Lockheed Martin Corp.
General Dynamics Corp.
) have once again been a beneficiary of Department of Defense
(DoD) contracts. Both have been successful in receiving a chunk
of DoD contracts worth $7 billion.
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The DoD has given approximately a dozen contracts to eight small
privately held firms scattered around N.J., Md., Ind., and Va.
Per the contract, these privately held firms along with Lockheed
and General Dynamics will supply software and systems engineering
services in support of the Army's Software Engineering Center.
Specifically, Lockheed has received a modification contract worth
$29.4 million to develop and integrate Acoustic Rapid
Commercial-Off-The-Shelf Insertion devices for the U.S. Navy's
submarine fleet. The contract is expected to be completed by Dec
General Dynamics has received a firm-fixed-price multi-year
foreign military sales contract worth $24.5 million to purchase
MK80 General Purpose Bomb Bodies for supply to Australia, Saudi
Arabia, and Iraq.
Last week, Lockheed Martin was selected among one of the 15
awardees for an Indefinite-Delivery/Indefinite-Quantity contract
from the U.S Navy. Under the Space and Naval Warfare Systems
Center Atlantic's Business and Force Support Multiple Award
Pillar contract, the company will provide a variety of
operational support services. The contract is worth a cumulative
$900 million for all awardees, if all options are implemented.
Last month, the company turned out to be one of the major
beneficiaries of the 20 contracts, worth $717.7 million, handed
out by DoD. The company secured four contracts that comprised
nearly 20% of the entire award from the DoD.
However, according to media reports, budget cuts from
sequestration reduced the number of contracts awarded by the DoD
in April. The DoD only awarded contracts worth $19 billion, down
52% from Mar 2013.
That said, General Dynamics at its first quarter earnings call
had declared that it does not see sequester as a significant
threat to its 2013 results. The recent spate of contract wins
amply proves the company's faith in its business.
Despite the continuous inflow of contracts, the threat of
sequestration, fear from budget uncertainty, the fate of
high-cost programs, risks related to key project executions and
order cancellations cannot be denied for most of the defense
Both Lockheed Martin and General Dynamics presently retain a
short-term Zacks Rank #3 (Hold). However, stocks that look better
placed at the moment are Zacks Rank #1
Erickson Air-Crane Inc.
) and Zacks Rank #2
Northrop Grumman Corp.