Supplier and Small Business Relationships
We are united with our suppliers and small businesses to make a difference in the world.
Maintaining strong and committed relationships with approximately 7,000 active suppliers, as well as continuing our award-winning small businesses advocacy programs, is essential to our mission of providing outstanding support to our customers. Our diverse customer base, requirements for services and need for varied materials require us to work with suppliers both large and small who can offer capabilities and unique solutions while providing the best value.
As a company specializing in IT, Science and Engineering solutions, Leidos has a supply chain that varies based on the types of contracts we are able to win from diverse markets of global importance to commercial, local, state, and federal government entities. Our major commodity areas consist of engineering services, IT hardware, software, communications technology and transportation. We strive to source from local and domestic suppliers whenever possible, with roughly 40% of our $4.1 billion in sourcing expenses going to US-based small businesses. We are also committed to sourcing from veteran-owned firms, realizing the value they deliver to our customers, our company and the country at large. Helping veteran-owned firms succeed and grow advances our goal of helping veterans transition successfully to the civilian workforce.
Our downstream products consist predominately of services rendered to U.S. government entities within the areas of defense and intelligence, civil services and infrastructure, healthcare, and cyber services. Our physical products tend to come in the form of defense solutions, IT hardware and infrastructure for civil projects.
Supply Chain Management Approach
It is the mission of Leidos’ Strategic Sourcing program to utilize our robust mix of people, leadership practices and tools to enhance the value for Leidos customers while keeping Leidos competitive in the marketplace. Our sourcing practices allow our programs to drive and deliver innovative solutions and services that matter most for meeting tomorrow’s demands. Our Strategic Sourcing program enables us to find the right products and services at the right price, all while ensuring that our suppliers meet our ethical standards. Our supplier expectations with regards to sustainability, social responsibility, and ethics are outlined on our supplier portal home page, and are included in our standard contract terms and conditions.
Abiding by the highest standards of business ethics is an essential component of all of our supplier relationships. Leidos maintains a Defense Contract Management Agency (DCMA) approved purchasing system and adheres to the Federal Acquisition Regulation (FAR) when purchasing direct-charge, non-commercial items or services. Our system is governed by a number of policies and procedures addressing use of consultants, contracts, procurement and international business – see our GRI Standards Index for a list. Supplier compliance is mandated with certain regulations and laws, including clauses that address:
- Cancellation, Rescission, and Recovery of Funds for Illegal or Improper Activity
- Price or Fee Adjustment for Illegal or Improper Activity
- Whistleblower Protections Under the American Recovery and Reinvestment Act of 2009
- Utilization of Small Business Concerns
- Notice to the Government of Labor Disputes
- Equal Opportunity (Only Paragraphs (b)(1) through (c)(11)
- Combating Trafficking in Persons
- Hazardous Material Identification and Material Safety Data
- Contractor Policy to Ban Text Messaging While Driving
- Conflict Minerals Policy
Leidos is regularly solicited by our customers to complete supplier questionnaires. These questionnaires are part of supply chain sustainability programs that our customers are operating in an effort to improve their own sustainability. By complying, we provide valuable information on our environmental performance, but also a wide range of sustainability areas, including human rights, fair labor practices and health and safety issues.
Our supplier selection criteria are based on specific customer requirements, with an emphasis on suppliers that offer strategic and competitive pricing, quality products and services, focus on continuous improvement and commitment to performance in delivery of goods or services. For customers with greater Environment, Health and Safety requirements those applicable suppliers complete the Leidos Contractor Safety Questionnaire as part of supplier evaluation prior to final supplier selection for award.
Our suppliers are reminded of our commitment to conduct business with uncompromising integrity. This commitment is clearly established in the Code of Conduct.
Leidos requires suppliers to conduct themselves in a manner consistent with the principles of our Code of Conduct. In addition, we strongly encourage our suppliers to establish proactive and meaningful ethics and compliance programs within their organizations. We want our suppliers to understand, foster, and mirror the ethical conduct we expect from our employees in all business transactions, and maintain a restricted supplier list, which is updated on a quarterly basis, to ensure our programs are sourcing from suppliers who meet our ethical and technical standards.
Strategic Sourcing Initiatives
Our Strategic Sourcing program undertakes initiatives in order to support the Leidos strategy that enable development of differentiating capabilities. Leidos’ Sourcing program has implemented effective enterprise processes, best practices and tools for execution excellence in business operations and risk management that enable efficient and secure supply chain sourcing and management. We additionally pursue, establish, and maintain mutually beneficial external partnerships to help continually enhance our Sourcing program.
Examples of practices that enable us to execute efficient and secure supply chain management include the provision of enterprise-wide supply chain engineering, material cost estimating, material planning, purchasing, logistics and category management for internal procurement and bid proposals; implementation of automation for cost efficiencies, and implementation of cyber best practices to ensure security and resilience in our operations.
