KippsDeSanto & Co. Industry Week in Review – December 07, 2018

Summary

Elon Musk’s SpaceX successfully launched its 19^th rocket for 2018, striving to make space exploration more cost effective. CIA CIO John Edwards emphasized the importance of an efficient, data-centric workforce. The DoD and GSA announced that a request for quotes for the $8 billion cloud contract, DEOS, will be made early next year.

Aerospace & Defense Update

This week Elon Musk’s space startup, Space Exploration Technologies Corp. (“SpaceX”), successfully launched its Falcon 9 rocket, marking the company’s 19th successful launch this year, surpassing its previous record of 18 launches set in 2017.  Moreover, this launch represented a second major milestone as the vehicle carried more than 60 small satellites into space, the most ever a top U.S. booster.  Multi-satellite missions, along with recycling essential rocket hardware such as engines and other essential components, have enabled Elon Musk to make space exploration more cost effective and allows SpaceX to compete with larger industry players.  In line with SpaceX’s rapid launch tempo, the company is scheduled to send a cargo resupply capsule for NASA to the International Space Station early next week.

Government Technology Solutions 

In response to the growing number of domestic and foreign cyber threats, the Central Intelligence Agency’s (“CIA”) Chief Information Officer (“CIO”), John Edwards, emphasized the importance of developing a more data-centric workforce, while speaking at the FedScoop Public Sector Innovation Summit on Monday. Given the complex and voluminous nature of information that the CIA processes daily, the ability to “sense, collect, ingest, condition, analyze, and characterize data,” as Edwards stated, is imperative in matters of national security. In order to achieve actionable results, the CIA must balance the necessity of data-scientists, who can sift through vast quantities of data, and analysts, whose responsibility is to turn the parsed down data into insights. With these two employee bases working in tandem, Edwards remarks that, “data is the new tip of the spear” to more effectively combat adversaries and protect the U.S. Nevertheless, while the U.S. government has placed a great deal of emphasis on rapid IT modernization, Edwards’ initiative confirms the importance of a workforce with technical acumen to drive efficiency and achieve mission goals.  This is just yet another example of the federal government demonstrating a desire for increased capabilities across data analytics and data management.

The Department of Defense’s (“DoD”) $8 billion cloud-based email and messaging contract, Defense Enterpriser Office Solutions (“DEOS”), is drawing attention due to its expedited timeline. On Monday, the DoD – along with the General Services Administration (“GSA”) – announced that a request for quotes will be made in early 2019 with an award date expected in April. Continuing the DoD’s emphasis on upgrading legacy systems, DEOS will seek to enhance internal communications and, as a byproduct, further develop the commercial IT market’s relationship with federal customers. Given the prolonged and controversial procurement of the Joint Enterprise Defense Infrastructure (“JEDI”) cloud contract, however, officials are concerned a similar scenario could unfold with DEOS’ award process. To date, the final acquisition strategy has not been announced – leaving contractors guessing if DEOS will be multiple awards or a single, winner-take-all award like JEDI. Irrespective of the contracts’ acquisition strategies, these two cloud computing contracts represent the largest shift towards IT modernization in the department’s history and represent positive trends and opportunities for government contractors looking to expand NextGen IT support to federal customers.

Big Movers

General Dynamics (down 9.5%) – Share prices were down this week as uncertainty over trade set in following the G20 Summit.

VSE Corporation (up 7.0%) – Share prices were up this week after various brokerage firms upgraded the stock to a Buy.

Transactions

Cerberus Capital Management has acquired Navistar Defense, LLC., a provider of tactical wheeled vehicle original equipment serving military, law enforcement, and government agencies worldwide. Terms of the deal were not disclosed.

Huntington Ingalls Industries, Inc. has acquired G2, Inc., a provider of cybersecurity solutions and services headquartered in Annapolis Junction, Maryland. Terms of the deal were not disclosed.

Liberty Hall Capital Partners has acquired Aircraft Performance Group, Inc., a provider of proprietary flight operations software solutions into the aftermarket of the aerospace industry. Terms of the deal were not disclosed. 

Sun Capital Partners, Inc. has acquired Tier One Relocation, LLC., a provider of door-to-door household moving services for the military. Terms of the deal were not disclosed.

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