The future is the focus for government services executives. With geopolitical tensions high and an elevated FY 2023 defense budget forthcoming, executives signaled innovation will be the key to establishing security on the global stage and exercising supremacy over near peer threats.
Industry executives are particularly interested in capturing awards related to IT modernization, zero-trust architecture (ZTA) and environmental protection.
Executives shared their perspectives recently in earnings calls that covered their companies’ third-quarter results. Three themes emerged from the calls, transcripts of which were provided by Bloomberg.
A new form of IT
Innovation is a perpetual buzzword that permeates nearly every industry ecosystem. But for government services contractors, where innovation is often linked to matters of national security, it is more than a buzzword. It is a necessity.
Horacio Rozanski, CEO of Booz Allen Hamilton, said the most strategic place for the company’s innovation is at the intersection of mission achievement and technology. Rozanski said that several key technologies have emerged to help, including artificial intelligence and 5G development. This aligns with the vision of Booz Allen Ventures, the company’s venture arm that invests in early-stage technologies that can potentially transform mission outcomes.
John Wasson, CEO of ICF International, said IT modernization and cloud migration initiatives have been among the federal government’s fastest-growing spending areas.
Contractors are not only focused on servicing future endeavors. They are also interjecting innovative solutions into existing missions and processes. This creates an ecosystem where perpetual agility is required to provide effective solutions at any point in the program life cycle.
Roger Krone, CEO of Leidos Holdings, said new issues require high levels of defense investment. He said companies that push the envelope to provide transformative defense solutions will benefit. Similar to Booz Allen Hamilton’s endeavors, the Leidos Alliance Partner Network has helped Leidos cultivate partnerships with savvy, technology-oriented businesses.
Geopolitical tensions and a growing defense budget provide a path forward for innovation, with ample opportunities for federal contractors. As such, key industry players will continue to align their people, processes and technologies with the mission-critical needs of tomorrow.
Focus on ZTA
The Biden administration’s Executive Order 14028 accelerated action to improve the nation’s cybersecurity. The mandated shift toward ZTA continues to create ample opportunities for contractors to help agencies modernize.
Threats exist inside and outside traditional network boundaries, and ZTA eliminates implicit trust on a single source of verification. Instead, ZTA provides a coordinated cybersecurity and systems management strategy that reduces the risk of threats. The result is a more secure solution.
Bob Pragada, CEO of Jacobs Engineering Group, said ZTA continues to be a key area of growth for the engineering and consulting firm.
Mark Bendoza, CFO of Telos Corporation, said his company is focused on ZTA initiatives and positioning on larger government contracts.
Keeping it clean
Industry executives remain optimistic that following the passage of the Inflation Reduction Act, additional legislation and funding will be in store for initiatives aimed at clean energy development and reducing the nation’s carbon footprint. This provides a wide range of opportunities for contractors to help agencies achieve carbon-zero status, monitor and report climate-related key performance indicators, and use the federal government’s procurement power to influence contractors and other commercial businesses to do the same.
ICF International CEO John Wasson identified climate and environmental initiatives as key areas of growth for his company.
Stuart Bradie, CEO of KBR, Inc., identified hydrogen-aligned technologies and the decarbonization of energy production as important initiatives for his organization.
Climate-related issues affect all agencies and businesses—defense and civilian alike. Therefore, all contractors have unique opportunities to address climate challenges inside their own organizations and for the federal agencies they serve.
Combatting climate change has become the newest mission in the ecosystem, driving growth opportunities for these mission-driven organizations. Firms focused on developing these solutions anticipate new awards to enter the pipeline that will address many environmental-related challenges.
In anticipation of this catalyst for growth, many executives have positioned their company’s portfolio of solutions to address aspects of the ongoing push to produce clean energy and protect the environment.
The takeaway
Executives aren’t dwelling on the past. They are focused on predicting and addressing opportunities. As the threat landscape intensifies and becomes increasingly complex, federal contractors must maintain security and compliance requirements while pushing their capabilities and solutions toward the cutting edge.
