Industry Week in Review – April 10, 2015
Aerospace & Defense Update
Bombardier’s new Chief Executive Officer, Allain Bellemare, led the next stage in the company makeover with a refresh of the executive team. Pierre Alary, the current Senior Vice President and Chief Financial Officer, will retire while Mike Arcamone, the current head of the commercial aircraft division will depart to pursue other opportunities. Bellemare has identified Fred Cromer, the previous president of International Lease Finance Corp., to head the commercial aircraft unit. Cromer has a long history in the commercial aerospace industry having held various senior positions at a range of airlines. Bellemare has also chosen Henri Courpron, the Chairman and Founder of Plane View Partners, an aviation advisory company, and former Chief Executive Officer of Airbus, North America, to come onboard as a strategic adviser to the firm. This revamp in the executive team highlights Bellemare’s urgency to transform the ailing company and to realign with customer taste in order sell the CS3000.
Government Technology Solutions Update
A memorandum regarding the appropriate use of Lowest Priced, Technically Acceptable (“LPTA”) source selection processes was issued within the Department of Defense (“DoD”) this week in an effort to narrow the use of LPTA procurements. When used correctly, LPTA is an effective method to drive down costs; however, agencies are realizing that solutions originally procured as LPTA often must be replaced or recreated, eliminating the cost savings and creating a need for additional funds. The memorandum, circulated by Frank Kendall, the Under Secretary of Defense for Acquisition, Technology, and Logistics, defines four conditions that are all to be met for the use of LPTA: (i) contract requirements must be well defined; (ii) risk of poor contract performance is minimal; (iii) price is a driving factor in the source selection; and (iv) there is no value, need, or willingness to pay for higher performance. With these stipulations, the DoD signals a shift away from LPTA procurements for technical or professional service and solution bids.
Over the next six months the General Services Administration (“GSA”) will continue to work with professional service vendors to launch the first consolidated GSA schedule. The schedule seeks to increase efficiencies for and spending by Federal agencies, as well as simplify contracting requirements for vendors. Under the consolidated schedule, the GSA hopes to increase its share of the professional services addressable spending to 31% of the market by 2017 – more than $7 billion in contractor spending. The GSA will be consolidating 4,400 of its current schedules, which will effectively migrate approximately 440 professional services vendors. Once migrated, each vendor will receive a new 20-year contract for the new, consolidated schedule.
Big Movers
Triumph Group Inc. (Up 5.8%) – Shares were up this week after the Company announced that Chairman Richard Ill will temporarily replace the existing CEO, Jeffry Frisby while the Company searches for a new CEO.
Astronics Corporation (Up 4.8%) – Shares were up this week after the Company won a $36.4 million indefinite delivery / indefinite quantity contract to manufacture, test, and deliver the Radio Frequency Distribution and Control System and parts for its submarines.
Transactions
Wencor Group acquired PHS / MWA Aviation Services, a certified FAA / EASA repair station and provider of aircraft repair solutions. Terms of the deal were not disclosed.
Landmark Aviation to acquire Era Group Inc. Fixed Based Operation in Alaska, a provider of fixed based operation services at Ted Stevens Anchorage International Airport. Terms of the deal were not disclosed.
Charterhouse Capital Partners, LLP acquired Mirion Technologies, Inc., a provider of radiation detection, measurement, analysis, and monitoring products and services. The deal is worth an estimated $750 million.
Boeing Co. acquired 2d3 Sensing, Inc., a provider of motion imagery processing of critical intelligence, surveillance, and reconnaissance data generated from aerial platforms. Terms of the deal were not disclosed.
Lindsay Goldberg made a minority stake investment in ECS Federal, LLS, a provider of technology solutions and engineering services to the U.S. Federal Government. ECS Federal generated $300 million in revenue for FY2014.
