January's top news

A roundup of important news and trends

Calling it splits

Not one, but two major companies announced that they were breaking up.

First was Motorola Inc., which is dividing into two pieces. Motorola Mobility will focus on consumer mobility devices, such as cellular phones, smart phones and tablets.

The federal government business will become part of Motorola Solutions. Jim Mears will continue to run that business.

“They’re really two different businesses, and to really unlock the value as two different organizations, it was critical to split them into two so they can survive and grow on their own,” he said.

Motorola Solutions will concentrate on radio systems with a focus on wireless voice, video and data communications for the Defense Department and public safety customers.

The second big breakup came when ITT Corp. said it would split into three independent companies, breaking off its water-related businesses and its Defense and Information Solutions division, which houses its government business.

“In today’s business environment, we believe this strategy is the best approach to unlock this value and position the three businesses to grow and serve customers as focused global companies,” said Steven Loranger, ITT's chairman, president and CEO.

M&A stays hot, hot, hot

Last year saw a torrid pace of mergers and acquisitions activity (see our cover story), and it looks like 2011 will continue that trend, with 10 deals announced in the first three weeks of January.

Some deals of note:

  • Ericcson, based in Stockholm, Sweden, announced it will sell its federal unit to Tailwind Capital, a private equity group. The new company, called Oceus Networks, will be able to operate unfettered by restrictions placed on foreign-owned companies.
  • Computer Sciences Corp. will acquire Image Solutions Inc., a company that builds regulatory submission management systems in the health care field.
  • A-T Solutions grew its intelligence offerings when it acquired Innovative Technology Systems Inc. The company brings capabilities in areas such as mission systems, software engineering and development, network services, and mission assurance.

Big contracts bust out

The past two months will be remembered for a plethora of large contract awards and new opportunities.

The biggest award went to Hewlett-Packard Co., which won a $2.5 billion NASA award to manage the agency’s IT services across all its centers.

Agencies also awarded several multiple-award contracts, such as the Internal Revenue Service's long-awaited Total Information Processing Support Services 4 program. The $4 billion award went to 33 companies that will now compete for task orders.

Lockheed Martin Corp., Serco Inc., VT Milcom and Amsec LLC, a subsidiary of Northrop Grumman Corp., all won pieces of a Navy contract to provide computer systems for ships, submarines and onshore facilities. The contract could be worth $1.4 billion if the Navy exercises all options.

On the opportunity side of the contract fence, Harris Corp. announced the team it is leading to pursue the Navy’s follow-on to the Navy Marine Corps Intranet contract that HP Enterprise Services holds. Harris’ team includes Computer Sciences Corp., General Dynamics Corp. and Cisco Systems Inc. Some estimates put the value of the Next Generation Enterprise Network at $9 billion over 10 years. The contract is expected to have several prime contractors.

Another major contract in the works is the $4.6 billion management support contract for the Global Information Grid. The Defense Information Systems Agency released a request for proposals in mid-January. The agency expects the award to go to one contractor. Bids are due March 14.

Bye-Bye SBInet

It's not exactly a surprise that the Homeland Security Department killed SBInet, which Boeing led. In the program's death notice, DHS said the virtual fence wasn’t meeting security requirements.

Often a target of criticism for cost overruns and failure to meet expectations, the department canceled the program after a year long review by DHS Secretary Janet Napolitano.

Boeing put a positive spin on the cancellation, saying that the company appreciates DHS’ decision to continue using the technology Boeing installed, including fixed towers that provide electronic monitoring of the border.

DHS spent more than $1 billion on SBInet, and it covers about 53 miles of the U.S. border with Mexico.

Personnel shifts galore

January was a busy month for human resources departments, with several high-level new hires and other personnel moves.

Here are some of the actions of note.

Lee Carrick is gone at Dell Services Federal Government Division, replaced as president by Richard Pineda.

Also gone is Sid Fuchs, president and CEO of ATS Corp. He left after the company’s board decided to explore strategic alternatives, which is code for putting the company up for sale.

Northrop Grumman named Karen Williams leader of its Defense Technologies Division in its information systems group.

Dynamics Research Corp. hired Daphne Zweifel as vice president and general manager at the company’s federal group.

Boeing Co. and QinetiQ NA both named new chief information officers. QinetiQ hired John Lamberth, and Boeing promoted Kim Hammonds.

Another watch list to avoid

Information on contractors’ bad behavior is heading to the Web.

The 2011 Defense Authorization Act became law Jan. 7 and requires that more information in the Federal Awardee Performance and Integrity Information System become open to the public.

The database adds more heat to an already tough oversight environment.

One fear is that easy access to the database will make bid protests more likely. Losing bidders can use the information of past bad behavior to object to the winning bidder’s award.

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