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Weekly Roundup Nov 2 – Nov 6 2015: The Numbers Behind Record-Breaking M&A Year, CSC’s US Govt Spinoff Moves Forward & More

Weekly Roundup
Nov 2 – Nov 6 2015

A Note From Our President & Founder Jim Garrettson

While government agencies continue to operate at the established levels and tightly control the dollars they have on hand, the stock market is jumping in anticipation of the dollars that are predicted to flow into the GovCon sector as a result of the 2 year budget now being finalized and signed.

A new report released this week gives the numbers behind a year that GovCon and defense sector observers believes represents an unprecedented period of in the industry not seen since the 1990s.

Thomson Reuters and PwC have pegged the overall value of mergers and acquisitions in the aerospace and defense sector at $52 billion in the third quarter of this year alone to exceed figures in any full year since 2001.

A&D companies have altogether made 34 deals through three quarters with a total value of $64.3 billion that includes the $9 billion acquisition of Sikorsky by Lockheed Martin, which is set to close today.

A related trend the report authors highlighted is moves by prime contractors such as Lockheed and others to separate their IT and government services segments and focus on the large defense programs with higher margins.

As the primes move out, other players see opportunity in the services arena of GovCon and one of them has revealed the name and business reach it will operate under.

The combined entity of CSC’s U.S. public sector business and SRAInternational will hit Wall Street and the federal IT market Nov. 30 as its largest contractor by annual revenue under the name of “CSRA.”

We are also anticipating further news from Lockheed on the future of its government services business along with its peers BAE Systems Inc. and L-3 Communications that are looking at similar moves.

Executive Mosaic’s senior editor Ross Wilkers and Federal News Radio anchor Francis Rose took another look at GovCon’s M&A environment in an on-air discussion Thursday morning that also included a look strong earnings reports from contractors such as Harris Corp. and Huntington Ingalls plus others from October.

Click here for the full 10-minute segment that also includes a look at how the Air Force’s bomber contract award to Northrop Grumman sent that company’s stock on a surge upward.


Boeing-Lockheed Team Challenges Air Force Bomber Contract Award
The Government Accountability Office has 100 days to review the selection of Northrop Grumman for the Long Range Strike Bomber.
Booz Allen Buys SPARC’s Software Development Services Business; Horacio Rozanski Comments
Booz Allen cites technical portfolio and customer base growth as goals of the deal.
Carlyle Group Cuts Booz Allen Ownership Stake to 20%
Global investors Carlyle scaled back their holding to 37 percent in November 2014 and again to 29 percent in February of this year.
IAP Buys DRS’ Aviation, Tactical Comms Businesses; Doug Kitani Comments
Florida-based IAP will combine the acquired segments into its aviation and engineering solutions and national security segments.
Lockheed Awarded $5B Modification on F-35 Production Contract with Navy
The funds cover low-rate initial production of 55 fighter jets under lot nine of the program.
Orbital ATK Receives $790M Air Force Ballistic Missile Sustainment Contract
The company will perform engineering and program management services on ICBM propulsion systems for the Air Force.
Leidos Wins $662M Army Airborne Reconnaissance System Support IDIQ
ARL-E technology works to offer users tactical monitoring functions and a system built to use different types of sensors.
SAP NS2’s Mark Testoni: US Needs to Secure Critical Network Infrastructures From Cyber Attacks
Testoni, CEO of the SAP subsidiary, cites blurred lines in cyberspace as a new dimension of conflict.
KippsDeSanto’s Jon Yim: GSA Contract Vehicle Consolidations Bring ‘More Uncertainty’ in M&A Market
Yim, a director at the bank, says acquirers and acquirees in GovCon M&A deals can face reduced visibility due to GSA’s initiatives.
AT&T to Help Census Bureau Manage Mobile Survey Data; Mike Leff Comments
The telecom contractor’s civilian government leader says AT&T aims to help the agency further adopt Internet of Things platforms.
House, Senate Negotiators Agree on 2016 NDAA Revisions
President Barack Obama vetoed the previous Defense Authorization Act version on a disagreement of war funding allocations.
Robert Work: Pentagon Could Face $14B Funding Gap Under Budget Deal
The Defense Department’s number-two civilian says DoD will see the gap occur in fiscal year 2017.
Terry Halvorsen: Trust Key to DoD-Tech Industry Relationships
DoD’s chief information officer advocates for greater collaboration between the military and Silicon Valley on cybersecurity programs.

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