Industry Week in Review – August 24, 2018
Industry Week in Review – August 24, 2018
Aerospace & Defense Update
While the Pentagon is increasing its focus on intercepting hypersonic and cruise missiles to keep pace with Chinese and Russian advances, the Missile Defense Agency (“MDA”) is continuing to invest in its ballistic missile defense (“BMD”) program. Currently, the MDA is looking for new ways to improve its BMD by utilizing Lockheed Martin’s F-35 to be used as a sensor and also deliver kinetic weapons to intercept such ballistic missiles. While space-based interceptor technology might be on the horizon to protect against ballistic missiles, the technology could be very costly and take a long time to fully develop. Therefore, the MDA is prioritizing air, land, and sea- based terminal interceptors such as the Aegis Ashore site for the time being.
From 2012 to 2017, more than 1,000 small satellites were launched into orbit, however this number is to be significantly surpassed in the next couple years as the Federal Communication Commission has approved the deployment of 5,264 small satellites. These new satellites are manufactured primarily by four main companies: OneWeb, Space Norway, Telesat, and SpaceX. Currently, the satellites are primarily used for Earth observations, but that business is expected to be eclipsed as broadband operators roll out mega-constellations to provide services such as high-speed internet, weather forecasting, encryption keys, and even extrasolar planet detection. This shift in space technology marks an important inflection point moving forward regarding the future of the space industry.
Government Technology Solutions
On Wednesday, Booz Allen Hamilton (“Booz Allen”) was awarded a six-year, $1.03 billion task order to provide agency-tailored cyber platforms for the Continuous Diagnostic and Mitigation’s (“CDM”) Dynamic and Evolving Federal Enterprise Network Defense (“DEFEND”) program. This task order, under the General Services Administration’s (“GSA”) Alliant contract, engages Booz Allen to provide cyber tools for the five “Group D” agencies: GSA, Department of Health and Human Services, NASA, Social Security Administration, Department of the Treasury and the US Postal Service. Booz Allen’s ability to provide “monitoring-as-a-service” dashboards and solutions will allow these agencies to understand, detect, and make informed decisions to combat potential cyber threats. This award is Booz Allen’s second on the DEFEND program, having previously won a task order to provide similar services to the “Group B” agencies in February. With these two wins, Booz Allen now oversees approximately 80% of .gov web domains, translating to about 1.75 million users and establishing the firm as a pre-eminent federal cybersecurity service provider.
In recent weeks, the Pentagon’s Joint Enterprise Defense Infrastructure (“JEDI”) single-source cloud contract has gained significant attention, prompting a pre-award protest from Oracle, filed on August 6. Much of the controversy stems from the fact that the entirety of the $10 billion JEDI contract is being structured as one award given to a single company. Other cloud providers expected to compete for the JEDI contract are comprised mostly of large, commercial IT companies, among them Microsoft, IBM, and Google. These commercial IT companies have become more prominent and increasingly competitive in the federal contracting space in recent years, highlighted in part by awards like JEDI and Amazon’s win of a $600 million private cloud computing contract with the CIA in 2013. Over the last several years, the increased presence of these major commercial IT companies has pushed many government contractors to partner with these commercial firms to perform back-end services work rather than compete directly against them head-to-head. Per former CSRA CEO Larry Prior: “When you’ve got an Oracle and an Amazon squaring off, a lot of us just want to get out of the bursting radius and be prepared to support customers whichever way they go.”
Big Movers
CACI International Inc. (up 3.3%) – Share prices were up this week due to the completion of its acquisition of the systems engineering and acquisition support services business of CSRA LLC, a unit of General Dynamics Information Technology Inc.
Safran S.A. (up 4.8%) – Share prices were up this week after production plans for its LEAP engine are estimated to be higher than previously thought.
Transactions
An unidentified private equity firm has agreed to acquire the Federal Government IT Services Business (“The Federal Business”) of Black Box Corp., a provider of leading-edge data and physical network solutions, including device control and storage, visualization, collaboration, and cabling, for civilian agencies, the armed services, state and local governments, and educational institutions. The deal is worth an estimated $75 million.
Communications & power Industries (CPI) has acquired related companies Orbital Systems, Ltd. and Quorom Communications, Inc., both are providers of design and manufacture antenna positioners and front-end system products that play a key role in communications applications. Terms of the deal were not announced.
Tech Mahindra Ltd. has agreed to acquire Inter-Informatics spol. S.r.o, a provider of aerospace design engineering services. The deal is worth an estimated $6.3 million.
