Aerospace & Defense Update
Boeing had a successful week, securing two major contracts and bidding on a third. The Company announced earlier this week it won a $1.9 billion award to produce 44 F/A-18 Super Hornet and EA-18G Growler aircraft for the U.S. Navy and the Australian government. The contract is part of a previously announced appropriation, and not an attempt to secure additional funds for new aircraft. In addition, Boeing also won a $2.8 billion contract from NASA to develop the core stage of a Space Launch System rocket, destined to send humans beyond the moon’s orbit for the first time. Lastly, Boeing was one of three companies bidding on a South Korean program for refueling tanker aircraft. Boeing’s 767-based KC-46 aircraft will need to beat competitors Airbus and Israel Aerospace Industries Ltd. to win the $1.38 billion award. Boeing and Airbus are currently in a global competition to fill demand for refueling planes; Airbus serves Australia, Saudi Arabia, U.A.E., the U.K., and Singapore while Boeing has a hold over the U.S. market. In 2011, the U.S. Air Force awarded Boeing a $52 billion contract to develop and buy refueling planes to replace its aging fleet. Ultimately, the South Korean contract will serve as an important part in providing a boost in the successful awardee’s defense business.
Government Technology Solutions Update
The General Service Administration and the Department of Homeland Security are finalizing Task Order 2 under Phase 2 of the Continuous Diagnostics and Mitigation (“CDM”) program, which is meant to streamline the steps toward enhanced cybersecurity protections for agency networks and computers. The future phases will be aimed at enhancing CDM capabilities and expanding the program’s initial focus of increasing interconnectivity on the cyber dashboard. The six upcoming contract awards, under Task Order 2, are set to be awarded over the next nine months and are expected to “[deploy] the initial baseline capability to all of [the dot-gov] agencies to raise the cyber awareness and critical protection of [these] agencies”.
In a step towards the Obama Administration’s goal of expanding the use of cross-agency shared services, providers will implement improvement plans later this month to increase shared service capabilities and provide these services to more agencies. The Office of Management and Budget and the Department of the Treasury are also expected to establish government-wide guidelines for shared services governance by the end of August. Over the next few months, the Obama Administration plans to monitor the number of agencies migrating to these new shared services and review customer satisfaction and service adoption metrics to ensure progress is being made. Ultimately, the end goal of the initiative is to reduce duplicative investments and improve government-wide transparency and reporting over the long-run.
API Technologies Corporation (Up 7.8%) – Shares were up this week after the Company announced it received a new order to supply high-power amplifier systems as part of a Department of Defense maritime requirement. No terms were disclosed in the award, but it is expected to be a multi-million dollar program with first production delivery set for May 2015.
Nexter Systems to merge with Krauss-Maffei Wegmann. Nexter Systems provides land defense systems for the French army and other forces internationally. Krauss-Maffei Wegmann provides wheeled and tracked vehicles for civil and military simulation, and day and night missions. Terms of the deal were not disclosed.
H-D Advanced Manufacturing Co. acquired Sungear Inc., a provider of complex, high quality, precision gear components and assemblies for the aerospace industry. Terms of the deal were not disclosed.
Saab AB to acquire ThyssenKrupp Marine Systems AB, a designer and builder of submarines and naval surface ships, offering independent propulsion systems, rescue systems, and mine clearance systems. The deal is worth an estimated $51.5 million.
Defense Conseil International S.A acquired Vigie Aviation, a provider of aerial video, airborne maritime surveillance relating to search and rescue, and coastal monitoring. Terms of the deal were not disclosed.
Versar, Inc. acquired J.M. Waller Associates, Inc., a provider of environmental, facilities, engineering, technical, and logistics consulting and management services. The deal is worth an estimated $13 million.
Lockheed Martin to acquire Zeta Associates, Inc., a provider of software-based communications signal collection and processing systems. Terms of the deal were not disclosed.