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Army Intelligence RFI Signals Near-Term Opportunity for Contractors

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On August 13th, the U.S. Army released the first of several planned Requests for Information (“RFI”) for its Distributed Common Ground System – Army (“DCGS-A”) Increment 2 contract, a successor contract to the current DCGS-A program.  DCGS-A is a key U.S. Army intelligence program tasked with collecting, analyzing, and disseminating intelligence information over a common enterprise system, in order to better enable decision-makers to respond to events with greater speed and effectiveness.  Launched in 1998, the DCGS program has since come under intense scrutiny from both military and civilian officials, with operators commenting that the system is slow to respond, unreliable, and highly vulnerable to cyber-attacks.  DCGS-A Increment 2 is one the first steps towards addressing the issues that have plagued the existing program, and is designed to provide an effective and evolvable end-product for operators and analysts, while improving system efficiencies and realizing cost savings.  With a total estimated cost of approximately $11 billion, and only $6 billion expended to date, future increments to the DCGS program offer a significant opportunity for defense and government technology solutions contractors with high-end data analytics and software development capabilities, particularly within the context of a budget-constrained environment in which defense and intelligence officials will continue to award contracting dollars to companies that can solve mission-critical challenges while also reducing overall program costs.

As the Department of Defense (“DoD”) and Intelligence Community (“IC”) increasingly prioritize cost-effective, mission-enabling technologies from an acquisition and procurement perspective, defense and government technology companies have sought to enhance their growth prospects by acquiring targets that possess such capabilities.  From 2013 – YTD 2014, 30 transactions have been announced in the intelligence sector, representing 28% of the total number of government technology transactions announced during the period.  This 28% is a meaningful increase over the 15% that intelligence transactions represented in 2012.  Recent examples include Novetta Solutions acquisition of SigInt Technologies, a provider of signals intelligence, analytics, and training solutions to the IC, and BAE Systems pending acquisition of Signals Innovation Group, a provider of imaging and analytics solutions to both DoD and IC customers.  As defense and intelligence agencies look to address mission-critical requirements in an uncertain and constrained budget environment, future DCGS elements, as well as other major national security procurements can: (i) create significant growth opportunities for smaller contractors; and (ii) position them to capitalize on the acquisition appetites of larger, diversified primes who are aiming to backfill a lack of organic growth across their organizations.

Source: GovWin IQ