Leesburg firm lays off 155 after Navy cancels $170M contract

Leesburg-based government contractor Pantheon Data this week laid off 155 workers — including 33 Virginia employees — after the U.S. Navy canceled its $170 million service contract with the company on May 12. 

According to Pantheon officials and USAspending.gov, which tracks federal contracts and modifications, the MyNavy HR Transformation contract awarded June 2024, with a potential award amount of $170.9 million and potential end date of June 2029, was canceled this week, with the government having paid only $39 million. The contract represents about 35% of Pantheon’s total business.

Pantheon officials notified the state Tuesday of the layoffs, in compliance with the Worker Adjustment and Retraining Notification (WARN) Act. Chief Operating Officer Michael Richardson wrote in a letter to Virginia Works that at 9 a.m. Monday, the Navy notified Pantheon that the Department of Government Efficiency, aka DOGE, was requiring the military branch to cancel its service contract. 

The contract was primarily to upgrade the Navy’s HR communications portal and IT systems, and according to Richardson’s letter, the company first heard of the possibility of the contract’s cancellation April 29. “However, at that time, we still had reasonable optimism that the contract would remain to service our client,” he wrote.

“As a result of the U.S. Navy’s sudden termination of our service contract, we are being forced to lay off all Pantheon employees that perform work for this service contract,” Richardson wrote. “Additionally, since this service contract comprises such a large portion of Pantheon’s business, we also must layoff a number of our corporate employees as we are unfortunately unable to sustain our current corporate headcount with the loss of such a large contract.” 

Most of the affected employees are based outside Virginia, the letter says, but the loss of the contract also means that some corporate employees have lost their jobs, “as we are unfortunately unable to sustain our current corporate headcount,” the letter says.

Richardson added that Pantheon Data, also known as The Kenific Group, spent May 12 “exhausting every possible avenue” to save the contract, but at 4 p.m. that day, the Navy notified the company it was canceling the contract effective immediately. 

According to the MyNavy HR Transformation website, the project would have consolidated more than 55 legacy systems into a few integrated systems. 

David Schiff, Pantheon’s deputy director who led the MyNavy contract, posted on LinkedIn this week that he was among the people laid off, calling the contract “suddenly, pointlessly and disgracefully terminated.” According to his post, senior Navy officials overruled the Pantheon team’s Navy resource sponsor, the personnel department known as OPNAV N1, who “had faith” that Pantheon could perform the modernization of the platforms.

“This is not because we were ineffective, a long-time incumbent, or because of some biased alliance,”  wrote Schiff, a retired Navy officer and former National Security Innovation Network regional director for the national capital region. “It is simply politics harming people who have served honorably as civilians, contractors and in other roles, trying to pull the Navy (in our case) into the 21st century when it came to HR systems and management of sailor and civilian data.”

Secretary of the Navy John C. Phelan said in an April 29 video posted on X that he was signing an order canceling the implementation of “an obsolete and redundant online portal the Navy no longer needs. Canceling this contract will save $300 million so we can spend more on our sailors and marines and our readiness.” 

Richardson said there are no bumping rights for Pantheon employees, and the affected employees are not represented by a union. 

Pantheon did not immediately respond to a request for comment Thursday.

DOGE, run by billionaire Elon Musk, claims credit for terminating more than 10,000 contracts totaling $32 billion, but The New York Times reported earlier in the month that more than $220 million in DOGE-canceled contracts were revived later by federal agencies, representing 44 contracts.