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Despite Concerns About Lockheed’s Future Earnings Company Wins JIEDDO Contract

by: Matthew Potter
February 8, 2012

Category: Business Line, Companies, Contract Awards, Department of Defense, development program, Events, Federal Budget Process, IT, Lockheed Martin, logistics, Restructuring, Services | RSS 2.0

On the same day that the Standard & Poor’s (S&P) lowered its outlook on U.S. defense contractor Lockheed Martin (LMT) to negative the company also announced a large contract to support the U.S. Defense Department’s anti-Improvised Explosive Device (IED) efforts.

The company was awarded one of five contracts to provide Operations Support to the Joint Improvised Explosive Device Defeat Organization (JIEDDO). The contract is an Indefinite Delivery / Indefinite Quantity (ID/IQ)one that could have a value of up to $900 million depending how the tasks area awarded. The initial contract is for two years with three option years.

The JIEDDO was established by DoD to focus efforts on defeating the mine and IED threat in Iraq and Afghanistan which became the primary method of attack and caused a great deal of casualties. The JIEDDO has focused on technical means to detect and disable IED’s including advanced detection and jamming.

The contract with Lockheed is focused on the operational part of JIEDDO mission with operations, analysis, combat and IT support for JIEDDO’s analytical team.

There has been concern expressed by many in the financial community that the stocks of the large defense contractors will suffer with the proposed reduction in U.S. spending. This will have a negative effect on their revenue and earnings. Of course the cuts may not happen or be as large as discussed. Also major acquisition programs like the F-35 JSF or ship construction will most likely see reductions in quantity rather then outright cancellation. This should cushion the blow to defense contractors.

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