TASC, the defense consultancy KKR & Co. (KKR:US) and General Atlantic LLC acquired from Northrop Grumman Corp. (NOC:US), is seeking to build its presence in the U.K. with U.S. prospects largely flat, the company’s chief executive said.
“The U.K. is the natural market to expand,” David H. Langstaff, CEO of the Chantilly, Virginia-based company said in an interview, citing ties between U.S. and British defense procurement.
The U.K. government is restructuring large parts of its defense management system as it seeks efficiencies to cope with a decline in spending. On the agenda are the sale of the organization that maintains military equipment and the possible hiring of a firm to manage equipment programs.
“These times will need more of what TASC has to offer,” Langstaff said. Although TASC also works with companies, in the U.K. it will focus on the government first, he said.
Even as defense spending in the U.K. is contracting, “certain segments of the market will grow,” Langstaff said. TASC hopes to secure contracts in helping the government work out how to sift through massive amounts of collected intelligence data and protect sensitive information stored remotely and accessible via the Internet.
Langstaff would not say what targets he has set for the U.K. effort.
The overseas initiative comes as TASC has been trying to build business with customers, such as the U.S. Navy, which it was unable to work with because of conflict of interest concerns before Northrop sold the company to the two private equity firms in 2009.
“We have been able to win work we could not have won under Northrop,” Langstaff said.
In the U.S., the company has also been trying to expand beyond its core intelligence agency and Pentagon customer base, Langstaff said, and is trying to build up its activities with civilian government agencies.
Prospects in the U.S. remain clouded by question marks hanging over government spending plans. U.S. defense spending faces an additional $500 billion in cuts over 10 years unless the White House and Congress avert automatic budget reductions, called sequestration, and tax increases due to take effect in January. The Pentagon has not said how the cuts would be apportioned.
“The services industry is at risk of being hit particularly hard because it is a variable cost,” Langstaff said, adding that there is little clarity on how cuts will play out. Some of the impact has already materialized as spending has been pared in advance of sequestration, he said.
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