To enhance our implementation of cybersecurity best practices, we have sponsored research at the University of Tennessee on the fundamentals of managing cyber risks in global supply chains. We are both increasing our understanding of, and implementing, industry-leading cybersecurity practices in order to reduce related risks in our product and service offerings.
In order to manage mutually beneficial external partnerships that support our Group and Functional strategies, we maintain executive relationships with Leidos’ major suppliers, subcontractors and strategic partners, including the Leidos Alliance Partner Network (LAPN).
Additionally, our sourcing program maximizes leverage and utility of our Strategic University Alliances to ensure we bring in the best and brightest talent for our program, leads the annual Leidos Supplier Symposium, and continually works to cultivate relationships with private equity and venture capital firms to gain access to emerging technologies.
Finally, Leidos initiated an internal supplier sustainability program in 2019. The program is set to launch in 2020 with the release of a supplier sustainability questionnaire covering environmental, social, and governance topics. The program will be piloted to a select group of partners in order to identify priority areas, and ultimately expanded as we formalize our most material supply chain issues.
These initiatives complement our goals of delivering exceptional service, value and expertise to internal stakeholders through efficient and compliant processes, as well as helping to establish a high performing, innovative and diverse supply base.
Leidos has a proud history of providing maximum opportunities for small businesses to engage with us as we support our customers in the vital areas of National Security, Health, and Engineering. The commitments we have made to our customers in supporting the Nation's small business program are key to distinguishing us as a small business advocacy leader.
We work closely with all categories of small businesses, including small disadvantaged, women-owned, veteran-owned, service-disabled veteran-owned, and historically underutilized business zone (HUBZone) companies, as well as historically black colleges and universities and minority institutions (HBCU/MIs). We continue to exceed the statutory goals for small disadvantaged, women-owned and service-disabled veteran-owned small businesses, as we believe that our success is strengthened by our legacy of commitment to small business engagement.
During government fiscal year 2019, Leidos awarded over $1.6 billion in contracts to small businesses. The Leidos Inc. Small Business Program holds a rating of “Exceptional” from the Defense Contract Management Agency (DCMA). These statistics illustrate the importance of small businesses to Leidos success, customer success and the dedication of the Leidos Small Business Development Program to promoting strategic teaming with a variety of small businesses.
To ensure continued company success and growth opportunities to small businesses, Leidos focuses on the following:
- A proactive corporate-led “Small Business Development Program” responsible for marketing and outreach/awareness activities
- Fostering strategic relationships with small businesses that lead to subcontracting as well as prime contracting opportunities
Leidos has been recognized for well over a decade for its outstanding efforts and work with small businesses of all categories. We have received notable recognition from the Small Business Administration in recent years, and received further recognition in 2019 that included the National Veterans Small Business Coalition’s Veterans Champion Award, The DoD NUNN Perry award recognition for Excellence in the DoD Mentor Protégé Program, and The Reston Chamber of Commerce Member of the Year Award.
Leidos participates in a variety of outreach programs that provide opportunities to introduce to small businesses in every socio-economic category. We host numerous small business events at our facilities to bring in small businesses interested in teaming opportunities as well as specific subcontracting opportunities. These “matchmaking” forums have been extremely successful, with Leidos business developers, program managers, and procurement personnel meeting with small businesses to receive capability briefings and discuss active opportunities.
Similarly, Leidos holds similar events for specific major programs and proposals. We frequently participate in industry and customer small business events that enable small businesses to find out about opportunities with Leidos. Over the years, we have participated in numerous events and forums sponsored by various federal agencies, including the Department of Defense, the SBA, and industry associations such as the National Defense Industrial Associate (NDIA), Armed Forces Electronics Association (AFCEA). Leidos also has a strong presence as a sponsor and participant with organizations that support minority and other socio-economic categories.
Leidos was one of the first contractors to be selected for DoD's pilot Mentor-Protégé Program in 1991. Since that time, Leidos formally mentored nearly 100 small businesses and is one of the most active participants in the federal agency program, and we currently maintain 7 active agreements with government agencies and third-party organizations to provide mentor services to small businesses. Some examples of our activities include:
- Offering certification programs for individuals, including Project Management Professional Certifications
- Certification for whole programs in Network+, Ethical Hacker, and Security+
- Assistance and support for our small business partners in preparing for the DCAA audit process
In addition to formal agreements, Leidos informally mentors many small businesses by providing assistance in the areas of joint marketing, task order response, human resources (HR), technology transfer, and administrative efforts. This approach helps develop our small business teammates while ensuring the highest levels of technical and programmatic performance.
Veteran-Owned Small Businesses
Leidos is an active supporter and sponsor of numerous veteran targeted events, which is not surprising considering more than 20% of Leidos' employees are veterans themselves. Leidos maintains a program aimed at enhancing the growth of Veteran-Owned Small Businesses (VOSBs) of all types in the government contracting arena through cooperative efforts with veteran advocacy bodies, and we directly supported VOSBs with approximately $335 million in spending in 2019.