,[6] making it number 240[26] on the Fortune 500 list. In 2014, Leidos reported US$5.06 billion in revenue.[3]

In August 2016, the deal to merge with the entirety of Lockheed Martin's Information Systems & Global Solutions (IS&GS) business came to a close, more than doubling the size of Leidos and its portfolio, and positioning the company as the global defense industry's largest enterprise in the federal technology sector.[27] As of December 2022, the company has 45,000 employees. In 2022, Leidos reported US$14.4 billion in revenue.[1] It ranked 274 on the 2022 Fortune 500 list.[28]

In January 2020, Leidos purchased defense contractor Dynetics for approximately $1.65 billion.[29][30][31] In May 2020 it purchased the Security Detection and Automation Systems division of L3Harris (notable for providing the detection screeners that all airport travelers pass through when flying).[32]

AMSEC LLC, a business partnership between SAIC and Northrop Grumman subsidiary Newport News Shipbuilding divested on July 13, 2007. Network Solutions was acquired by SAIC in 1995,[52] and subsequently was acquired by VeriSign, Inc. for $21 billion.[53]Leidos Cyber, Inc., formerly Lockheed Martin Industrial Defender, acquired by merging with Lockheed Martin IS&GS, was sold to Capgemini in 2018.[54]

Then-SAIC had as part of its management and on its board of directors, many well-known ex-government personnel including Melvin Laird, Secretary of Defense in the Nixon administration; William Perry, Secretary of Defense for Bill Clinton; John M. Deutch, Director of Central Intelligence under President Clinton; Admiral Bobby Ray Inman who served in various capacities in the National Security Agency (NSA) and Central Intelligence Agency (CIA) for the Ford, Carter and Reagan administrations; and David Kay who led the search for weapons of mass destruction after the 1991 Gulf War and served under the Bush administration after the 2003 invasion of Iraq. In 2022, 30 out of 38 Leidos Inc. lobbyists previously held government jobs.[55][56]

In June 2001, the Federal Bureau of Investigation (FBI) paid SAIC US$122 million to create a Virtual Case File (VCF) software system to speed up the sharing of information among agents. But the FBI abandoned VCF when it failed to function adequately. Robert Mueller, FBI Director, testified to a congressional committee, "When SAIC delivered the first product in December 2003 we immediately identified a number of deficiencies – 17 at the outset. That soon cascaded to 50 or more and ultimately to 400 problems with that software ... We were indeed disappointed."[57]

In 2005, then-SAIC executive vice president Arnold L. Punaro claimed that the company had "fully conformed to the contract we have and gave the taxpayers real value for their money." He blamed the FBI for the initial problems, saying the agency had a parade of program managers and demanded too many design changes. He stated that during 15 months that SAIC worked on the program, 19 different government managers were involved and 36 contract modifications were ordered.[58] "There were an average of 1.3 changes every day from the FBI, for a total of 399 changes during the period," Punaro said.[59]

In 2011–2012, then-SAIC was among the 8 top contributors to federal candidates, parties, and outside groups with US$1,209,611 (equivalent to $1,541,864 in 2022) during the 2011–2012 election cycle according to information from the Federal Election Commission. The top candidate recipient was Barack Obama.[55]

In a heavily redacted report dated January 3, 2018, the Inspector General for the Department of Defense determined that a supervisor at Leidos made “inappropriate sexual and racial comments to” a female contractor, and that when she complained of a hostile work environment, Leidos retaliated by excluding her from further work on an additional contract.[60] The report found that Leidos's claim that the contract employee “exhibited poor performance throughout her employment" lacked supporting evidence. It recommended that U.S. Secretary of Defense Jim Mattis “consider appropriate action against Leidos” such as “compensatory damages, including back pay, employee benefits and other terms and conditions of employment” that the contractor would have received under the additional contract.

In 2018, Leidos donated to the Senate campaign of Cindy Hyde-Smith. However, after a video was released showing Hyde-Smith speaking fondly of participating in "public hangings", Leidos said the company would never have made the donation if it had known about the comment. During Hyde-Smith's 2020 re-election bid, Leidos again donated to her.[61]