Industry Week in Review – April 14, 2017
Aerospace & Defense Update
On Wednesday, President Trump held a joint press conference with North Atlantic Treaty Organization (“NATO”) Secretary General Jens Stoltenberg at the White House. In his remarks, Trump stated that he no longer thinks NATO is “obsolete.” The President reconfirmed his commitment to NATO and believes it is now doing more to fight terrorism. Trump also reiterated that NATO allies must increase their financial obligations and reach the alliance’s goal of spending at least 2.0% of their gross domestic product (“GDP”) on defense by 2024. Stoltenberg backed Trump’s message on member-nation defense spending and stated that NATO has turned a corner in fair burden-sharing. NATO increased defense spending from 2015 to 2016 by ~$10.0 billion (3.8%). Stoltenberg also echoed that NATO can and should do more in the global fight against terror.
In the same press conference, Trump announced that he will send National Security Adviser H.R. McMaster into Afghanistan to determine if more U.S. forces are necessary. This statement came a day before the U.S. dropped the largest non-nuclear bomb on Afghanistan targeting tunnels and caves believed to be built by the Islamic State. This move was the Trump Administration’s first significant step towards establishing a strategy for the deepening security crisis in Afghanistan. In February, Army General John Nicholson requested a “few thousand” more troops to fight the Taliban and train the Afghan allies. Of the ~13,000 NATO troops currently in Afghanistan, ~8,400 are American soldiers. The Administration plans to work with NATO allies in establishing optimal troop levels but a timeline on when this review will be completed has not yet been established.
Government Technology Solutions Update
On Wednesday, the Department of Veterans Affairs (“VA”) issued a request for information (“RFI”) to potential vendors regarding a commercial, cloud-based version of the Vista electronic health record (“EHR”) system, with the goal of consolidating Vista down to just five physical data centers. This would permit the VA to continue its use of Vista while outsourcing its maintenance to a commercial entity. The RFI comes at a crossroads of the VA’s EHR modernization strategy. The agency has until July 1st to decide whether it will continue to use, develop, and maintain the Vista system in-house or otherwise seek the procurement of a fully commercial EHR solution. Some have argued that a cloud-based approach may be an acceptable middle ground, as it provides for the continued use of the familiar legacy Vista system while allowing an outside party to handle the logistics, complexity, and cost of maintenance and upgrades. The VA pursued additional modernization initiatives this week when it launched a web-based access and quality tool designed to increase transparency, allowing veterans to view average wait times for local facilities and leave feedback regarding the quality of their visits. Both the Vista cloud migration and web portal efforts are being made as the VA attempts to overhaul its practices by driving down costs, increasing efficiency, and providing higher-quality care for veterans nationwide.
The Army made awards on its $248.7 million Army Cloud Computing Enterprise Transformation (“ACCENT”) contract late last week. The contract has 50 prime awardees, and will be used mainly to assist the Army in migrating its systems to a commercial cloud environment. While the ceiling value of this ACCENT is relatively low given the number of awards, the Army noted that it will be, in part, a pilot program for future initiatives. The contract is designed for ease of use, flexibility, and expediency, with a turnaround of one to two months envisioned from solicitation to award on each task order. ACCENT is designed to procure several modernization solutions and services, such as cloud transition support, technical engineering, security requirements analysis, and data migration planning. The Army is attempting to cut down on the costs associated with what it sees as an over-expanded IT infrastructure through data center consolidation, and believes that ACCENT will be a key component in laying the groundwork for a successful transition.
Big Movers
Orbital ATK (down 3.2%) – Share prices were down this week after a small ammunition plant run by the Company experienced a fatal explosion.
Airbus (down 1.5%) – Share prices were down this week after Delta Air Lines announced it is reviewing its $14.0 billion purchase from Airbus.
Transactions
Buchanan & Edwards, Inc. has acquired The Reports and Requirements Company, LLC, a provider of data governance, data curation, cyber intelligence, collection management, and intelligence training to Intelligence Community (“IC”) and national security customers. Terms of the deal were not disclosed.
Oasis Systems, LLC, has acquired Human Solutions, Inc., a provider of full lifecycle consulting in systems engineering, enterprise architecture, human factors, and user interface design for Federal and commercial customers. Terms of the deal were not disclosed.
Wencor Group has acquired Accessory Technologies Corp., a provider of repairs for pneumatic valves, electro-mechanical actuators, and electrical components within aerospace industry. Terms of the deal were not disclosed.
