Industry Week in Review – June 7, 2013
On Wednesday, the U.S. House Armed Services Committee (“HASC”) began marking up the 2014 National Defense Authorization Act proposed by Committee Chairman Rep. Howard McKeon. In its current stage, referred to as the “chairman’s mark”, the bill would authorize the Department of Defense (“DoD”) to spend $552.6 billion in baseline dollars and an additional $85.8 billion for operations overseas for FY2014, totaling roughly $164 billion over the spending cap set by the Budget Control Act of 2011.
The HASC bill addresses plans for special operations forces, cyber defense, drone strikes, and military space launches, while also introducing some highly debated programs such as the East Coast missile shield. HASC Ranking Member Rep. Adam Smith, D-Wash., presented concerns about unnecessary and wasteful spending included in the bill, specifically identifying a half-billion dollars in the Strategic Forces subcommittee that was not requested by the DoD. The House-Senate panel will meet in the summer or fall of this year to collaborate on a final version of the Pentagon-authorization bill.
On a similar note, the House Appropriations defense subcommittee has proposed a bill that would allocate $512.5 billion to the Pentagon’s base budget and $85 billion for war funding, emulating the HASC authorization bill. The Appropriations subcommittee’s bill cut $2 billion from the enacted 2013 procurement level, but still exceeds the sequestered Pentagon budget by roughly $28 billion. The bill includes $98.4 billion for the purchase of combat platforms, $29 billion for certain special weapon programs, and $66.4 billion for R&D.
Kratos Defense & Security Solutions (Up 6.9%) – Shares were up for the week after the company received two contract awards totaling $8.1 million. One of the awards, from an existing customer, relates to the production of specialty products for an electronic attack and electronic warfare program. The second award is for specialized equipment for undisclosed radar and National Security programs.
Astronics Corporation (Up 6.4%) – Shares rose this week after the company announced its plans to acquire the outstanding shares of PECO, Inc. one week ago for $136 million.
MB Aerospace acquired Delta Industries, Inc., a provider of engineering, manufacturing, and repair services for a variety of intake, compression, combustion, and exhaust products used in ground based turbines and jet engines. The acquisition expands MB Aerospace’s technical capabilities in the fabrication and robotic welding of complex aero engine components. The terms of the deal were not disclosed.
Quantum Research International acquired J2 Technologies, Inc., a specialist in aviation and missile defense architecture, defense technology assessments, software and prototype development, and integration support for the U.S. Government and the DoD, for an undisclosed amount. The acquisition enhances Quantum’s portfolio of prime contracts in the cybersecurity and defense areas.