General Dynamics Information Technology, a business unit of General Dynamics Corporation (GD), has received a five-year, multiple-award, indefinite delivery, and indefinite quantity contract with a potential value of $1.9 billion from the Ogden Air Logistics Center (“OO-ALC”), Hill Air Force Base, Utah. General Dynamics was one of the 26 awardees receiving this Design Engineering Support Program (“DESP”) III contract.
General Dynamics will be responsible for providing engineering and advanced technical support services to all Air Force Materiel Command weapons systems, components and support equipment. Also, it will work on reducing technology lifecycle costs by implementing integrated engineering systems.
Besides providing education and training support for the engineering systems, the company will also supervise the operational life and look after the performance, safety and environmental sustainability of those systems.
The current contract is a competitive follow-on to the DESP II contract. In December 2006, along with other companies, the company had received a DESP II contract with a total potential value of $1.9 billion over the five-year period of performance if all options are exercised. Per the contract, the company had to provide design and engineering technical support services for Department of Defense’s (“DoD”) mission weapon systems and components.
General Dynamics has always supported the US Air Force Base in prior DESP task orders. These include Propulsion Environmental Working Group’s sustainable initiatives for depots at the Oklahoma City Air Logistics Center; T-38 system modifications for the Aeronautical Systems Center at Wright Patterson Air Force Base, Ohio; and A-10 Wing Replacement Program Engineering Support at the OO-ALC.
The company’s other achievements include providing engineering and managing aircraft modifications by conducting studies on operational suitability and sustainability engineering to its customers which will overall help the depot industrial modernization plan.
General Dynamics was the third largest U.S. defense contractor in terms of revenue in fiscal 2011 after The Boeing Company (BA) and Lockheed Martin Corporation (LMT). However, the company is largely tied to the U.S. defense budget, where the threat of budget cuts runs high. Also, we have turned slightly cautious about the company’s steadily dropping order backlog, and risks related to the execution of key projects. The company presently retains a short-term Zacks #4 Rank (Sell). We have a long-term Neutral recommendation on the stock.
Based in Falls Church, Virginia, General Dynamics engages in mission-critical information systems and technologies; land and expeditionary combat vehicles, armaments and munitions; shipbuilding and marine systems; and business aviation.
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