Weekly Roundup May 23 – May 27 2016: Merger & Acquisition Activity in GovCon Still Active & more

May 23 – May 27 2016

A Note From Our President & Founder Jim Garrettson


Just when we thought GovCon was on a merger-and-acquisition hiatus, two deals have garnered our attention this week with one that has definitive effects in the public sector and a second that might.

Our first M&A deal to examine comes from KBR, who has agreed to pay $570 million for engineering services contractor Wyle Laboratories in pursuit of new research-and-development work with agencies in the U.S. to complement KBR’s current overseas work for the federal government.

During a call with investors Monday, KBR CEO Stuart Bradie described the U.S. government services market as one that offers a stable growth path to his company.

“We’ll have two very different sources of revenue to de-risk the government side of our business. There’s good visibility in the government side because of lengths in procurement cycles and we can see what’s down the tunnel 12-to-24 months out, ” Bradie said.

Stable government funding over the long-term helps investors view GovCon as an opportunity for returns even in the midst of spending cuts and economic headwinds, PAE CEO John Heller told ExecutiveBiz in an article published Tuesday.

In that article, Heller updated ExecutiveBiz on the contractor’s activity since its March acquisition by LA-based Platinum Equity and offered other insights into what the investment firm sees in both PAE and the government services market.

The second M&A development that broke this week will have CSC merge into the enterprise services segment of Hewlett Packard Enterprise, one of two companies made out of the former HP.

Part of that deal involves a U.S. public sector component within HPE that would contribute nearly $2.86 billion in annual revenue to the combined company, CSC said in an investor presentation.

One potential wrinkle is CSC’s two-year non-compete agreement with the government technology services spinoff CSRA that forbids CSC from federal market activity and restricts both companies from “certain business activities in certain areas of the U.S. state and local government field.”

So what did CSC CEO Mike Lawrie tell analysts Tuesday regarding the future of HPE’s U.S. public sector business?

“Post-close all options, and I underscore the word ‘all options, ’ would be on the table. But that decision will be approached and looked at after we close the transaction.”

CSRA CEO Larry Prior offered investors this outlook on the merger CSC and HPE expect to close in March 2017.

“As a company, we’ve got a lot of time to think about this… I know our board is tremendously interested in it and we’ll consider it along with all of the other strategic opportunities that will avail themselves in the market over the next year.”


FedData Buys Intelligent Decisions’ Intelligence Businesses
Arlington, VA-based Federal Data Systems also makes a pair of appointments to leadership roles as the company enters commercial and intelligence markets.
Anthony Robbins Joins AT&T as Global Defense Public Sector Solutions VP; Kay Kapoor Comments
Robbins formerly led the federal business at Brocade and is also a veteran of companies such as Oracle and Sun Microsystems.
Parsons VP Marianne Meins Named Federal Cyber Intell & Operations Sector Manager; Biff Lyons Comments
Meins previously managed business development functions for Parsons’ defense and security division.
6 Contractors Win Spots on $460M Cybercom Mission Support IDIQ
GSA manages the five-year contract for Cyber Command and received 17 offers from prospective bidders.
Scott Miller Named FCi Federal CEO, Sharon Virts to Become Exec Chairman
Miller will continue to hold the title of president at the professional services contractor as founder Virts ends her 25-year tenure as chief executive.
ForeScout Technologies Promotes Niels Jensen to SVP of US Public Sector
Jensen takes a newly-created position at the IT services provider as it seeks to expand its public sector market presence.
VA Posts RFI on Predictive Modeling, Analytical Services for Veterans Benefits Administration
Vendors are asked for ideas on how to implement a system that can predict benefits demand and measure output capacity.
Sen. John McCain to Request $17B in Additional Defense Funds Through Amendment to 2017 NDAA
McCain said would propose the military spending boosts despite caps put in place under the two-year budget deal passed in 2015.
FedRAMP Team Aims to Cut Readiness Assessment Time for Cloud Vendors; William Hamilton, Claudio Belloli Comment
Leaders at the GSA FedRAMP office want to reduce the process from a 6-to-12 month period to one at between 3-and-6 months.
Pentagon Swears in Army Secretary Eric Fanning
Fanning received unanimous approval from the Senate Tuesday after nearly six months since his original nomination by the president.

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