Industry Week in Review – July 3, 2015
Aerospace & Defense Update
The explosion of SpaceX’s Falcon 9 rocket on June 28th has ignited discussion among military officials over the feasibility of running a competitive space launch program. Implications for a company that encounters a failure could be fatal as it would likely require shutting down that company for a significant period of time to investigate. Under the scenario that United Launch Alliance remains without competition, it would be able to defer to its Delta IV system if the Atlas V failed or vice-versa in order to remain in operation despite a failure. Although it is too early to stipulate the effects of SpaceX’s launch failure on future Department of Defense launch missions, the Pentagon is committed to the continuity and strength of its National Security Space missions.
Pentagon officials released the FY2014 small business scorecard last month which announced that 24.9% (~$91.7 million) of all prime contracts awarded last year were given to small businesses. This represents the highest percentage of funding allocated to small businesses since the 23% goal was established in 1997. About half of the total sum was allocated to defense contracts and accounted for ~$54.3 billion. These results confirm efforts by the Pentagon to focus on small business contracting in order to protect what is viewed as an economic driver throughout the industry.
Government Technology Solutions Update
The General Services Administration (“GSA”) is looking to partner with the Defense Information Systems Agency (“DISA”) for its upcoming Enterprise Infrastructure Solutions (“EIS”) telecommunications contract vehicle. EIS, worth an estimated $50 billion over 15-years, is part of the GSA’s broader Network Services 2020 strategy. The GSA has added a new clause in the geographic coverage section of the vehicle, to better incorporate the needs of the Department of Defense (“DoD”) by aligning the contract with the Defense Federal Acquisition Regulation System (“DFAR”). The potential partnership comes at a time when DISA is preparing to open bidding on several other key acquisition efforts including its Systems Engineering Technology and Innovation (“SETI”) contract vehicle and Encore III, the follow-on to its current $12 billion ceiling IT services contract.
The DoD recently announced that it is ramping up Defense Mobile Classified Capability – Secret (“DMCC-S”) from pilot stage into full production. DMCC-S mobility capabilities allows users to securely access secret data and voice communications from anywhere in the world. DISA is using the program to replace the technologically dated Secure Mobile Environment Portable Electronic Device (“SME PED”) system and aims to have 3,000 secure mobile users by government fiscal 2Q16. In a related move, the National Institute of Standards and Technology (“NIST”), has released technical specifications for the next generation of digital smart cards, which allow for remote identity verification. These mobility developments by both the DoD and NIST enhance the Federal mobile cybersecurity strategy.
Big Movers
AeroVironment (Up 4.2%) – Shares were up this week in response to better than expected earnings for 4Q15. The company reported a quarterly profit of $7.1 million.
Transactions
Atrenne Integrated Solutions, Inc., acquired the Engineered Products business of Curtiss-Wright Corp., a manufacturer of a wide range of VITA / PICMG – standard complaint and rugged application-specific electronic packaging solutions. Terms of the deal were not disclosed.
Rift Valley Equity Partners, LLC acquired assets of M&M Manufacturing, Inc., a provider of CNC milling and turning, assembly and inspection, and value-added services such as programming, modeling, and tooling. Terms of the deal were not disclosed.
Safariland, LLC acquired VIEVU, LLC, a manufacturer of wearable video cameras and data management software for law enforcement and private security professionals. Terms of the deal were not disclosed.
Ballard Power Systems, Inc. signed a definitive agreement to acquire Protonex Technology Corp., a designer and manufacturer of advanced power management products and portable fuel cell solutions. The deal is worth an estimated $30 million.
