Peraton, which provides a diverse range of national security solutions and technology, recently completed two acquisitions worth over US$10 billion combined. Stu Shea, the company’s CEO, speaks with Acuris Capital Intelligence about scaling up for the US federal government’s continued IT modernization push.

Interview by James Ward

Q. Peraton just completed two huge acquisitions, buying Perspecta and Northrop Grumman’s federal IT and mission support services business. The integrations are expected to last into next year. Does that mean the company is done acquiring or taking a pause?

We’ll certainly look on an opportunistic basis. We're not actively seeking anything mostly because I want to lower the leverage ratio. I want to get down to the point that I'm delivering a ton of cash. We'll do some portfolio shaping over the course of the next year or so, small adjustments, not anything significant, and then take that cash and use it as a buy down of our debt.

We have the capacity to go from concept all the way to deployment, from R&D all the way to big enterprise IT systems across a multitude of markets. That makes you very powerful.

Q. Following the acquisitions, Peraton announced it is aligning around nine business organizations: Space & Intelligence, Cyber Mission, Defense Solutions, Citizen Security & Public Services, Global Health & Financial Solutions, Peraton Labs, Navy & Marines Corps business, SRI and System Engineering. Which do you see as potentially the biggest growth engines?

I'm a big believer that growth comes from sustainable markets. Space, cyber, national defense, intelligence, these are very sustainable over any change in administration and the nuances of budgetary pressures.

We're not in the platform business, but I think there’s a massive recapitalization and technology advancement changes coming because of things like 5G and artificial intelligence. There's just a lot of investment there in the defense business.

I think there's going to be a significant investment because of this administration in civilian businesses and infrastructure and other things, and that's going to take a couple of years to work its way through the system.

Q. The US appears to be turning the corner on the COVID-19 global pandemic. What is the biggest lesson Peraton took away from the experience?

We learned that giving people the flexibility to operate in the place they want, in the timeframe they want, in the environment they want, improved their productivity. We learned there is a resiliency to our workforce. Trust is one of our core values and we have to trust that is the way of the future.

We're going through a very deliberate process to skinny down the number of facilities and the way in which we use them to make more of a mobile workforce. We learned that having a strong business continuity environment and being able to shift rapidly or move people or disinfect buildings was critical for us.

Bit of background: Peraton is a mission capability integrator and enterprise IT provider providing national security solutions and technologies at the highest levels, from NASA to the US military. CEO Stu Shea is the former president and COO of Leidos and was the principal architect in the creation of Leidos when he served as COO of SAIC. Prior to being named COO, Stu led SAIC’s support to the National Security Community as President, Intelligence, Surveillance and Reconnaissance Group.

This interview has been edited for clarity and length.