Industry Week in Review – May 9, 2014
The House Armed Services Committee (“HASC”) unanimously approved a measure that would authorize just over $600 billion in defense spending for the 2015 fiscal year. The HASC’s version of the 2015 National Defense Authorization Act includes the Pentagon’s previously requested $495.8 billion base budget, as well as $79.4 billion for Overseas Contingency Operations (“OCO”). The bill also authorizes $17.9 billion in Energy Department defense programs and $7.9 billion in mandatory defense spending, both of which could grow larger since the OCO figure is still standing as a placeholder and will likely decrease. Most notable from the measure is the HASC’s amendment that, if included in the final bill, would ultimately reverse and block the highly controversial plan to retire the Air Force’s fleet of A-10 Warthog aircraft. The new amendment would prohibit the retirement of the aircraft until the U.S. comptroller general makes a number of certifications and studies to evaluate Air Force platforms used for close-air-support missions. Another key focus from the HASC’s measure is the protection of weapons programs, which would involve shifting more than $2.5 billion from service contract accounts and other non-weapons accounts towards projects not budgeted in Obama’s 2015 budget request. The projects include refueling the George Washington aircraft carrier, developing missile defenses with Israel, and purchasing or upgrading certain aircraft and tanks.
The National Institutes of Health (“NIH”) released a request for proposal (“RFP”) for the Chief Information Officer – Commodities and Solutions Contract (“CIO-CS”), which will succeed the NIH’s current Electronic Commodities Store III contract. CIO-CS will be a government-wide acquisition contract and will support the procurement of IT commodities and solutions relating to general IT initiatives, especially for those agencies participating in health care and biological research, such as the NIH and Department of Health and Human Services more broadly. This 10-year, $20 billion contract is expected to have 75 awardees and small businesses will receive 60 percent of the total value of all delivery orders, compared to its predecessor contract which has a $6 billion ceiling value, 66 awardees, and small businesses receive ~42% of the total value of all delivery orders. The release of this contract vehicle is a testament to the continuation of opportunities within the HIT marketplace for contractors. The contract’s RFP was released Wednesday, May 7th and the bid deadline is set for June 11th.
Big Movers
B/E Aerospace Inc. (Up 11.6%) – Shares were up this week after the Company announced it is reviewing strategic alternatives for a potential sale or spin-off of the business.
Relevant Transactions
Calian Technologies Ltd. acquired AMTEK Engineering Services Ltd., a provider of engineering and technical services primarily to the Department of National Defence in Canada. Terms of the deal were not disclosed.
Ultra Electronics Holdings plc acquired ICE Corporation, Inc., a manufacturer of aerospace products including motor control electronics, electrothermal ice protection controllers, and pneumatic valve controls. Ultra Electronics paid $8.6 million for the acquisition.
FireEye, Inc. to acquire nPulse Technologies Inc., a provider of network forensics, including security flows and packet capture solutions for government agencies and financial institutions. FireEye will pay approximately $70 million for the acquisition, which is expected to close during 2Q14.
Endgame, Inc. acquired Onyxware Corporation, a provider of mobile security technology used to detect mobile devices that are connecting to unsafe networks or are being accessed by a third party. Terms of the deal were not disclosed.
