How Two Six Technologies leverages federal contracts to expand

While some government contractors contend with cuts and broken deals, other defense technology companies selling to the feds are seeing steady interest. 

That’s true for the Arlington-based Two Six Technologies, a gov tech startup specializing in products for the Department of Defense (DOD) and intelligence agencies. Formed in 2021 after an acquisition of two Northern Virginia firms by major private equity firm the Carlyle Group, it boasts deals with ceilings in the billions.

Two Six Technologies has a staff of about 900 across the US, including 600 employees in the DMV region. The firm has grown to bring in $300 million in annual revenue, per David Leach, the vice president of corporate development. Leach previously held the same position at Two Six Labs, whose Carlyle-orchestrated merger with IST Research created the current company. 

Since then, Two Six has made four of its own acquisitions of small technology companies in the region. 

Despite this profitability, Leach asserted that Two Six Technologies isn’t focused on profits, but on the outcomes of the technology. That includes encryption software, cybersecurity products and AI-powered analytics for defense and intelligence contexts. 

“It’s about how many missions we impact for the customer,” Leach told Technical.ly, using terminology often employed in the private defense and security sector. “How much success we provide for the US government and in national security objectives.”

Increasing desire for private defense tech

Leach noted the startup hasn’t seen a downturn in growth this year. 

During that time, President Donald Trump made several moves indicating that defense spending is a priority of this administration. For instance, he issued an executive order in April to “reform” the acquisition process at the DOD. 

Trump also proposed $1 trillion in defense spending in the domestic spending bill, though that allocation ended up being $150 billion. But the separate appropriations bill for defense spending going through Congress, with $851.9 billion in discretionary funding, would bring the total amount to slightly more than $1 trillion.

But before Trump took office in January, Leach noticed the startup’s customers wanting to buy more software on commercial terms — which is quicker than a specialized procurement process.

Two Six Technologies offers products through both the commercial process and traditional government contracting, per Leach, and the startup is fully audited as a government contractor. It’s up to the customer as to which process the deal takes, he explained, and typically depends on how rapidly the agency would like the product deployed.   

Solid talent and customer relations make for fast growth

Leach credits the startup’s quick development, with only one investment (the amount of which he declined to disclose) from the Carlyle Group at its start, to close relationships with its customers at the DOD and intelligence agencies. 

“We spent a lot of years doing great research for technology that ended up in the lab,” Leach said. “We want to be a technology that’s out in the field and is out with the warfighters at the edge of the conflict where it really matters.”

Part of that reach, and “being intimate with the customer’s needs,” includes proximity, he noted. Two Six Technologies keeps headquarters in Arlington to be close to DARPA — the innovation arm of the DOD and a core customer. 

Two Six Technologies has 20 different offices across the country, and employees are remote or hybrid. The startup also opened a new office in Herndon, Virginia, in May 2024, and has offices in Laurel, Maryland. 

“Each location we have is directly linked to one of our most important customers,” Leach said. “We want to be close to them so we understand their mission as well as we can.”

Leach also attributes Two Six Technologies’ success to its staff. It can be difficult to score talented people because the labor market is competitive, he said. But the startup has a 90% retention rate per year. 

“You want to treat people really well,” Leach said. “When you do that, you get more great people on your team. When you have the best and brightest people, it seems to be a magnet for other very talented, motivated people.”