Bloomberg News

Booz Allen to Lockheed Win Part of $6 Billion Anti-Hacking Award

August 13, 2013

Booz Allen Hamilton Holding Corp. (BAH:US) and 16 other companies won a $6 billion contract that may become the biggest unclassified cybersecurity agreement in the U.S. government.

The list of suppliers announced today includes Lockheed Martin Corp. (LMT:US), SAIC Inc. (SAI:US), Northrop Grumman Corp. (NOC:US) and General Dynamics Corp. (GD:US) They will help the Department of Homeland Security develop a shopping hub for federal, state and local agencies seeking to shield their computer networks from hackers.

The program is valued at as much as $6 billion during as many as five years. While it might not reach that amount, its potential size and scope has drawn the attention of dozens of companies at a time when the $512 billion federal contracting market is shrinking.

“This is a key contract” for Homeland Security, William Loomis, Baltimore-based managing director at Stifel Nicolaus & Co Inc., said in an interview.

Today’s announcement probably will be followed by the “inevitable round of protests” from the losing companies, which would delay the start of work, he said.

One of the big winners is McLean, Virginia-based Booz Allen, which has been under the spotlight since former employee and National Security Agency contractor Edward Snowden leaked classified information about U.S. surveillance programs.

Booz Allen will offer tools and services that will allow federal agencies to automatically be alerted to cybersecurity threats, Chris Kelly, the company’s executive vice president, said in an e-mailed statement.

‘Cyber Landscape’

“The cyber landscape in which federal agencies operate is a constantly changing and dynamic environment and threats to the nation’s information security continue to evolve,” Kelly said.

The agreement announced by the U.S. General Services Administration are under a multiple-award contract, which means a pool of suppliers is chosen rather than a single provider. Once picked, contractors bid against each other for orders as specific needs arise.

The suppliers include Computer Sciences Corp. (CSC:US), International Business Machines Corp. and Hewlett-Packard Co. (HPQ:US) Also part of the deal are Dynamics Research Corp. (DRCO:US), ManTech International Corp. (MANT:US), SRA International Inc. and Kratos Defense & Security Solutions Inc. (KTOS:US)

Five other contractors made the list: Technica Corp., CGI Federal Inc., Knowledge Consulting Group Inc., Digital Management Inc. and MicroTech.

Central Hubs

Loomis said the number of companies that won the work was higher than he had anticipated, though he said it would encourage competition.

The suppliers will provide central hubs through which government agencies can buy computer hardware and software as well as consulting services to help manage employees’ access to networks, according to the government’s Dec. 10 request for bids.

The “program will help transform the way federal and other government entities manage their cyber networks,” Anne Altman, general manager for Armonk, New York-based IBM’s federal business, said in a statement.

State and local agencies also could benefit from the consistency, pricing and purchasing speed that federal agencies will gain under the program, Altman said.

While Loomis said the number of companies that won the work was higher than he had anticipated, he said it would encourage competition. Loomis said he believes Homeland Security officials are “keeping their options open.”

Digital Attacks

“This is really the start of work to be done that will be subsequently competed and won in varying amounts by the companies” that have now been approved, Carter Copeland, New York-based director of global aerospace and defense research at Barclays Plc, said in an interview.

The contract follows accusations from senior Obama administration officials that the Chinese government is behind digital attacks against the U.S.

President Barack Obama issued an executive order in February directing the Homeland Security Department to ensure that government networks are constantly scanned for threats, defended from attacks and audited for performance to verify that federal agencies are complying with computer-security rules.

The program is designed for civilian government agencies, though it also will be available to the Defense Department and intelligence agencies, according to the federal request for bids.

Congress appropriated $202 million to the Homeland Security Department for the program during the current fiscal year ending Sept. 30, which equates to $185 million after automatic U.S. spending cuts under a process known as sequestration. The department has requested $168 million for the program in fiscal 2014.

To contact the reporters on this story: Chris Strohm in Washington at cstrohm1@bloomberg.net; Danielle Ivory in Washington at divory@bloomberg.net

To contact the editor responsible for this story: Stephanie Stoughton at sstoughton@bloomberg.net


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Companies Mentioned

  • BAH
    (Booz Allen Hamilton Holding Corp)
    • $22.18 USD
    • 0.11
    • 0.5%
  • LMT
    (Lockheed Martin Corp)
    • $174.0 USD
    • -0.10
    • -0.06%
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