Bert Subin: Great. Thank you for the comments.
Stuart Davis: Abigail, we’re at the top of the hour, so we’ll just take one more question.
Operator: Thank you. Our last question. One moment for our last question. Our last question comes from Matthew Akers with Wells Fargo. Your line is open.
Matthew Akers: Yeah, hey guys. Good morning. I think we’re squeezing me in. Tom, you alluded to some IRAD targeted investments in the opening remarks. Can you elaborate on those at all? What capabilities you’re going after?
Tom Bell: Sure. There’s actually two parts of that equation, Matthew. One of the things that we’re focused very much on with our link being elevated to our CTO office is CRAD [ph]. So making sure that we get customer focused IRAD, which has a two prong benefit. (A), it is doing the things that the customers need done. So that points you in the direction of what is the scratch they want to itch, but also its funded work that we can co-invest in. So we’re very focused on targeting CRAD in the areas of technology that are going to differentiate us going forward, and we’re very much focused on matching our investment, our IRAD in those focused areas also. Macro picture, obviously Software, Cyber, AI, Maritime Autonomy are four of the top things we’re investing in.
But again, as part of the strategy process, we’re asking each sector to identify the Golden Bolts that will truly differentiate them over the coming three to five years, so as to give them solutions to the customer problems that are emerging over that same period of time. So we have an articulated playbook of focused IRAD. We have an articulated playbook of CRAD that we’re going after, but we’re also creating organically a poll from the businesses of what would you have me invest in that will differentiate my solutions and my capabilities to solve my customers problems.
Matthew Akers: Great. Thanks for the color. And I guess one for Chris. On Section 174, can you just remind us how much you have you could potentially recover if that does get overturned?
Chris Cage: Yeah, sure Matt. And I mean, it’s a nuanced situation, so there’s some variables you got to think through. Obviously, looks like it may be retroactive. And so if that were to be the case, and if there is a path forward to recovery, monies that were previously paid in the year, and then we have some state taxes that have to follow suit. If all that lines up, it could be north of $200 million of benefit to Leidos. There’d be a little bit of modest uplift on the effective tax rate. But net-net, it would be a great benefit to the company and add to that additional amount of capital we’d have to consider how we deploy appropriately in the later part of the year. So a little bit over $200 million plus, not having to pay the $60 million that we’ve got teed up in ‘24. So goodness all around.
Matthew Akers: Great. Thank you.
Tom Bell: Thank you.
Operator: This concludes our question-and-answer session. I would now like to turn the conference back to Stuart Davis for any closing remarks.
Stuart Davis : Thank you, Abigail, for your assistance on this morning’s call, and thank you all listening on the line today and this morning for your interest in Leidos. We look forward to updating you again soon. Have a great day.
Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.
