$15 billion and $1 trillion are two numbers that loom over the government contracting industry as we near the end of 2015 and look forward to what the sector will bring us in 2016.
The first $15 billion number is a figure tabulated by the Wall Street Journal to describe the “record” volume of mergers-and-acquisitions in the defense and government contracting sector announced in 2015 with a large portion concentrated in both the mid-tier technology and pure-play services arenas.
We started the year of M&A announcements in February with radio maker Harris Corp.’s nearly $5 billion deal to buy competitor Exelis and ended 2015 with CACI International’s deal to acquire L-3 Communications’ government services segment for $550 million.
GovCon also welcomed the new CSRA to the fold after CSC’s U.S. government business and SRA International combined, SAIC added a new intelligence market channel with its $790 million pickup of Scitor and many other contractors below the top tier added to the sector’s consolidation narrative this year.
On the flip side, some large contractors pumped the brakes on potential sales as BAE Systems held onto its U.S. services business after external interest and Boeing and Lockheed Martin turned down an offer from Aerojet Rocketdyne to purchase United Launch Alliance, the 50-50 joint venture of Boeing and Lockheed.
As 2015 turns into 2016, we will shift our attention to Lockheed Martin at the start of the new year to see whether the world’s largest defense and government contractor will sell its services segment, spin it off to shareholders or offer parts of the business for sale in separate deals.
We also received news this week that congressional leaders struck a tentative deal in the late hours of Tuesday night on a new $1 trillion-plus spending bill to fund the federal government through to September 2016 and give agencies and contractors at least one year of stability.
Details of the 2, 009-page “omnibus” legislation have trickled out since lawmakers unveiled its full text to give leaders in both the public and private sectors many details to consider for their agency or business.
The House was scheduled to vote on the omnibus Thursday with the Senate set to take its turn either Thursday or Friday.
THE YEAR’S TOP M&A DEVELOPMENTS