U.S. National Guard Bureau Awards SAIC Construction Management Contract

The U.S. National Guard Bureau (NGB) coordinates and manages resources for the fifty states and territories National Guard forces. This includes the Army and Air Force Guard units. The states provide a great deal of funding for operations but the Federal Department of Defense helps buy equipment and training for the forces. The NGB helps manage this equipment as well as numerous facilities across the United States.

SAIC was awarded a contract to provide construction support for the NGB. The two year base contract could last five years and be worth up to $95 million. This contract is a renewal of an earlier one the company had.

SAIC’s Benham subsidiary primary job under the contract is to manage architectural design and engineering services for structures, roads and airfields. The structures involved include hangers, maintenance, munitions and supply shops as well as infrastructure on the bases such as fire and police stations, mess halls and medical buildings.

Reflecting Change In Focus SAIC Moving Headquarters To Northern Virginia

One of the top ten defense contractors, SAIC, is moving its corporate headquarters from San Diego, CA to outside Washington, DC to Fairfax, VA. The company obviously has a large presence outside Washington, DC where many of its contracts are executed. The move to Fairfax, VA is not completely unexpected and the company is using the excuse of the better business climate in that state to support the move.

The company will still stay in California as it has many customers there not least the Navy’s SPAWAR in San Diego. The cost to California will be several hundred of the company’s highest paid employees who will now be moving to Virginia and spending their earnings and paying taxes there. The cost of living even in Northern Virginia will be much less for their employees just in housing and income taxes alone.

The move also comes at a time when the Washington, DC area is going to experience solid growth in the Federal Government work force due to some of the initiatives of the Obama Administration. Having their leadership in the DC area will facilitate business development and cultivating relationships with politicians and bureaucrats alike.

Orbital Earnings Take A Hit

Due to some restructuring of its work due to the Obama Administration’s efforts to reorient defense spending Orbital Sciences Corporation reported a downturn in revenue and operating income in its most recent quarterly results. The company saw a missile defense contract ended and some delays in satellite work leading it to reduce its estimates for the full year.

Of the major defense companies reporting so far results have been mixed. Some have seen better quarters then others. The effects of the major changes planned by Obama and Secretary of Defense Gates may take some months to have effect. The large programs they have ended will still be paying termination costs to the companies as they figure out what fees are needed and what work will be paid for. There are also chances that new contracts will be awarded in the next year or so.

Several programs will be continued in another form it may take two or three years for the next iteration to start. The Army’s Future Combat System (FCS) contract with Boeing and SAIC ended but the technology and work has been inserted into a new program. The contracts for the new program have not been fully awarded, so Boeing and SAIC may end of with revenue from that effort. In the end despite the cancellation the companies may not end up losing much revenue.

FCS Cancellation Fallout

The cancellation of the current Future Combat Systems (FCS) development contract was one of the cornerstones of the Obama Administrations 2010 defense budget. The program of new vehicles, unmanned aerial and ground systems, and the data links connecting them was estimated at over $160 billion. The Army still has a requirement for a upgrade to their combat brigades currently using the Eighties produced M1/M2 vehicles and the Styker Interim system. As such a new program was set up to replace FCS almost immediately after the contract with Boeing and SAIC was canceled.

Now the Army is concerned that the money planned for in the budget may not be available for this new program. At a minimum some of it will be needed to pay the termination fees related to the various contracts ended prematurely. They were ended at the convenience of the government so the contractors are entitled to payment for whatever work they had done and what it takes to close out the contracts. If the money doesn’t remain in the FCS line then the Army will be forced to fund it from other programs.

Congress in their mark up of the 2010 budget cut most of the money budgeted for this as they felt there were sufficient current funds to cover this. This may be a little too much penny save pound foolish. The Army knows fairly well what is needed and probably budgeted appropriately. The cost to other parts of the Army including the new modernization program may be quite high.

Army Pushes Back on FCS

Due to its complexity, cost and risk the Future Combat System (FCS) program is required to have an annual report to Congress submitted by the GAO. This was done recently. The FCS is the largest and probably most complex program under development right now by the U.S. military. It is being managed and integrated by Boeing and SAIC. The GAO continues its negative view of FCS and the Temple Daily Telegram reports that the Army acquisition folks countered that with calls to reporters. FCS is a system of systems which will used wheeled armored vehicles, unmanned ground and aerial vehicles all linked by a variety of data links and systems. Its goal is to increase the speed, accuracy and response of the Army. Parts of it have been developed and deployed where they can in Afghanistan and Iraq. The current Stryker vehicle units are the interim step from the M1/M2 based units to the FCS. As it is the largest program in the Army consuming a few billion dollars a year and has risk it is obviously the place that Congress and the Obama administration is looking for cuts. Until the FY10 budget is released there will be this back-and-forth between the Army and other parts of the government as that service tries to preserve as much of the program as they can.

National Cancer Institue contracts for basic research

September 29, 2008 by Matthew Potter · Comment
Filed under: Contract Awards, S&T, SAIC, development program, medicine 

The National Cancer Institute contracted with SAIC to run the Federal Funded Research and Development Center (FFRDC) in Frederick, MD. The 3 year contract will allow SAIC to conduct basic research on cancer and HIV cures and treatments. While SAIC is known primarily for supporting the US military they have been doing this work for over 10 years.

See the press release at IT News Online.

It takes money to spend money

The Defense Finance and Accounting Service (DFAS) is the organization within DoD that actually pays the bills. Eventually every contract action will lead to DFAS sending money to the company doing the work. SAIC has won a contract to build software to train the DFAS employees on policies and regulations. See a story here.

Some Analysis of SAIC’s Common Stock

April 21, 2008 by Matthew Potter · Comment
Filed under: Editorial, Industry Analysis, SAIC, SETA 

As a recent GAO report highlighted the Department of Defense invests a great deal in Science, Engineering, Technical and Analysis (SETA) contracts. These contracts, and contractors, are most known as working with the military acquisition offices to provide necessary support. There are also SETA contracts with IT, testing, engineering, safety and pretty much any area that the DoD and Services are involved in. It is a large business employing thousands.

Read more

Boeing expands JLTV team

April 18, 2008 by Matthew Potter · Comment
Filed under: Boeing, Ford, Industry Analysis, SAIC 

Boeing added SAIC and Ford to the team they have established to bid on the development contract for the JLTV. See an article here. The JLTV will replace the HUMVEE and other light tactical vehicles. Read more

SAIC Hires Two New Senior Security Executives

December 22, 2007 by Matthew Potter · Comment
Filed under: Hires, SAIC 

On 20 December, it was announced that SAIC hired two new executives who will be responsible for developing their homeland and cyber security businesses. Retired US Army Lieutenant General Joe DeFrancisco and former US Customs and Immigration Agency official Bill Carroll are to utilize their experience to “to provide awareness of our U.S. Army and Homeland Security customer priorities, trends, concerns and opportunities,” according to SAIC. The full story from UPI is here. Unlike other large defense corporations in the United States, SAIC provides science, analytical and engineering services rather then developing and producing hardware.

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