christianchan ©

May 3, 2021 used by permission of FedSavvy Strategies

Peraton has lit up the GovCon news feed with two major acquisitions in the past few months.

In December 2020, the company announced the $3.4 billion acquisition of Northrop Grumman’s Federal IT and mission support services business. The acquisition was closed in February 2021.

This was followed shortly by the January 2021 announcement that Veritas Capital, the private equity that owns Peraton, would acquire Perspecta for $7.1 billion. Once the deal is closed, Perspecta will be combined with Peraton and will operate under the Peraton name, led by Peraton’s Chief Executive Officer Stu Shea.

Breaking down the new Peraton

If you’ve forgotten some of the fundamentals about Peraton, and their origin story as the legacy Harris Government IT business, refresh your memory with this blog on Peraton in 2018.

Peraton announced its intended post Perspecta acquisition close (possible in May 2021) organization on April 30, 2021. This is a change from the last organizational announcement in February 2021. Note that this creates a myriad of sectors which carries over most, but not all executives and their general business sectors from Peraton and Perspecta into the new “integrated” business.

  • Space and Intelligence Sector, led by Roger Mason (previously Peraton’s Space, Intelligence and Cyber division President)
  • Cyber Mission Sector, led by Tom Afferton (previously Northrop Grumman IT’s Defense and Intelligence Segment Vice President)
  • Defense Solutions Sector, led by Jeff Bohling (previously led the Defense Group at Perspecta)
  • Navy and Marine Corps Business Group, led by Ted Branch (previously led the same group at Perspecta)
  • Citizen Security and Public Services, led by Rocky Thurston (previously led Civilian, State and Local Group at Perspecta)
  • Global Health and Financial Solutions, led by Tarik Reyes (previously Northrop Grumman IT’s Civil and Health unit Vice President)
  • Systems Engineering Sector, led by Damian DiPippa (previously led the Intelligence Group at Perspecta)
  • Peraton Labs, led by Petros Mouchtaris (previously led Perspecta Labs)

Note that Jeremy Fremin will remain at the helm of legacy Strategic Resources International (SRI). Other sectors and groups have undoubtedly been consolidated into the above sectors.

The History of Peraton, Perspecta, and Northrop Grumman IT

So how does Peraton look now? This new business is comprised of some interesting legacy businesses. Let us break down the M&A actions that led up to the formation of each of the new Peraton component businesses.

Figure 1- Major acquisitions and divestitures leading up to the formation of 2021 Peraton

There are some noteworthy legacy names in this acquisition chart – companies whose portfolios will continue to drive the new Peraton backlog.

These predecessor entities each bring interesting capabilities and customers to Peraton and understanding the previous organizations will help us understand what kind of threat Peraton could become in the future.

What does Perspecta bring to Peraton?

Figure 2- Top 5 Prime Federal customers between fiscal years 2016-2020 when combining Perspecta and Peraton. Source:

As noted in this 2017 blog on Perspecta, and in this March 2020 Perspecta Update, the Navy had been a huge part the company’s revenue. Note the past tense. The expiration of the $3.5 billion Next Generation Enterprise Network (NGEN) contract and the loss of the two NGEN Recompete components to Leidos and HP respectively mean that the company’s Navy revenue has little life remaining. Editorial note: They have had a long transition even after the loss.

The bulk of Perspecta’s CMS portfolio falls under the CMS Virtual Data Center Prime (VDCP) contract, under which the company has received $1.5 billion in Prime task order work for data hosting and infrastructure services.

Perspecta’s Office of Personnel Management (OPM) work is inherited from Key Point Government Solutions, and is a unique pocket of the business focused solely on specialized investigative services. This business is an odd man out compared to the rest of the company, and it will be interesting to see what happens to this background investigative services portfolio after the acquisition closes.

Not shown in the above chart is the significant Intelligence community footprint that Perspecta has through legacy Vencore. This includes 2019 wins for systems engineering work at the National Geospatial-Intelligence Agency (NGA) and intelligence analysis work at the Defense Intelligence Agency (DIA).

What about Northrop Grumman IT?

It is still not yet fully clear exactly what parts of Northrop Grumman transferred over to the new Peraton entity under the IT business acquisition. We want to study Northrop Grumman’s IT business more thoroughly before making assumptions on exactly what moves over. What we do know right now is this:

  • Northrop Grumman’s Centers for Disease Control and Prevention (CDC) work was acquired by Peraton – the core of which is $634 million in task orders under the $1.5 billion ceiling of the CDC Information Management Services (CIMS) IDIQ.
  • Peraton will have access to past performance from Northrop Grumman’s old Centers for Medicare and Medicaid Services (CMS) portfolio on the expired CMS Enterprise System Development (ESD) IDIQ. While Northrop Grumman IT’s work on CMS ESD ran dry in 2019, the contract accounted for a sizable $832 million in obligations over its period of performance. Peraton may look to pursue CMS or health systems modernization work in order to leverage this contract while it remains in the five (5) year past performance window.
  • Given that Peraton’s Cyber Mission Sector will be led by legacy Northrop Grumman IT leadership figures, we can expect some of Northrop Grumman’s DOD cyber security contracts to be part of this acquisition.
  • We would not be surprised to see work in the Northrop Grumman small-but-successful U.S. Department of State portfolio move over to Peraton. This includes their Bureau of Consular Affairs Office of Consular Systems and Technology (CST), Consular Systems Modernization contract, as well as their noteworthy subcontract work on the U.S. Department of State VANGUARD 2.2.1 contract (under the prime contractor SAIC).

The Takeaway

  • Peraton and Perspecta are an interesting combination in the space systems domain. Peraton itself has maintained a fairly respectable presence providing satellite and ground systems operational support to civilian customers under NASA JPL DSN, NASA SENSE and NOAA GOES-R. The company may go after more engineering and integration work with the addition of Peraton. Since NASA and NOAA are typically stringent about Organizational Conflict of Interest (OCI), there may yet be room to grow in this market.
  • However, for military and intelligence customers, Peraton and Perspecta will have to decide whether they want to do space systems operations or provide space systems advisory services. Peraton has a legacy of operations and maintenance for satellite and communications for customers including AFRICOM, while Perspecta has significant systems engineering and integration support work for space enterprises in the intelligence community. When OCIs become a concern, the company may have to decide which lane they want to play in: operations or advisory support.
  • While the specifics of the Northrop Grumman IT acquisition are still unclear, we do know that they will provide Peraton with a strong base of CDC IT work. After joining of forces with Perspecta’s foothold at CMS, the Northrop Grumman IT-led Civil and Health sector will likely be aggressive in expanding their CMS and civilian health work.
  • Perspecta’s Risk Decision Group has an interesting collection of seemingly unrelated legacy businesses such as KeyPoint Government Solutions and HP’s SafeGuard Services (SGS).  KeyPoint and SGS engaged in background investigative services (mostly OPM) and program integrity (mostly for Medicare and Medicaid programs).  Both are an outlier to the emerging business. It is very likely that this business will be divested or spun off in the near future.  Note in the new April 2021 announced organization, this does not have a clearly defined home.

This article was written by FedSavvy Strategies, a boutique market and competitive intelligence consultancy founded in 2012.  They provide Black Hat reviews, market planning and analysis and competitive intelligence through RapidCI™ – a novel blend of tradecraft and technology.  

© FedSavvy Strategies and FedSavvy Strategies blog, 2012-2021. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to FedSavvy Strategies and FedSavvy Strategies blog with appropriate and specific direction to the original content.



Please enter your comment!
Please enter your name here