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Weekly Roundup Nov 9 – Nov 13 2015: BAE’s Decision Gives Some US Govt Services M&A Clarity & more

Weekly Roundup
Nov 9 – Nov 13 2015

A Note From Our President & Founder Jim Garrettson

What will the U.S. government services market look like when we enter 2016 and who will be in it? We received some clarity to that question early Thursday morning when Britain’s BAE Systems said it would hold onto its U.S. government manpower and services business and not push forward on efforts to sell the unit.

Market conditions, company valuations, federal budget movement and recent contract wins are the shifting sands that make handicapping the GovCon marketplace and this potential sale a murky equity equation and best left to those with an appetite for risk while eliminating the faint of heart.

BAE launched a review of the business in April after the world’s third-largest defense contractor reported “external interest and a number of enquiries” for the unit that posted $800 million in revenue during its last fiscal year.

GovCon observers are now shifting their attention toward Lockheed Martin and L-3 Communications to find out what those companies will do with their respective government services segments.

Both companies have indicated to Wall Street they would like to reach a decision by the end of this year on whether to sell their respective units as a whole, offload in pieces or spin them off entirely into publicly-traded businesses.

One factor that could decide both outcomes is the Federal Reserve’s December meeting as investors are betting interest rates will rise from the near-zero levels Lockheed cited in its rationale behind the $9 billion Sikorsky acquisition.

Lockheed’s services unit posted nearly $6 billion in 2014 revenue and L-3’s services business recorded $1.1 billion in sales last year.


Maximus FY 2015, 4Q Earnings Exceed Street Forecast
The Reston, Va.-headquartered government services contractor also updated its earnings and revenue outlook for fiscal year 2016.
AECOM FY 2015 Earnings Top Wall Street Forecast
Los Angeles-based engineering services provider AECOM also exceeded the consensus Wall Street forecast for fourth quarter earnings.
CGI FY 2015 Earnings Top Wall Street Estimates, 4Q Number Beats Forecast
The global technology services contractor also reported a 4-percent increase in revenue from fiscal year 2014.
CEO Barbara Humpton on Her Agenda for Siemens’ Federal Arm, Smart Grids in Govt
ExecutiveBiz’s two-part interview with Humpton also includes her outlook on the federal healthcare market and energy programs at agencies.
Lockheed Appoints Dan Schultz President of New Sikorsky Unit
Schultz will lead the largest piece of Lockheed’s mission systems and training area as the acquisition of Sikorsky closed.
OMB Vet David Haun Joins Grant Thornton’s Global Public Sector Practice
Haun holds 35 years experience in federal service and will hold a director role at the audit and professional services firm.
Wood Parker Named to Serco’s US Arm Board
Parker led TASC as CEO through its 2009 separation from Northrop Grumman and retired in June 2011.
Chris Smith: DHS Taps AT&T for ‘Einstein 3’ Federal Network Security Program Support
DHS uses the Einstein tool to defend civilian agency computer networks against potential cyber threats.
Rocky Thurston on AT&T’s Mobility and ‘Internet of Things’ Focus for Agencies, Cloud Trends
AT&T’s federal client EVP also describes how agencies want to create new tools in cloud computing environments in Q&A with ExecutiveBiz.
Orbital ATK Helps Form New Subsidiary in Saudi Arabia; Mike Kahn Comments
This marks Orbital ATK’s second Middle East operation announced this week with the other in the United Arab Emirates.
Obama to Nominate Beth Cobert as Full-Time OPM Director
Cobert has led the federal government’s human resources agency on an acting basis since July.
Congress OKs Revised Fiscal 2016 Defense Bill
House and Senate negotiators took out $5 billion from this new version to fall within limits set by the recent two-year budget agreement.
Mac Thornberry: 2016 NDAA Would Be Step Toward Defense Acquisition Reform
The House Armed Services chairman says lawmakers made progress and took first steps on reform efforts.
GSA: Acquisition Gateway Now Has 17 Category Hallways
Contracting professionals at federal agencies use the hallways to manage program costs and requirements.

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