Belcan Makes Its Way Into the of US Department of Defense

/ August 24, 2018/ Belcan, Contract, US, US Federal

Belcan has indicated it has been selected by the US Department of Defense (through DARPA) as a preferred supplier for its Technical and Analytical Support Services for the next five years.

The exact terminology is US government-specific: Belcan, through its Schafer Corporation is one of seven firms selected as preferred suppliers as part of this indefinite-delivery/indefinite-quantity (IDIQ). Belcan will be competing for contracts (task orders) for a maximum of USD 850m (for all participants). The other selected vendors are well-known vendors such as Booz Allen Hamilton and ManTech, and lesser-known ones such as Centra Technology, E3 Federal Solutions, ECS, and Strategic Analysis.

This is the second time Belcan (through its subsidiary Schafer) is selected as a preferred vendor, with the previous contract vehicle having a contract value ceiling of USD 204m. Being a preferred vendor is a pre-requisite for winning task orders and therefore revenues.

The timing is good: the Trump administration is funding the growth of the budget of the Department of Defense (DoD). R&D spending is a small part (less than 4%) of what the DoD spends but it still represents about ~USD 13bn in R&D spending. The DoD would rank #6 among organizations that spend the most on R&D in the US, well behind the FANGs but before all pharmaceutical firms.

The name of the client for this USD 850m IDIQ contract rings a bell: DARPA, or Defense Advanced Research Projects Agency, is the R&D arm of the US Departement of Defense and conducts technological research for national security. DARPA is a prestigious organization that was involved in the creation of precision weapons and GPS, to name a few.

DARPA has four research priorities, including fundamental research; defending the nation from external threats (cybersecurity, biosurveillance, and biothreat, and weapons of mass destruction); deterring against European and APAC competitors (in space and electromagnetic spectrum), and for “fighting differently” in city warfares.

Looking forward, we will put more emphasis on the US government services industry, whose main vendors include Leidos, General Dynamics IT, Booz Allen Hamilton, SAIC, CACI, and Perspecta. A large share of the activities of these firms is IT services and BPO. However, an important element of their revenues come from ER&D services. We will be commenting further on this industry.


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