M&A

General Dynamics' and CSRA's recompete challenge

There is some caution for CSRA with respect to its recompete picture as its $6.8 billion acquisition by General Dynamics comes closer to completion.

Krishna Sinha, government market analyst at Vertical Research Partners, wrote in a note to investors that the medium term will see CSRA having to rebid for the third Groundbreaker recompete yet to be awarded, another large Transportation Security Agency IT contract, the Army’s Warfighter Focus contract and others.

The company also is in the hunt for the $3.5 billion Navy Next Generation Enterprise Network recompete, currently held by DXC. A solicitation is expected in the coming weeks with an award possible by the end of the year.

Large-scale mergers in federal IT can impact a company’s win rates due to consolidation of bid and proposal staff and management attention being diverted to the integration among other reasons, Sinha wrote.

That said, the combined company’s pipeline of new opportunities could help mitigate any recompete risk. CSRA CEO Larry Prior told investors that there are 25 contracts north of $500 million in the pipeline that a larger entity could better target.

After Leidos and the General Dynamics IT-CSRA combination, Booz Allen Hamilton would be government IT and services’ third-largest player at $5.8 billion for its most recent fiscal year. Next would be SAIC at $4.45 billion, then CACI International at $4.35 billion in revenue.

The combination of DXC’s U.S. federal business with Vencore and KeyPoint Government Solutions would be just behind CACI at $4.3 billion in revenue.

About the Author

Ross Wilkers is a senior staff writer for Washington Technology. He can be reached at rwilkers@washingtontechnology.com. Follow him on Twitter: @rosswilkers. Also find and connect with him on LinkedIn.

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