News & Events

Industry Week in Review – September 30, 2011

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As part of its recapitalization program, the U.S. Army, in its complete draft request for proposals (“RfP”), announced Thursday that it intends to pay no more than $180,000 to upgrade each Humvee in the program. As new Joint Light Tactical Vehicles (“JLTV”) would cost the government $366,000 apiece, Army and Marine Corps officials agree that it makes sense to upgrade a portion of the Humvee fleet. However, Col. David Bassett, Army program manager for Tactical Vehicles, stated that the U.S. does not “want to be in a position where we are spending more to upgrade a Humvee than we would to replace that vehicle with an even more capable vehicle that we built from the ground up…If it costs too much, it doesn’t make strategic sense. You’re better off just replacing it.” Despite push back from Army and Marine Corps officials and the remaining service life of the upgraded Humvee being less than half of a new JLTV, the Senate Appropriations committee has debated cancelling the JLTV program entirely, believing its missions could be transferred to other vehicles.

The Humvee program however, will have two phases; a research, development, test and evaluation (“RDT&E”) phase and a production phase. Three defense teams will move on from the RDT&E phase, from which one contractor will be chosen to begin production in 2013. According to the draft RfP executive summary, “the estimated total production quantity is 5,750 vehicles at a rate of 3-4 vehicles per day.” With the Army expecting each upgrade to cost between $160,000 and $180,000, the Humvee upgrade portion of the Army’s recapitalization plan could boost a contractor’s top line by more than $1 billion over the life of the contract.

Notes on some big movers

GenCorp, Inc. (Up 15.4 %) – Shares are up this week after the company announced third-quarter sales of $226 million, beating analysts’ original estimates of $223 million.

The KEYW Holdings Corporation (Down 28.0%) – Shares are down this week after the company announced Thursday that the systems integration contract referred to as “Aura” was awarded to a competitor. The order, likely awarded to ManTech International Corp., could be worth as much as $100 million a year.

Notes on some relevant transactions

Vitec Group plc. to acquire entire share capital of Haigh-Farr, Inc., a world leader in the design, development, and manufacture of flight-body antennae for simple and sophisticated communication applications, for up to $36 million. The acquisition will complement Vitec’s existing range of military, aerospace, and government activities where Vitec provides leading edge digital communication transmission technologies for mission-critical applications.

LinQuest acquired Mosaic, a provider of strategic consulting and technical services and solutions to the Intelligence Community (“IC”), for an undisclosed amount. The combination of Mosaic’s IC enterprise information skill sets with LinQuest’s DoD enterprise engineering and integration capabilities will create powerful cross-selling and provide access to new markets.

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