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Weekly Roundup Nov 30 – Dec 4 2015: Lockheed Presses Pause on IT Biz Separation & More

Weekly Roundup
Nov 30 – Dec 4 2015

A Note From Our President & Founder Jim Garrettson

The world’s largest aerospace and defense contractor’s message to investors and other GovCon industry observers this week on the future of its government services business can be boiled down to this: wait ‘til next year.

Bruce Tanner, chief financial officer at Lockheed Martin, told a group of industry analysts the company has pushed the target date of a sale or spin-out of the services segments out to March 2016 from its original year-end intention in order to further examine external interest.

Tanner’s announcement to the Credit Suisse Industrials Conference in Florida fills the second of three pieces in the puzzle of how large prime contractors would contribute to the GovCon services segment’s consolidation narrative for 2015.

BAE Systems officially took its U.S. government services segment off the auction block two weeks ago and L-3 Communications is looking to make a decision on its own services business by this year’s end.

For GovCon watchers, Tanner’s comments tell the story of the GovCon services sector’s shifting landscape and why large primes like Lockheed may no longer want to stay in.

“This has become a marketplace where past performance does not have much precedence on future awards as it once did. It’s truly a cost shootout and what we saw was more entrants into this businesses as single-model businesses.”

Other industry players see an opportunity to stay in or even double down and we saw that come into play from Engility over the past two years with its purchase of Dynamics Research Corp. and the blockbuster combination with its Chantilly neighbor TASC.

Our website ExecutiveBiz recently caught up with Engility CEO Tony Smeraglinolo and COO John Hynes for insight into how industry is thinking about services sector consolidation, plus their outlook for Engility next year and beyond after the TASC deal.

Please click here to read more of our conversation with Engility’s top two executives.

Frank Kendall: DoD On Track for FY 2017 Budget Release, R&D Concerns Hold
The Pentagon’s top acquisition official updated the Potomac Officers Club this week on the military’s research-and-development environment.
$607B Defense Policy Bill Gets Obama’s Signature
President Obama signed this new version of the National Defense Authorization Act one month after a veto of a prior NDAA sent to the White House.
CSRA Starts Public Trading on NYSE, Rings Opening Bell
The combination of CSC’s U.S. government business and SRA International hit Wall Street Monday and joins our GovCon Index of 30 publicly-traded government contracting companies.
SAIC 3Q Earnings Top, Revenue Meets Wall Street Forecasts
Acquired business Scitor contributed nearly $148 million of SAIC’s total $1.13 billion in revenue for the third quarter ended Oct. 31.
David Dacquino Joins Serco’s US Arm as Defense Services SVP
Dacquino previously led air logistics contractor SkyLink Aviation as CEO for two years and held the chief executive role at VT Group from 2009 to 2013.
ManTech Awarded $407M Air Force Security Services Contract; Bill Varner Comments
The contract contains a one-year base period and nine option years.
William Perry: DoD Should Offer Industry Guidance Amid Consolidation Wave
The former defense secretary and host of the famous “Last Supper” dinner in 1993 expresses concern over impact of consolidation on competition.
AT&T to Connect Agencies to AWS GovCloud US; Kay Kapoor Comments
The telecommunications company will offer its NetBond tool to agencies that want connections to Amazon’s cloud services.
Booz Allen’s Angie Messer: Companies Should Exercise Cyber Response Plans Through ‘Wargames’
Messer says CEOs and COOs should lead the way in those plans as they touch on business operations as well.
Former NGA Head Letitia Long to Chair INSA Board; John Negroponte Comments
The company has acted as a third-party assessment organization for the governmentwide cloud computing initiative for two years.
Mike McCord: FY 2017 DoD Budget Would Slow Agency’s Modernization Efforts
The Pentagon’s CFO also says he does not anticipate changes to the current force size under the two-year budget signed in November.
Randall Coleman Takes Executive Assistant Director Role at FBI’s Cyber Crime Branch
Coleman is an 18-year bureau veteran and will oversee its cyber crime investigations around the world in his new role.

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