KippsDeSanto & Co. Industry Week in Review – February 22, 2019
Aerospace & Defense Update
On Tuesday, United Launch Alliance (“ULA”) and its rival, SpaceX, split six launches awarded by the Air Force that amounted to approximately $750 million. The contracts were awarded by the Air Force’s Space and Missile Systems Center as part of the Evolved Expendable Launch Vehicle program. ULA, a joint venture between Boeing and Lockheed Martin, won a $442 million award for three launches, while Elon Musk’s SpaceX won a $297 million contract for the other three launches. Each company will be responsible for the entire launch ecosystem that includes everything from launch vehicle production to mission launch operations and spaceflight worthiness. The award continues a trend of the Air Force awarding launch contracts that balance rewarding low-price bids while also maintaining competition.
Lockheed Martin has unveiled a version of the F-16, named the F-21, specifically configured for the Indian Air Force (“IAF”) that would be built jointly with Tata Advanced Systems in India. The F-21 name is a trademark, not an official U.S. designation, and stands for “Fighter for the 21st century”. The India-specific F-21 incorporates technologies derived from those in its F-22 and F-35 fifth-generation fighters. However, the new designation highlights the commitment to delivering an advanced, scalable fighter aircraft to the IAF that also provides unrivaled industrial opportunities and accelerates closer India-U.S. cooperation on technologies. The new F-21 is competing for the future IAF order with the Boeing Super Hornet, Dassault Rafale, Eurofighter Typhoon, Saab JAS Gripen, and the United Aircraft MiG-35.
Government Technology Solutions
This week, Microsoft announced it has been cleared for use within the Department of Defense (“DoD”) — allowing users to securely utilize Outlook and other mobile applications for classified data while remaining compliant with the DoD’s Cloud Computing Security requirements. Microsoft plans to advance its cleared government services work, offering new services capable of handling Impact Level 6 (“IL-6”) workloads in the near future.
Oracle’s protest of the $10 billion Joint Enterprise Defense Infrastructure (“JEDI”) contract has been paused so that the U.S. Court of Federal Claims can investigate potential conflicts of interest. The temporary hold is due to “new information not previously provided to DoD being disclosed, according to Pentagon spokesperson Elissa Smith. Claims have been made that two DoD officials—Deap Ubhi and Anthony DeMartino — involved in the procurement of JEDI, may have had conflicts of interest due to their prior work with Amazon Web Services (“AWS”). The pause is expected to further delay the award of the highly controversial cloud contract
Bombardier (Up 12.4%) – Share prices continued to surge this week following an announcement that the Company would invest $22 million CAD over a three-year horizon in two aerospace research projects: Aero21 and the SAGE project. These projects should have a beneficial impact on the greater aerospace community by bringing industry, government, and research partners together.
BAE Systems (Down 9.2%) – Share prices were down this week following Germany’s announcement of an arms ban on exports to Saudi Arabia. Germany assists in the production of the Eurofighter Typhoon, and its embargo could threaten the future of BAE’s pending £10bn deal to sell 48 new jets to Saudi Arabia.
Capgemini SE has completed its acquisition of the commercial cyber-security arm of Leidos Holdings, Inc., which supports the security architecture demands of Fortune 500 companies, including integrated offerings for security combined with managed security services. Terms of the transaction were not disclosed.
FLIR Systems, Inc. has agreed to acquired Endeavor Robotics Holdings, Inc., a provider of battle-tested, tactical unmanned ground vehicles (“UGVs”) for the global military, public safety, and critical infrastructure markets. The deal is worth an estimated $385 million.
Rafael Advanced Defense Systems Ltd. And Avichai Stolero has acquired Aeronautics Ltd.,a provider of the manufacturing of drones for military uses. Terms of the transaction were not disclosed.
Safran S.A. has acquired the ElectroMechanical Systems Business from Collins Aerospace, a provider of pilot controls and electrical actuators for aircrafts. Terms of the transaction were not disclosed.