Top contractors shuffle executive positions

It’s been a busy year for chief executives at some of the largest government contractors.

A major shift is underway as multiple leaders among companies such as Computer Sciences Corp., General Dynamics Corp. and Lockheed Martin Corp. have announced their departures. In fact, CSC, GD and CACI International unveiled top-level changes within 48 hours of each other.

CSC said June 5 that James Sheaffer, the president of North American public sector, was retiring and would be replaced by Dave Zolet, who was president of business development.

On June 6, GD’s chairman and CEO Jay Johnson announced his retirement, effective Dec. 31. He’ll be replaced by Phebe Novakovic, current president and chief operating officer. She was named to that post just last month after serving as executive vice president of the Marine Systems group.

Also, on June 6, CACI President and CEO Paul Cofoni said he would retire Dec. 1. President of U.S. Operations Daniel Allen will succeed him.

Similar changes are underway at Lockheed Martin, where CEO Robert Stevens said in late April that he will retire at the end of the year and will be replaced by Chris Kubasik, president and chief operating officer. Stevens will remain chairman until January 2014.

On June 5, BAE Systems named DeEtte Gray, president of its 7,000-person intelligence and security business.

Other major contractors also have named new senior leaders in the last nine months including:

• William Brown, CEO, Harris Corp.
• Mike Lawrie, CEO of CSC
• John Jumper, CEO at Science Applications International Corp.
• Marilyn Crouther, president of Hewlett-Packard Enterprise Service public sector
• George Newstrom, president, Dell Federal services
• Donna Ryan, president, CGI Federal

Multiple factors are driving these shifts.

For companies such as CACI, which has been outperforming its peers in the market, the retirements are just that, retirements. And HP’s Crouther was appointed when the former public sector president was promoted to another position at HP.

While Sheaffer’s performance has not been called into question, CSC, is going through major changes across the company as the new CEO has declared the company in a turnaround mode. Lawrie came on board in March and within weeks said that he was looking for $1 billion in cost savings. The company’s bottomline has been rocked by unprofitable contracts, particularly the work the company is doing on the United Kingdom National Health Service contract.

SAIC also had its share of stumbles with a New York City contract that not only has costs overruns but was implicated in a bribery scheme. The company had to pay $500 million to settle that case. Shortly thereafter CEO Walt Havenstein announced his retirement and former Air Force Gen. John Jumper was appointed to that post.

The major defense players such as Lockheed and General Dynamics face the challenge of shrinking defense budgets. They’ve spent the last few years sucking costs out of their operations and divesting non-core businesses. More layoffs could be on the way, if sequestration kicks in with deep automatic budget cuts at the beginning of 2013.

But Lockheed and GD also are taking pains to project stability to the market with succession plans that will be measured in months and not weeks. CACI succession plan is similar.

Even the best performers see a tough market ahead and that might have as much to do with the slew of retirements as anything else. Leaders in their 60s see several years of tough going in the market and might not want to spend the last five years of their careers fighting for every dollar in the market.

Instead they are turning the reins over to executives 10 or more years younger.

During an interview with Washington Technology prior to announcing his retirement, Cofoni talked about a new slate of senior executives CACI had hired, including his successor. “These are all people in their 40s and 50s, so they can take us through the next decade,” he said. Cofoni is 64.

But asked after his retirement announcement, Cofoni said the timing of his departure had nothing to do with the tough market.

“Over two years ago I expressed to the board that I thought calendar year ’12 was the right time frame for me [to retire] and we began right at that time to go through a succession planning process,” he said. “And at that time we launched a search for my replacement. We selected Dan [Allen], who was our first choice.”