Leidos awarded $987 million contract to support F-16 Foreign Military Sales sustainment

Rhea-AI Summary

Leidos (NYSE: LDOS) has secured a significant $987 million contract from the Air Force Life Cycle Management Center to provide engineering and sustainment services for Foreign Military Sales customers of the F-16 Fighting Falcon. The single-award contract spans a 10-year period and focuses on post-production support for the F-16 weapon system.

The company will implement its Web Based Management System to provide real-time visibility of repair asset tracking and enhance the repair and return process. The system leverages AI and predictive analytics to increase efficiency, visibility, and accountability. This support is important for the global F-16 fleet, which includes approximately 2,200 active aircraft across more than 25 nations.

Positive

• Secured substantial $987 million contract with 10-year duration
• Contract provides stable, long-term revenue stream through F-16 sustainment services
• Serves large global market with 2,200 active F-16 aircraft across 25+ nations
• Implementation of proprietary AI and predictive analytics technology

Negative

• None.

Insights

Defense Industry Analyst

This $987 million F-16 sustainment contract represents a major win for Leidos, strengthening their position in the lucrative defense maintenance sector. The 10-year performance period provides stable, long-term revenue visibility. What's particularly noteworthy is Leidos' integration of AI and predictive analytics for maintenance optimization - this technological edge could yield higher profit margins compared to traditional sustainment contracts.

The global F-16 fleet of 2,200 active aircraft across 25+ nations presents significant upside potential. As these aircraft age, maintenance requirements typically increase, potentially leading to additional contract opportunities. The Web Based Management System for real-time repair tracking addresses a critical pain point in military aviation maintenance, where parts availability and repair turnaround times directly impact operational readiness.

Comparing this to Leidos' $15.4 billion annual revenue, this contract represents approximately 0.64% of yearly revenue per annum, making it a meaningful but not transformative addition to their portfolio. The emphasis on diminishing manufacturing sources mitigation is particularly valuable as F-16 parts become scarcer, potentially commanding premium pricing.

Technology Systems Analyst

The implementation of AI and predictive analytics in military aviation maintenance marks a significant technological advancement. Traditional maintenance tracking systems often struggle with data fragmentation and delayed reporting. Leidos' Web Based Management System, by enabling real-time visibility, could reduce aircraft downtime and maintenance costs - critical metrics in defense contracts.

The system's focus on diminishing manufacturing sources is particularly innovative. As F-16 components become obsolete, predictive analytics can forecast parts failures before they occur, enabling proactive sourcing and potentially preventing costly aircraft groundings. This technological approach could give Leidos a competitive advantage in future military sustainment contracts.

RESTON, Va., Dec. 19, 2024 /PRNewswire/ -- Leidos (NYSE: LDOS) today announced a new contract to provide critical engineering and sustainment services for Foreign Military Sales (FMS) customers of the U.S. Air Force's F-16 Fighting Falcon. The contract was awarded by the Air Force Life Cycle Management Center, supporting the F-16 System Program Office. The single award, indefinite delivery, indefinite quantity contract has a maximum value of $987 million and 10-year period of performance.

"We leveraged our corporate investments in AI and predictive analytics to provide our customer with a data-informed platform to increase efficiency, visibility and accountability," said Roy Stevens, Leidos National Security Sector president. "This win underlines Leidos' commitment to supporting the U.S. Air Force and our allies ensuring high resilience and interoperability."

Under the contract, Leidos will provide post-production support through critical engineering and sustainment services necessary for the continued operation and improvement of the F-16 weapon system. Leidos' Web Based Management System will enable the customer to maintain real-time visibility of repair asset tracking status for the repair and return lifecycle. Leidos' technology is designed to enhance the customer's repair and return process, improve engineering and technical support resolution, and help reduce diminishing manufacturing sources and material shortages.

The F-16 has been procured by over 25 nations around the world, supporting a global fleet size of approximately 2,200 active aircraft.

The appearance of U.S. Department of Defense (DoD) visual information does not imply or constitute DoD endorsement.

About Leidos

Leidos is an industry and technology leader serving government and commercial customers with smarter, more efficient digital and mission innovations. Headquartered in Reston, Virginia, with 48,000 global employees, Leidos reported annual revenues of approximately $15.4 billion for the fiscal year ended December 29, 2023. For more information, visit www.Leidos.com.

Certain statements in this announcement constitute "forward-looking statements" within the meaning of the rules and regulations of the U.S. Securities and Exchange Commission (SEC). These statements are based on management's current beliefs and expectations and are subject to significant risks and uncertainties. These statements are not guarantees of future results or occurrences. A number of factors could cause our actual results, performance, achievements, or industry results to be different from the results, performance, or achievements expressed or implied by such forward-looking statements. These factors include, but are not limited to, the "Risk Factors" set forth in Leidos' Annual Report on Form 10-K for the fiscal year ended December 29, 2023, and other such filings that Leidos makes with the SEC from time to time. Readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. Leidos does not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements were made.

Contact:	Alyssa Pettus
	(571) 526-6743
	alyssa.t.pettus@leidos.com
	Greg Hellman
	(571) 526-7592
	Greg.hellman@leidos.com

View original content to download multimedia:https://www.prnewswire.com/news-releases/leidos-awarded-987-million-contract-to-support-f-16-foreign-military-sales-sustainment-302335710.html

SOURCE Leidos Holdings, Inc.

FAQ

What is the value and duration of Leidos's (LDOS) new F-16 sustainment contract?

Leidos (LDOS) secured a $987 million contract with a 10-year period of performance for F-16 sustainment services.

How many countries and aircraft will Leidos (LDOS) support through the F-16 contract?

Leidos will support over 25 nations and approximately 2,200 active F-16 aircraft through this Foreign Military Sales contract.

What technology will Leidos (LDOS) use in the F-16 sustainment program?

Leidos will utilize its Web Based Management System, incorporating AI and predictive analytics for real-time repair asset tracking and improved efficiency.

What specific services will Leidos (LDOS) provide under the F-16 contract?

Leidos will provide post-production support, critical engineering and sustainment services, repair asset tracking, and solutions for diminishing manufacturing sources and material shortages.