Kevin Kelly on Arcfield’s Continued and Growing Commitment to National Security and Space Missions

Kevin Kelly took the helm at Arcfield in 2021, determined to position the company as a valuable mission partner alongside a continuously growing commercial space market.

Since then, he has led two major acquisitions that added over 200 employees, diversified the business and expanded its capabilities and offerings.

A portfolio company of The Veritas Capital Vantage Fund, L.P., Arcfield also experienced considerable organic growth, largely in contract wins, recompetes and market growth.

Achieving these goals was all part of the plan, Kelly tells WashingtonExec. Before joining Arcfield, he was in talks with Veritas about its heritage and core capabilities, which are largely technical and focused on priority missions in the government.

“This wasn’t a company that was seeking to go after commoditized work,” he said. “The work was more technology-differentiated and germane to more challenging mission areas within the space and defense communities specifically in space systems engineering, hypersonics and warfighter readiness.”

Kelly discussed strategy and growth plans with Veritas, which led to setting goals for the company to focus on investing in differentiating technologies. These investments, both internal and through acquisitions, aim to support priority missions in national security and intelligence.

He was particularly drawn to Veritas’ courage to take risks by investing in technology, despite the uncertainty of achieving gains, new capabilities or business opportunities.

“We take calculated risks and we make those investments likewise with inorganic growth,” Kelly said. “We’re not just seeking to buy scale or our mirror image company out there and try to combine the two ⏤ but we are actually looking to further differentiate us as a category leader within systems engineering, model-based systems engineering, space environment, space architecture and engineering.”

Kelly highlighted these areas, including testing and evaluating next-generation weapon systems in hypersonics and ballistic missiles, as challenging for competitors to penetrate.

“We have a very established relationship with those customers and an important role to play,” he said. “I didn’t want us to take our eye off the ball and get distracted with too many other mission areas.”

Since his early discussions with Veritas and becoming CEO, Arcfield has stayed true to its original strategy, pursuing organic and inorganic investments to build a stronger, more resilient company.

The Progression of Arcfield’s Foundational Goals 

Timing was on Kelly’s side when he joined in 2021. Arcfield had over $1 billion worth of backlog business ⏤ over 10 contracts ⏤ ready for re-competes in the 12-18 months after the company’s divestiture from Peraton.

It was risky carving a business out with no infrastructure, C-suite, IT, finance or human resources to support the business. Bidding and winning the recompetes and building an infrastructure around the business became crucial.

“No. 1 goal was to defend the base and to make sure that we win all of those re-competes or as many of them as we can,” Kelly said, while not letting the difficulty and messiness of building a company and executing a carve-out become visible to federal mission partners.

“If you lose the base business, you’re kind of starting over,” Kelly added. Luckily, Arcfield won 100% of those re-competes in its first couple of years.

A second goal was to diversify the business and take Arcfield’s capabilities into new markets ⏤ which it also did. Arcfield expanded its work in the intelligence community and took on more missions within the Defense Department.

“We grew our cyber defense business with the Air Force Research Laboratory and expanded our work with the Missile Defense Agency into new testing and modeling simulation capabilities,” Kelly said. The company has strengthened its business with the Royal Canadian Air Force and won new work with the U.S. Space Force.

Arcfield’s third goal was to create differentiating technology. “When we took this business over, it did not have an internal research and development program that came with it,” Kelly said. “There was no existing program that was investing in technologies.”

Yet the company had strong capabilities in model-based systems engineering and tools and technologies that have been developed over decades of support in the space architecture environment.

Kelly directed Arcfield’s multimillion-dollar investment in model-based systems engineering to develop technologies addressing complex government challenges. The company then modernized and commercialized its internally developed tool suites to extend its reach into new markets.

Arcfield’s fourth goal was to streamline operations. It originated as Peraton’s divested systems engineering, integration and support services business, accustomed to the infrastructure, policies and constraints typical of a large company designed to manage the risks of multi-billion-dollar operations.

“When you carve a company out that’s half a billion dollars in size, you don’t need that heavy infrastructure,” Kelly said. “It can become a financial and procedural burden for the business.”

Arcfield’s leadership focused on reducing friction in corporate functions to improve efficiency, drive growth and strengthen workforce culture.

These goals were set within a year, and leadership has since executed them while monitoring progress in quarterly board meetings.

Factoring in Inorganic Growth

Arcfield continues to progress in organic growth but is also active in the mergers and acquisition market. Under Kelly’s leadership, Arcfield experienced two significant acquisitions of Orion Space Solutions and Strategic Technology Consulting.

These decisions, however, aren’t taken lightly ⏤ and are part of the company’s ethos.

“We are looking for one of two things: Access to a customer or a market that we don’t have today; or access to differentiating technology that through acquisition, we can acquire quicker or more cheaply than building it ourselves,” Kelly said.

Arcfield’s leadership evaluates what its mission partners need, and does a “buy it, build it, borrow it” analysis. If it’s available to be acquired, Arcfield will engage. Or, if there is a partner that has that capability and would be interested in having an acquisition discussion, Arcfield will pursue those conversations.

Some markets are challenging for an outsider to enter. Kelly saw the potential for Arcfield to expand its work with the U.S. Space Force, but the company’s small presence in that space limited its opportunities. The acquisition of Orion Space Solutions addressed this gap.

