Defense Contractors' Growing African Business

Northrop, Lockheed Martin, and other defense outfits see opportunities as the U.S. government, private industry, and the U.N. spend more in Africa

By Lawrence Delevingne

Five years ago, Africa didn't matter much to DynCorp International (DCP). The Falls Church (Va.) company had its hands full in Afghanistan and Iraq, where it recruited, trained, and supplied police. But with big new contracts in Liberia, Sudan, and Somalia—and lots of potential business elsewhere on the continent—DynCorp's interest in Africa is growing fast. In fact, Africa is now so important that the company this month is paying to be the top sponsor of a Washington conference for defense contractors focused on the region.

In recent years, DynCorp's African business has grown to $150 million annually, or 7% of its total revenue, and it's looking for more. The company is eyeing "major" business opportunities there, says Will Imbrie, business development chief at DynCorp. It's bidding on extending a current contract to train peacekeepers in Sudan for the U.S., and expects there may be a chance soon to build schools and hospitals on the continent for the U.S. Agency for International Development. Another possibility could be a contract to work with the army in the Democratic Republic of Congo for the U.N. "Africa really fits into the company's sweet spot" Imbrie says.

DynCorp isn't alone. Companies such as Triple Canopy, Northrop Grumman (NOC), PAE (a unit of Lockheed Martin (LMT)), and MPRI (a unit of L-3 Communications (LLL)) have received at least $1.1 billion for programs in Africa since 2004—mostly State Dept. and Pentagon contracts to train African soldiers, a steep increase from 2003. The continent, however, still represents only a small slice of U.S. defense contractors' worldwide business, which totaled $20 billion to $316 billion last year, depending which companies and services are counted.

African Market Growth

Africa is now one of the industry's most promising growth markets. American companies are currently bidding on U.S. and U.N. contracts that will be worth at least $1.2 billion over the next five years, and they see even more work providing security for oil companies, mining outfits, and other Western corporations operating in Africa. There's probably even more than that on tap, experts say, but projections are difficult because many government contracts don't break out funds for contractors until after the fact, and other contracts aren't publicized. "There's a huge surge" in African work, says consultant Frances Cook, a former U.S. ambassador to Cameroon and Burundi who advises clients on working in Africa. Since 2005, contractors have helped the U.S. train nearly 80% of African peacekeepers—some 39,000 soldiers from 20 countries. "It's big bucks," she says.

The biggest known prize, the continuation of an ongoing State Dept. peacekeeper-training program, is set to be awarded by February. The deal is worth up to $1 billion over five years, and involves support services such as communications, maintenance, and construction, rather than the armed security work carried out in Iraq by the likes of Blackwater, which has battled with insurgents.