Logicon's IT services portfolio has Northrop flying high

Not long ago, Northrop Grumman Corp.'s business was so focused on building military aircraft that you almost could say if it did not have wings, the company was not interested.

Now the mighty aerospace contractor, with its subsidiary Logicon Inc. at the core of its information technology services and systems support offering, is pushing into the professional services marketplace, counting on that segment to catapult the company into the new millennium.

Logicon, Herndon, Va., has been a part of Northrop Grumman for less than two years, but the systems integration work it performs is the fastest-growing among the parent company's diverse lines of business, Logicon officials said.

Northrop Grumman started the year with a new structure that divides its business into three pillars: the Integrated Systems and Aerostructures Sector, the Electronic Sensors and Systems Sector, and Logicon.

In the restructuring, Northrop Grumman combined its Data Systems and Services Division with Logicon and folded in the resources of Inter-National Research Inc., which it bought for $60 million last year to bolster its command and control mapping software development.

Herndon became the headquarters for the business unit, which in addition to systems integration is responsible for command, control, communications, computers and intelligence solutions; battle management and mission planning; high-performance computing; imaging; simulation and training; and technical services.

Those areas represented about $1 billion, or 13 percent, of Northrop Grumman's $8.9 billion in sales in 1998. By 2003 the company projects a doubling of Logicon's sales to about $2.2 billion, or about 20 percent of a projected $12 billion in sales.

The forecasts would look different if the Justice Department last year had not rejected Lockheed Martin Corp.'s bid to take over Northrop Grumman. After the decision was announced, things started clicking at Logicon, and by the end of the year, Logicon had won eight new contracts.

Among them was the Joint Base Operations Support Contract (JBOSC) at Kennedy Space Center and Patrick Air Force Base in Florida, worth $2.2 billion over 10 years. Logicon basically runs a small city for NASA and the base by handling logistics, security and a lot of other "roads-to-commodes" duties.

Logicon's years of experience with the IRS helped it land a role on Computer Sciences Corp.'s Prime contract for modernizing the IRS' IT systems. Logicon's chief job for the agency has involved automating the 1040EZ and other handwritten tax forms. Logicon installed the hardware and software and integrated the system that scans the forms at IRS tax offices across the country.

"Clearly we are on the [winning] team because of our experience," said Robert Koch, director of corporate communications for Logicon. "We are the only team member that has a nationally deployed IRS tax system in place at five national service centers."

Logicon projects that its overall Defense Department sales will decrease from about 65 percent of the total to about 44 percent in 2005, with growth in the federal civilian and the state and local markets picking up the slack.

Contracts such as JBOSC that involve the outsourcing of military base functions will grow in a huge way, said Steve Carrier, vice president for business development for Logicon. The projects DOD used to award as separate contracts, one covering the more technical data center outsourcing and the other covering base functions, are being lumped together, Carrier said.

With Logicon holding a firm position in the IT services segment, its parent is not just bidding to build things with wings; instead, Northrop Grumman considers itself well-positioned to compete in the IT services market.

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