Space is no longer just an aspiration — it’s a critical domain where speed, precision and innovation define success. Bringing in Orion’s expertise in modeling and data analysis, sensor and payload design, and SmallSat/CubeSat spacecraft integration enhanced Arcfield’s existing space exploration and defense capabilities in all orbits, and strengthened its ability to serve both defense and commercial markets.

Additionally, Orion’s expertise in developing solutions for very low earth orbit establishes the company as a market leader in groundbreaking scientific innovations for communication, sensing and navigation capabilities that will help its mission partners achieve the next level of space superiority and resiliency, Kelly said.

“They both had technical capabilities that we didn’t have that were germane to the space missions that we support, and they had a well-established relationship with the U.S. Space Force,” he added. “That gave us both access to technology and access to a market that we didn’t have previously.”

The acquisition of STC, a model-based systems engineering and digital engineering company, paired well with Arcfield’s existing systems engineering work.

“STC had a consulting practice that had both commercial and government clients and was able to deliver a modernized approach to digital engineering to commercial and government clients alike,” Kelly said. This acquisition gave Arcfield access to commercial markets, the U.S. Army and advanced tool suites and techniques previously unused with Intelligence Community customers.

“It was a technology and a market access motivator to do those acquisitions,” Kelly said, and that’s the filter the company will continue to use to evaluate future opportunities going forward.

“We’re not a grow-by-acquisition company,” Kelly stated. “The company grows based on its strategy and its pipeline. We have a very healthy pipeline of qualified opportunities. But each of those requires very advanced solutions, and sometimes, we have to go acquire that technology elsewhere.”

A Growth Strategy that Expands Workforce Opportunities  

Rapid business growth inevitably affects a company’s workforce, and Kelly said employees are excited about the new markets Arcfield is getting into. He often communicates companywide successes on individual missions via a “Good News Friday” internal newsletter. It highlights new customers, acquisitions and engagements.

“People get excited about that,” Kelly said. “They recognize customers that were not part of our portfolio initially, and they take a great sense of pride in being part of a company that’s growing into those markets.”

As a new carve-out, Arcfield lacked the infrastructure larger companies offer, such as enabling employees to move across markets, customer areas or locations.

“Even though we had contracts in a variety of different areas, we didn’t have the HR infrastructure to enable horizontal movement throughout the company,” Kelly said. “But that’s something that we have today.”

Arcfield hosts internal job fairs where employees can explore career changes if they’ve finished a degree, seek other opportunities or want to move to a different location.

“The ability to leverage the knowledge across a larger customer set has helped differentiate us because we come with the built-in experience as opposed to having to learn it for the first time,” Kelly said. “We have four business sectors within Arcfield and we have a heartwarming amount of cross-sector collaboration.”

The company now has 1,600 to 1,700 employees, with growth creating unique opportunities for a company its size.

“Our voluntary attrition rate is roughly half of what it was three years ago when we started the business, which was industry average,” Kelly said. “Employees come here and they want to stay here and build a career here because of the opportunities available to grow.”

Approaching Leadership with Scalability and Passion in Mind

Leadership is presented in various shapes, sizes and styles. What worked for Kelly and his leadership team stems from three rules: Be the best at what you do; help each other along the way; and bring an honest, easy-to-work-with attitude.

“Our leadership team challenges each other,” Kelly said. “You have to be the best, and we expect our employees to be the best, and what we provide to the U.S. taxpayer through each of our contracts needs to be the best.”

Cross-sector collaboration is a key factor in helping each other. It helps grow the business, write better proposals and execute with lower risk.

And quite frankly, as a leader, “you can’t be a jerk,” Kelly said. “You’ve got to be easy to work with. You’ve got to be honest. You’ve got to be predictable. From an attitude standpoint, that goes a long way.”

Kelly follows these leadership principles and discusses them with Arcfield’s leadership team, as they shape the company’s culture and growth potential.

“I’m blessed with a leadership team that has such a rich set of experiences,” he said. “It is the most experienced leadership team I’ve ever been a part of.”

Building on Arcfield as a “Category Killer”  

Kelly is dedicated to ensuring the U.S. defense industry maintains a decisive technological edge. He sees the future of defense shifting from traditional solutions to addressing asymmetric warfare challenges, with advancements in areas like hypersonics, nuclear deterrence and space domain awareness.

Veritas Capital Partners builds companies it thinks will be a “category killer,” and Arcfield plans to be just that.

“Our partnership with Veritas is very close, and they understand the mission challenges that we’re helping our mission partners deal with,” Kelly said. “They’re always interested in reinvesting in the growth of this business and our capabilities because they’re passionate about national security. And that’s really what fuels us here.”

Arcfield supports missions addressing threats from Russia and China in space, hypersonics and intelligence collection. The company’s role is to provide early visibility, enabling decision-makers to act in time to prevent threats or build a strong defense to deter adversaries.

“When you start to look at some of the capabilities that well-funded, well-organized nation-states present to our national security, it’s imperative that we continue to innovate faster and more effectively and more efficiently than they do,” Kelly said.

It’s not practical for the U.S. to keep spending more and more money ⏤ it must do more with the same or less, and that requires advancements in technology and inclusion in force multipliers like artificial intelligence and machine learning and digital engineering.

Thanks to Arcfield’s core competency in model-based systems engineering, the company can build things faster with reduced risk and cost.

Kelly emphasized the company will continue investing in technologies in areas such as space, hypersonics and cyber while exploring acquisitions that strengthen its capabilities or expand market access.

“We want Arcfield to become a bigger, stronger, more valued partner to our government and mission partners in those three main areas,” he said.