Industry Week in Review – January 13, 2017
Aerospace & Defense Update
Earlier this week, the Senate began confirmation hearings to vet President-elect Donald Trump’s Cabinet nominees. General James Mattis, the Secretary of Defense nominee, received broad bipartisan support after taking a strong stance against Russia and vowing his support for the Iran nuclear agreement. General John F. Kelly, Trump’s nominee for Secretary of Homeland Security, also received widespread support after insisting that his top priority would be to secure the southern border. ExxonMobil CEO Rex Tillerson, the Secretary of State nominee, received some opposition from both parties after refusing to call Vladamir Putin a “war criminal,” but gained support after insisting that it is imperative for the U.S. to push back against Putin’s attempts to increase Russian influence around the world.
During the opening remarks of President-elect Donald Trump’s first official press conference since the election, he restated his criticism for the high costs of the F-35 joint strike fighter program. Trump was responding to Lockheed Martin’s projected seven-month delay of the F-35 and a $500 million cost overrun. The President-elect indicated he aims to make the process more competitive in an effort to reduce costs and increase efficiency. In a Senate confirmation hearing, Trump’s Secretary of Defense nominee, General James Mattis, noted that Trump is supportive of the program, but wants more accountability in defense spending programs. Mattis believes that the F-35 program is critical to the defense of the U.S. and its allies.
Government Technology Solutions Update
On Wednesday, the Government Accountability Office (“GAO”) ruled against the final remaining bid protests on the Alliant 2 contract. These final protests were based around a variety issues, mostly regarding how bid pricing would be analyzed and whether or not the number of awards on the contract was enough to ensure adequate competition. The GAO’s ruling denied these arguments, stating that there were no regulations against their decision to pursue the highest technically rated bids as long as the price was reasonable; the GAO also claimed that the number of awards on the $50 billion Alliant 2 contract would be adequate to ensure competition and that they had specifically put safeguards in place to promote and ensure a proper level of competition. With this decision, the GAO is now free to begin making awards on the contract and up to 60 winners are expected to be announced within the next few months.
John Kelly, a former U.S. Marine general and Donald Trump’s nominee for Secretary of Homeland Security, had his Senate confirmation hearing on Tuesday. During that hearing, Mr. Kelly answered several questions on a range of topics, including his thoughts on the current state of the nation’s cybersecurity infrastructure. Kelly claimed that he would work in closer proximity with commercial companies in order to field ideas as to how the Department of Homeland Security (“DHS”) could address and develop solutions for pressing cyber threats. He further went on to say that he planned on working to thoroughly review the current status of the country’s cyber infrastructure, especially with respect to defensive capabilities. His goal would be to find, identify, and correct any shortcomings and vulnerabilities through technological innovation and advancement in both the public and private sectors.
Big Movers
Bombardier (up 13.2%) – Shares were up this week after Germany’s economic minster announced that Bombardier will not close its plants in the country.
L3 Technologies (down 3.4%) – Shares were down this week after the Company agreed to pay $1.6 million to settle accusations of improper accounting techniques.
Transactions
Atec, Inc. has acquired Vital Link, Inc., a provider of military and commercial jet engine test cells, hush houses, and associated facilities and systems. Terms of the deal were not disclosed.
LLR Partners Inc. has acquired BluVector, Inc., a subsidiary of Northrop Grumman and a provider of cyber threat detection and hunting solutions for commercial and government clients. Terms of the deal were not disclosed.
Odyssey Investment Partners, LLC has acquired Avtron Aerospace, a provider of electronic and hydraulic aircraft component test solutions for the global commercial and military aerospace markets. Terms of the deal were not disclosed.
Research Triangle Institute has acquired Engility Holdings Inc.’s International Resources Group Ltd., a provider of critical solutions to the US Agency for International Development (“USAID”) in developing nations around the world. The deal is worth $24 million.
The Safariland Group has acquired Aegis Engineering Limited, a provider of personal protective apparel and equipment, including body armor, ballistic helmets, shields, and rifle plates. Terms of the deal were not disclosed.
The Safariland Group has acquired LBA International Limited, a provider of protective equipment, including hard armor plates and ballistic helmets to law enforcement officers. Terms of the deal were not disclosed.
