Aerospace & Defense Update
Boeing has rejected Aerojet Rocketdyne’s $2 billion bid for United Launch Alliance (“ULA”), a rocket launch joint venture with Lockheed Martin. Chris Chadwick, President and CEO of Boeing Defense, Space & Security, said no serious consideration was given to the unsolicited bid, as he expects ULA to be an instrumental part of their portfolio moving forward. Boeing’s commitment to ULA is evident through their recent agreement with Blue Origin, a company owned by Amazon CEO Jeff Bezos, to design the engine for ULA’s new rocket. Some analysts believe that Aerojet’s offer was a strategic move to shut out rival Blue Origin, whose engine is favored by ULA. Lockheed Martin has since declined to comment, but sources say that its refusal to comment indicates an agreement with Boeing to reject the offer. Despite Boeing’s expressed commitment to ULA in the long term, Aerojet is still interested in ULA and is engaged in talks about providing a more formal offer.
Airbus Group opened its first jetliner factory in the United States on Monday, as the company faces the challenge of increasing its production rates. The new plant, located in Alabama, will help Airbus meet its 2017 expected production of 50 narrow-body jets a month, an increase from the current 42. With a backlog of more than 5,400 planes, Airbus is considering raising the monthly production even further, to 60 potential jets. Beyond just meeting production targets, Airbus hopes the new plant will help it establish a stronger customer base in the United States, with an end goal of capturing 50% of the U.S. market (current order books result in a 40% market share). With an expected delivery of its first U.S. made A321 aircraft to JetBlue in 2Q16, Airbus is poised to become a more prominent player in the United States market moving forward.
Government Technology Solutions Update
The General Services Administration (“GSA”) has signaled that it is preparing to release the Request for Proposal (“RFP”) for its Enterprise Infrastructure Solutions (“EIS”) contract valued at $50 billion over 15 years. While the RFP was originally scheduled to drop in July, over 1,600 responses to the draft RFP prompted the agency to delay the release by approximately two months. As of September 10th, the GSA posted a pre-solicitation notice on FedBizOps. EIS covers communications technologies, such as traditional telecom services, voice-over-IP, virtual private networks and emerging communications technologies. The agency’s aim is for the contract to serve at least 30% of the $6 billion annual Federal communications market. Though EIS is a replacement for Networx, it is expected to be used by additional agencies as it offers more flexible and customized solutions. GSA officials also anticipate more awardees on the contract than the five previously under Networx.
The Department of Veterans Affairs (“VA”) has released a solicitation seeking companies with agile development expertise to help build the VA’s website, VA.gov. The website is set to debut on November 11, and strives to become the “go-to” site for veterans and consolidates self-service and information into one portal. The RFP details task orders that go beyond website design, and includes maintenance, user authentication, and hosting services, exhibiting adoption of agile throughout various capabilities. The VA has become the latest of many agencies turning to agile for quicker deliverables at lower costs.
Zodiac Aerospace (Down 17.5%) – Shares were down this week following an announcement of extended production difficulties in the aircraft interiors business.
Aerojet Rocketdyne Holdings Inc. (Down 8.0%) – Shares were down this week in response to Boeing rejecting Aerojet’s offer for United Launch Alliance, a rocket launch joint venture between Boeing and Lockheed Martin.
ADS, Inc. to acquire Theodor Wille Intertrade, a provider of supply chain management services for defense, government, and energy sectors. Terms of the deal were not disclosed.
Communications & Power Industries acquires ASC Signal Corp., a designer and builder of satellite communications, radar, and high-frequency antennas and controllers. The deal is worth an estimated $50 million.
Versar to acquire Johnson Controls’ Federal Security Systems Integration Business, a provider of design, installation, and support services for physical and network security systems. The agreed acquisition price was $20 million, satisfied with cash and contingent consideration.
Carlyle-Chertoff Alliance acquires majority share of Coalfire Systems, a provider of cyber risk management and compliance services. Terms of the deal were not disclosed.