Nice little article about the defense industry and where it is at today. It asks a really compelling question–will the larger defense firms eventually try to compete in the services industry as the big program defense contracts decrease? Could we see a Boeing or Lockheed Martin participating in TWISS or some other security contractor related ‘services’ contract? lol You never know?….
The other thing I wanted to mention is that this is a prime example of small companies or small forces attacking the weakness of a large company or force. What works for guerrilla warfare, can have similar application to the business world. These smaller services companies are geared towards their niches, they are able to flex and roll with the contracting tempo, and they know what the client wants. Not only that, but because this is their primary focus, they can provide a better service than the big guys. The larger defense companies are more concerned with and tooled for the big contracts, just because they have such a massive organization to support. Smaller companies can certainly be more nimble in these smaller defense markets.
That’s not to say that a Lockheed Martin couldn’t enter the services market and rock and roll. It’s just they would have to compete with these well established niche companies. It will be interesting to see how this goes, and I am sure all defense companies are retooling and looking to the future as to what’s next. Because on the one hand, you have congress getting pressure to reduce costs and balance the budge, but on the other hand we have all this chaos and war going on around the world. So this is a very difficult market to plan for, and I do not envy these companies in this endeavor. –Matt
Pentagon Business Goes to the Small Fry
Foreign wars create opportunities for small and nimble contractors
By Nick Taborek
September 01, 2011
Real-life army grunts have more important things to do on the modern battlefield, goes the thinking at the Pentagon these days. The scut work—and a good deal more—is outsourced to companies that can swoop in with people, basic resources, and technical know-how.
CACI International (CACI) and ManTech International (MANT) have become two of the most successful providers of technical services to the U.S. armed forces as spending on contractors soared because of wars in Iraq and Afghanistan. Together they raked in $3.9 billion last year from the military for providing everything from security services to radar data analysis. “When DOD outsources work, it can surge and purge,” says Todd Harrison, a defense analyst at the Center for Strategic and Budgetary Assessments in Washington. “It can tell a contractor, ‘I want you to bring on hundreds or thousands of people quickly,’ and they’ll do it.” And when the job is done, “they’re gone,” he adds.