Industry Week in Review – August 28, 2015
Aerospace & Defense Update
Oshkosh was awarded a $6.75 billion contract on Tuesday to build nearly 17,000 Humvee replacements as part of the Joint Light Tactical Vehicle (“JLTV”) program. This marks one of the largest Army contract award in recent years, and could be worth up to $30 billion. The Wisconsin based company beat out Lockheed Martin and Humvee-maker AM General to build up to 55,000 JLTVs over the next 25 years. The JLTV program is one of the Army’s highest priorities and promises soldiers greater protection from roadside bombs and mines. Lockheed and AM General have an opportunity to protest the award in the coming weeks.
Recent advances in aircraft connectivity are enabling airlines to tap into a new domain of cost-saving and efficiency-gaining opportunities. These improvements will allow airlines to communicate information at higher speeds and bandwidth, providing capabilities such as live troubleshooting, which will ideally help airlines to better schedule maintenance activities, and live telemedicine connection, which could alleviate costly medical diversions. Increased connectivity will also provide pilots and cabin crew with real-time weather forecasts, inventory control, and passenger manifests. The current progression in technology suggests that these examples are only a small portion of operational efficiencies that will become available to airlines as connections to and within the aircraft improves.
Government Technology Solutions Update
In an attempt to quickly support soldiers with necessary cyber IT tools, the U.S. Army has turned to a new acquisition strategy. Known as the IT Box, the new approach aims to supply soldiers with sensors, forensics, and other essential capabilities in a fraction of the time previously needed; cutting wait times from months or even years to just weeks. Though the IT Box was first used at the Department of Defense (“DoD”) in 2008, the Army is leveraging it as an innovative acquisition method specifically tailored to meet newly emerging cyber demands. The IT Box has four main components: (i) requirements and oversight; (ii) capabilities and measures of effectiveness; (iii) applications and software development as well as integration costs; and (iv) estimated sustainment costs. Along with similar efforts by other services including the Air Force and Navy, this strategy highlights a need for more flexible and efficient acquisition processes to stay competitive on the battlefield.
The Defense Information Systems Agency (“DISA”) recently released a best practices guide for DoD cloud mission owners, exhibiting a transition from its former role as the sole broker for the DoD commercial cloud market to its new role as advisor and regulator. The new guide, posted on the agency’s website, aggregates insights from DoD IT officials who have had success in migrating systems to commercial cloud services as an introduction for potential buyers looking to do the same. Contents of the 23 page document provide high-level guidelines on determining costs to migrate services, benefits and setbacks of cloud usage, and most importantly how to comply with DoD cybersecurity standards. In addition to benefitting individual agencies directly, the unclassified document has the added value of providing commercial cloud vendors with insights into the services and requirements buyers may be pursuing.
Big Movers
Oshkosh (Up 11.4%) – Shares were up this week in response to the $6.7 billion JLTV contract award.
TASER (Up 11.4%) – Shares were up this week after the U.S. Department of Justice released plans to spend $20 million on body cameras in a pilot program that will spend a total of $75 million over the next three years to deploy 50,000 body cameras on law enforcement agents nationwide.
Transactions
HEICO Corporation acquired Astroseal Products Manufacturing Corporation, a provider of expanded foil mesh which is integrated into composite aerospace structures for lightning strike protection in fixed and rotary wing aircraft. Terms of the deal were not disclosed.
HEICO Corporation acquired an equity stake in Midwest Microwave Solutions Inc., a producer of unique size, weight, power and cost optimized communications and electronic intercept receivers and tuners for military and intelligence applications.
Transcat Inc. acquired Anmar Metrology Inc., a provider of customized calibration and repair solutions for customers in the life science and defense market.
Libra Industries acquired Circuit Design Specialties Inc., a producer of printed circuit board assemblies.
The Carlyle Group to acquire Novetta, a provider of cybersecurity data analytics for Government agencies including the DoD and Department of Homeland Security (“DHS”). Novetta is a portfolio company of Arlington Capital Partners. Terms of the deal were not disclosed.
