Industry Week in Review – December 28, 2018
Industry Week in Review – December 28, 2018
Summary
This week, Sikorsky and Boeing unveiled a prototype for faster, more maneuverable helicopters for the U.S. Army. Also, the U.S. Navy continues to improve its capabilities, placing an emphasis on skills training and the use of large combatant ships for surface strikes. In the Government Technology Solutions sector, the Department of Homeland Security (“DHS”) announced its intentions to use various GSA vehicles instead of the Enterprise Acquisition Gateway for Leading-Edge Solutions (“EAGLE”) II contract to further build out IT functionality. Additionally, President Trump signed into law the Small Business Runway Extension Act, lengthening the period of measurement for small business status.
Aerospace & Defense Update
Sikorsky and Boeing have recently rolled out their prototype SB-1 Defiant high-speed helicopter, built for the U.S. Army’s Joint Multi Role technology demonstration. Initially slated to fly in 2017, the helicopter’s first flight is expected to be in early 2019 due to transmission issues. The Defiant is an advanced compound helicopter, which offers increased speed and greater maneuverability over traditional helicopters. It also provides improved stability while hovering and is quieter than existing types. The Army’s Joint Multi Role project is critical because it will outline the requirements for the “medium” segment of the Future Vertical Lift program, which is looking to replace the aging UH-60 Black Hawk transport helicopters and AH-64 Apache gunships. This unveiling is a key step for the Army in its search for the next-generation of rotary-wing aircraft.
For 2019, the U.S. Navy’s surface fleet plans to focus on maritime skills training, its DDG-1000 guided missile destroyer, and large surface combatant ships. Experts believe this recent focus on training will start to bear fruit in 2019. In addition, the first of the DDG-1000 class, the Zumwalt, is wrapping up its combat systems installation in San Diego and will start undergoing the integration process. The DDG-1000, the Navy’s newest surface combatant, is a result of the Navy’s pivot away from land attacks towards surface strikes. Finally, the Navy is rapidly trending towards the use of large surface combatant ships. Consequently, the Navy is aiming to purchase its cruiser and destroyer replacements in 2023 or 2024, which means the acquisition process and capabilities development documents for these ships should formally kick-off in 2019.
Government Technology Solutions
The DHS announced last week that the department will fulfill its IT needs via an array of contracts, rather than a re-competition of the EAGLE II, which will continue to be utilized by the department until its expiration in 2020. Originally, the successor of EAGLE II was Flexible Agile Support for the Homeland (“FLASH”); however, the contract was cancelled in June. The new IT strategy is called EAGLE Next Generation. Going forward, DHS will utilize various General Services Administration (“GSA”) vehicles (namely Alliant 2, Alliant 2 Small Business, 8(a) STARS II, and VETS 2), as well as National Institutes of Health (“NIT”) vehicles (CIO-SP3 and CIO-SP3 Small Business) to procure IT services up to and beyond the expiration of EAGLE II. The new approach will give the DHS greater options for IT and will give contractors with prior work on the aforementioned GSA and NIT vehicles an increased chance to work with DHS.
The Small Business Runway Extension Act of 2018 was signed into law by President Trump, expanding the period of measurement for the North American Industry Classification System (“NAICS”) Small Business status. According to the bill, businesses will qualify for Small Business based on average revenue over the last five years, rather than the current, shorter three-year period. The purpose of the amendment is to prevent advanced small or mid-sized businesses from falling into “no man’s land”: too large to qualify for Small Business status but not large enough to effectively compete on Full and Open (“F&O”) contracts. By extending the qualifying average revenue period, the Act is structured to promote economic growth, spur job creation, and primarily give mature small businesses more options in the federal marketplace.
Big Movers
Bombardier (Up 4.7%) – Share prices were up this week after Bombardier announced the sale of four Global 6000 business jets to an undisclosed customer. The transaction was valued at approximately $310 million.
Transactions
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