Our first billion-dollar contract and how it paved the way for more

As part of the 50th anniversary celebrations at Leidos, Insights will be taking a closer look over the course of this year at some of the key moments in the company's history. For a deeper dive into our past, we invite you to download and read our new eBook.

SAI's very first contract was a $70,000 project for the Defense Atomic Support Agency in 1969. This was a big win that set the new company in motion, but it was small relative to the firm’s potential. Company founder Dr. J. Robert Beyster and his management team found that SAI's expertise in nuclear systems could also be applied to disciplines like nuclear medicine or radiation oncology. To pursue those kinds of non-defense projects, the company created its JRB Associates subsidiary in its first year.

Then, in 1972, President Richard Nixon declared war on cancer. As part of that effort, the annual budget for the National Cancer Institute increased from $200 million to $1 billion. NCI needed a strategic plan to help manage its growth and research, and JRB worked on that plan for them.

Through that and other projects, it became clear that data management mattered in healthcare. SAI could augment its systems expertise with new hires who had medical knowledge and develop new service offerings that would advance the field.

Pioneering electronic patient records for the military

SAI changed its name to Science Applications International Corporation (SAIC) in 1984. The following year, the company received the opportunity to show what it could do. The U.S. Department of Defense sent out a request for proposal for the Composite Health Care System (CHCS). This program would create electronic patient records for use in all military clinics, hospitals and health facilities, with more than 500 sites worldwide.

SAIC was one of six companies that submitted a bid. Although the company had a strong track record, this contract was a stretch for SAIC — and for the Department of Defense, which rarely spent this much money unless it was on a weapons system. In addition, the contracting process had oversight from the General Accounting Office. SAIC worked on the bid for 18 months and created a final presentation that stacked in at 65 inches of paperwork.

“I had quite a few people working with me then in the healthcare area who advised me not to do it," said Jim Russell, the SAIC executive who handled the CHCS proposal. "They said it would ruin my career. But I said, 'I'm going for it. You've got to stick your neck out a little bit.'"

Russell, of course, is happy to have taken the risk. SAIC was awarded the contract in 1988, the company's first billion-dollar contract — and the first of many of that size. And the company’s work in healthcare around the globe continues as well; among other things, Leidos manages health services for workers at the South Pole as part of the $2 billion Antarctic Support Contract.

The compounding impact of the CHCS

The original purpose of the CHCS was to create electronic patient records that could be accessed no matter where a service member was deployed. Two significant outcomes followed. The first was the creation of a robust database that researchers could use to look at health norms and outcomes for service members, which led to better healthcare for everyone. The data not only improved services, but also allowed researchers to analyze what happened in order to push the science of medicine forward.

The second outcome of CHCS was that it became the model for electronic records and data management in civilian healthcare systems. In 1995, Kaiser Permanente hired SAIC to build a similar IT platform for a civilian population – making Kaiser the first private insurer to create a healthcare data system.

The legacy of the system lives on

CHCS is still in use, albeit with more than a few upgrades. The latest generation of CHCS is known as the Armed Forces Health Longitudinal Technology Application (AHLTA).

In 2015, Leidos was awarded the $4.3 billion Defense Health Management System Modernization contract, known as MHS GENESIS, designed to standardize healthcare for the Military Healthcare System. As the lead systems integrator on this project, Leidos provides key technical and clinical thought leadership as well as cybersecurity expertise to deliver the MHS GENESIS system. Once fully deployed, MHS GENESIS will transform the delivery of healthcare for nearly 10 million service members and their families.  

Today, Leidos is the largest third-party healthcare IT integrator in the U.S., working with government and commercial insurers to improve healthcare with more efficient systems. And the company has no shortage of billion-dollar contracts now. Some tie to its initial expertise, such as the $5.2 billion contract it received from the Department of Health and Human Services in 2008 to provide technical support to the National Cancer Institute's research and development center — the largest contract that HHS has ever awarded.

In March, Leidos was an awardee of a multi-year contract with the Department of Defense to manage aircraft logistics and maintenance with a potential value of $25.5 billion to awardees. A month before that win, NASA awarded Leidos its NEST contract to provide IT services, for a potential value of $2.9 billion. The company is growing because it has a history demonstrating that its staff can handle complexity.

Today, Leidos manages several billion-dollar contracts for customers all over the world. These include the $3.2 billion contract for managing the Department of Energy’s Hanford nuclear research facility and the £6.7 billion (US$8.4 billion) Logistical Commodities and Services Transformation (LCST) Programme contract with the United Kingdom’s Ministry of Defence. Smaller Leidos projects, such as the control and navigation systems for the Navy’s Sea Hunter autonomous ship, may well lead to more major contracts as the concept is proven.

Unlike in 1988, Leidos regularly bids on and wins multi-billion dollar contracts, which has helped it rank No. 311 in the latest Fortune 500. As Leidos builds on its technical core competencies for the next 50 years, it will take on more of these critical programs across the civil, defense, health and intelligence markets.