Weekly Roundup
July 20 – July 24 2015

The world’s largest aerospace and defense contractor kicked off this week with a twin bill of announcements on a future separation of its IT businesses and a new large acquisition for GovCon observers to examine.

Lockheed Martin said Monday it will undertake a strategic review at whether to sell or spin off parts of its information systems and global solutions business that work predominantly in the commercial cybersecurity, government healthcare IT and other civilian markets.
The company will also examine the technical services portion of its missiles and fire control segment as part of that review, while business primarily for defense and intelligence agencies will stay at Lockheed and be folded into other company segments outside of IS&GS.
In a Monday morning call with investors, CEO Marillyn Hewson said the separation of the IT businesses into stand-alone entities could require more than one transaction.
“There are a number of possible scenarios. That’s why we want to go through this process between now and the end of the year to review what are the best strategic options for these elements of the business,” the Wash100 inductee said.
News of Lockheed’s plans for its IT business mirrors other moves some of GovCon’s largest players have made or are making to spin off services work and reshape their portfolios.
Exelis completed the separation of its mission services arm into the company now known as Vectrus in September 2014, nearly eight months before Harris closed its close-to $5 billion purchase of Exelis.
CSC is also in the process of dividing into a U.S. public sector-oriented company and another that will focus on commercial and international government markets.
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Lockheed also announced it reached a $9 billion deal with United Technologies Corp. to buy the helicopter manufacturer Sikorsky Aircraft in a deal anticipated by many observers since UTC unveiled in June its plans to sell that business.
Sikorsky will become a part of Lockheed’s mission systems and training business segment upon the deal’s closure, which Lockheed expects to occur in either the fourth quarter of its 2015 fiscal year or first quarter for fiscal 2016.
Hewson told investors in that Monday morning call she sees Sikorsky, which generated $8 billion in fiscal 2014 revenue, as a “natural fit” to Lockheed’s core business of platforms and systems integration work in the defense market.
“With approximately 50% of their annual revenue derived from international customers, (Sikorsky) will aid us in moving forward on our goal to expand international revenues,” she said.
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The Potomac Officers Club is excited to host Defense Department Chief Information Officer Terry Halvorsen Aug. 6 for the second part of the “Innovation in Defense & Intelligence” events, a portion of POC’s larger “CIO Speaker Series” for the summer and early fall.
Halvorsen will continue the technology and spending environment conversation from part one held earlier in July that was led by Doug Wolfe, the CIA’s CIO and a panel of leaders from the GovCon and intelligence communities.
Other federal technology and procurement leaders scheduled to speak during the series include Transportation Department CIO Richard McKinney on Aug. 20, Army acquisition chief Heidi Shyu on Sept. 2 and the General Services Administration’s Chris Hamm on Sept. 24.
Additionally, we are excited to announce that Navy Adm. Michael Rogers, head of the National Security Agency and Cyber Command, has been lined up to address the POCOct. 15 for the 2015 Cybersecurity Summit.
Click here to sign up for these events and view POC’s full calendar.

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