Industry Week in Review – May 26, 2018
Aerospace & Defense Update
On Thursday, the House of Representatives approved the $717 billion defense authorization bill for Government Fiscal Year 2019 following several days of debate. The bill focuses on restoring military readiness, including authorization for over $39 billion on military aviation upgrades, $18.5 billion to replace aging Army equipment, and $25.5 billion for equipment maintenance and replacement parts. The House also supported plans for an additional 77 F-35 fighter jets, two additional Virginia-class submarines and littoral combat ships, and upgrades for almost 3,400 Joint Light Tactical Vehicles. The White House has offered a preliminary list of objections to the House plan with respect to increases to surveillance aircraft and aircraft carriers, reorganization of the current space forces, and the shuttering of the Defense Information Systems Agency. The White House anticipates that some of these issues will be nullified by the Senate version of the legislation, which is anticipated to be released later this summer.
Citing the growing prominence of drone technology and the potential threats it can manifest, Department of Homeland Security (“DHS”) Secretary, Kirstjen Nielsen, has asked Congress for the authority to “identify, track, and mitigate drones that could pose a danger to the public and to DHS operations.” Secretary Nielsen would like to have the power to use the wide range of actions outlined in the “Preventing Emerging Threats Act of 2018” to counter these drones. Currently, the counter-drone market features over 200 commercially available products, which could potentially provide the DHS with a wide range of off-the-shelf counter-drone capabilities.
Government Technology Solutions
The Pentagon is looking to implement a new contract to run continuous bug bounty contests on a full range of its networks. The winning commercial bug bounty company will partner with the Department of Defense (“DoD”) to conduct crowdsourced vulnerability discovery and disclosure services. In recent years, the DoD has hosted individual bug bounty programs, lasting several weeks and rewarding cash prizes for hackers reporting security vulnerabilities. This new contract will transform the former short-term hacking contests into year-long efforts, strengthening the DoD’s security network though continuous monitoring. Additionally, this program will give hackers access to closed networks and internal systems that were not previously made available during the short-term hacking events.
Big Movers
Engility (up 5.8%) – Share prices were up this week after the company was awarded a $41 million Marine Corps Global Command and Control Systems task order.
Embraer (up 4.4%) – Share prices were up this week after amidst growing optimism over Embraer consummating a deal with Boeing.
Transactions
Fishtech Group has agreed to acquire Haystax Technology, a provider of advanced security analytics and risk management solutions. Terms of the deal were not disclosed.
New Mountain Partners has agreed to acquire Clairvest Group’s portfolio company, MAG DS Corp., a provider of manned aerial sensing, unmanned aerial sensing, aviation training, and aviation logistics services to federal, global, and commercial customers. Terms of the deal were not disclosed.
Parsons Corp. has agreed to acquired Polaris Alpha Holdings, LLC, a provider of innovative mission solutions for complex defense, intelligence, and security customers, as well as other U.S. federal government customers. Terms of the deal were not disclosed.
