The Pentagon has officially received its top-line budget figure for fiscal 2020. Boeing’s 777-family passed the 2,000-order milestone, setting a record for any widebody model. Furthermore, the Department of Health and Human Services is starting to shift away from having its labor force performing repeatable, mundane tasks in order to enhance efficiency, cost-cutting, and safety.
Aerospace & Defense Update
Acting Deputy Secretary of Defense, David Norquist, released a statement this past week that stated the Pentagon has officially received its top-line budget figure for fiscal 2020. However, Norquist declined to go into details on what the dollar figure would be following numerous requests. The Pentagon’s budget figure has significantly fluctuated over the past three months. The department had been tracking towards a $733 billion defense top-line figure, until recently at an October Cabinet meeting when President Trump announced the figure would be closer to $700 billion. Following this, President Trump backtracked and verbally agreed to a request from former Defense Secretary James Mattis to propose a defense budget of $750 billion in December. Despite this uncertainty, Norquist indicated that the budget top-line figure will be rolled out in February, although the ongoing government shutdown may impact this plan.
Boeing is getting ready to perform critical landing gear retraction tests on its first Boeing 777-9. Progress towards completion of the first 777-9 comes on the heels of the 777-family passing the 2,000-order milestone, representing an industry record for any widebody model. This threshold was passed in December of 2018 when the company slated 17 net orders for the 777 aircraft from lessor BOC Aviation and two other unidentified customers. The first flight for the 777X is scheduled for 2019 with the first delivery lined up for 2020. Boeing has so far announced 340 orders and commitments for the 777X from various airlines including Cathay Pacific, Emirates, Etihad Airways, Qatar Airways, Lufthansa, and Singapore Airlines.
Government Technology Solutions
On Thursday, the Department of Health and Human Services’ (“HHS”) Program Support Center (“PSC”) issued a request for proposals (“RFP”) for artificial intelligence and automation solutions, products, and services. The five-year, $49 million indefinite delivery, indefinite quantity (“IDIQ”) contract will be used to procure Intelligent Automation / Artificial Intelligence (“IAAI”) solutions, which should allow employees to focus more on high-value work rather than repetitive, labor-intensive tasks. This shift away from the labor force performing repeatable, mundane tasks is expected to enhance efficiency, cost-cutting, and safety, ultimately transforming the roles of existing employees and even creating new ones altogether. Per the solicitation, these solutions are expected to “[do] everything from reducing backlog and cutting costs to performing functions; such as predicting fraudulent transactions and identifying critical suspects via facial recognition…” The HHS plans to allow other federal agencies and programs to issue task orders through this vehicle for a small fee, providing agencies outside of the HHS with access to these IAAI solutions that could “fundamentally transform how the public sector gets work done.” While this is a relatively small contract, it is one of the first of its kind and demonstrates the federal government’s commitment to adopting NextGen IT technologies to drive innovation and operating efficiencies.
Boeing (Up 7.9%) – Share prices were up this week after the government of Brazil approved its commercial aircraft joint venture with Embraer.
Maxar Technologies (Down 50.4%) – Share prices were down after reports that its WorldView-4 digital imaging satellite, “experienced a failure in its control moment gyros preventing the satellite from collecting imagery due to the loss of an axis of stability.”
Essex Industries, Inc. has acquired Momeni Engineering, LLC, a provider of precision machined OEM parts and assemblies to aerospace and medical companies. The terms of the transaction were not disclosed.
Gallant Capital Partners, LLC has acquired Aero Turbine, Inc., a provider of turbine engine and accessory overhaul, repair, and testing services to military and commercial clients. The terms of the transaction were not disclosed.
Greenbriar Equity Group, LLC has acquired STS Aviation Group, a provider of component sales and distribution, workforce management, engineering services, line maintenance, and aircraft repair and modifications to the global aviation industry. The terms of the transaction were not disclosed.
Guardian Capital Partners has acquired Tactical Medical Solutions, Inc., a provider, developer, and manufacturer of hemorrhage control and related safety products for emergency trauma care across the military, law enforcement, fire & emergency services, and civilian end markets. The terms of the transaction were not disclosed.
Hutchinson S.A. has acquired Mide Technology Corp., a provider of products such as seals and wearable sensors for the aerospace, automotive and manufacturing sectors. The terms of the transaction were not disclosed.
Ibis Tek, Inc. has acquired Standard Bent Glass Corp., a provider of custom fabricated glass products, including transparent armor for the security and defense industry. The terms of the transaction were not disclosed.
Kellstrom Defense Aerospace has acquired Williams Aerospace and Manufacturing, Inc., a provider of tooling for the manufacture of complex defense aircraft parts as well as strong capabilities in molding and machining for aerospace and defense aftermarket components. The terms of the transaction were not disclosed.
Parsons Corporation has acquired OGSystems, LLC, a provider of geospatial and security solutions for the Department of Defense and Intelligence Community. The terms of the transaction were not disclosed
Technical Services Corp. has acquired Accelerated Development & Support Corp., a provider of technically oriented services from program management to systems integration and engineering. The terms of the transaction were not disclosed.
Trive Capital Holdings, LLC has acquired California Brazing, a provider of complex, high tolerance components for space, aircraft connectivity, specialty electronic, and various application. The terms of the transaction were not disclosed.
VSE Aviation Inc. has acquired 1st Choice Aerospace, a provider of component maintenance, repair and overhaul services and products for new generation and legacy commercial aircraft families. The deal is worth an estimated $112 million.