Science Applications Int'l Corp (SAIC)

[DMOST]

Tony Moraco went to Silicon Valley. Here’s what he learned, and what government contractors should know.

Silicon Valley is of course synonymous with disruption, though often these days to its detriment what with our data being hacked and our time being sucked and our democracy being imperiled (at least, according to this new alternative history from valley chronicler Wired).

Its disruptive influence on federal contracting is cited more and more these days as government agencies seek to transform what they do and how they do it using digital technologies — everything from as-a-service platforms to sophisticated analytics to futuristic artificial intelligence tools.

At the same time, especially with defense work, the devotion to mission that government contractors prize has clashed with corporate principles of companies such as Google, a conflict that’s exploded into public view.

Tony Moraco, chief executive of Science Applications International Corp. (NYSE: SAIC), was in Silicon Valley last week and has some advice for Greater Washington federal contractors weighing whether these companies — titans and startups alike — are mission friend or business foe.

Embrace them. Partner up. Leverage their innovative talents to better serve customers.

“I think fundamentally they’re accelerators,” he said Thursday at the Morrison & Foerster federal M&A outlook in Tysons, where Moraco shared a stage with PAE Inc. CEO John Heller talking mergers and acquisitions and other market trends. “They don’t want to be direct federal contractors. They can’t tolerate a 24-month sales cycle. It’s just too many variables.”

Moraco told me after the event he was out west on a roadshow talking up SAIC’s $2.5 billion all-stock deal to acquire Chantilly-based Engility Holdings Inc. (NYSE: EGL). He was invited to a dinner with several Silicon Valley executives in attendance, including someone from Apple.

A big takeaway, Moraco said, was that these companies need systems integrators, companies like SAIC and others than can bridge the worlds of Silicon Valley and the nation’s capital. Government agencies are increasingly emphasizing time to market, getting mission capabilities out to the field faster or getting a new IT architecture into place on an accelerated timeline.
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“There’s a lot of drivers to go faster. No one accepts the fact that a five- to 10-year development program is fast,” Moraco said during his Q&A. “So [federal agencies] have actually migrated some of their acquisition strategies … [to] looking at a broad capability set through technology transfer to different markets. Silicon Valley offers technology transfer opportunities for generally mature capabilities that the customer now wants to consume.”

I asked Moraco if the kind of idealism that prompted Google to drop out of the Pentagon’s $10 billion JEDI cloud computing competition was discussed. Is there a fundamental disconnect at play?

“It did come up,” he said. “Most felt it is not a community problem.”

That squares with what Amazon.com Inc. CEO Jeff Bezos said recently about working with the Pentagon specifically. He portrayed the choice two ways — as a patriotic duty as well as a duty to act like the adults in the room. Those remarks contrast starkly with companies walking away from lucrative programs — such as an AI initiative called Project Maven — because their rank and file finds the work distasteful.

SAIC said earlier this week the Engility acquisition’s waiting period under the Hart-Scott-Rodino Antitrust Improvements Act had expired, meeting one of the conditions to closing of the proposed merger. SAIC expects the deal to close by February.

https://www.bizjournals.com/washington/news/2018/10/26/tony-moraco-went-to-silicon-valley-here-s-what-he.html?ana=yahoo&yptr=yahoo

GO SAIC

"PEACE"