A contracting company called Leidos received more than $ 16 billion in revenue last year, most of which are through contracts with federal agencies such as the Ministry of Old Warriors Affairs.
So when the Trump administration budget sectors targeted last month, it seemed to be bad news not only for administration employees but also for LED and dozens of other private sector companies.
“No more consultants who pay to do things like creating Power Point slices and writing the minutes of the meeting!” Administration Secretary, Doug Collins, Books on x. In general, the administration indicated that it was canceling more than 850 contracts worth $ 2 billion.
But shortly after Mr. Collins’ announcement, it seemed that the future view of some of the Ministry of the Ministry of Affairs of the Veterans Affairs shines. Department Put the cancellation At standing, saying that she needs to review contracts to avoid “eliminating any benefits or services” for old warriors or VA beneficiaries. Later The list narrowed Of contracts canceled by a few hundred.
Government contract experts said that the discounts made on the agency, which announced last week that they were seeking to trim 80,000 of its 480,000 employees, even, even to increase spending on federal contracts.
These experts pointed out that cutting employees without being held in a government job – such as providing health care and benefits for old warriors, and the work in which he plays to trample a major role – means that the task will usually significantly decrease the contractors.
“If you cut people and do not cut the task, you should rely on other sources to do the work,” said Stan Solwai, an official in the Ministry of Defense in the Clinton administration who led a commercial group representing government contractors.
“We strongly support the goal of creating a more efficient and effective federal government that costs less taxpayers,” said Brandon Feldi, a spokesman for Lidos, adding that “providing innovations that do so is the basic of our mission.”
However, the isolated world and a few federal contractors are not immune to the uncertainty that President Trump and Elon Musk, head of the government efficiency initiative, to the federal system.
In the months that followed the presidential elections, as it became clear that Mr. Trump and Mr. Musk will appoint in federal agencies, stock prices have decreased for traders trading to the public such as Lidos and Boug Allen Hamilton. (Prices are still high from this contract earlier.)
Then one of the senior officials in the government Participate in purchasesActing Head of the Public Services Department, sent note Last month, the heads of federal agencies were asked to review a list of potential non -essential contracts – those that only generate “report, research, training or artifact” – and defend anything essential.
A Follow -up note 10 consulting companies have been listed throughout the government and said they are to obtain more than 65 billion dollars as fees starting this year. “Please provide us with a list of contracts with these companies that intend to end and that you intend to preserve,” added the memo.
Lidos and Allen’s almonds were in the list. Some contractors’ employees said that their companies discussed the reduction of jobs amid the audit.
But it seems that the Trump administration has eased its position since then. After meetings with the executives of the large contracting companies, The Wall Street Journal reported“We appreciate their partnership” and “we welcome them to work with us to reduce our excessive government spending while continuing to provide the basic services that the government needs.”
Stock analysts who follow companies specialized in federal contracts said they were generally optimistic about the prospects of companies. “For the short term, there is likely to have some turmoil and uncertainty for contractors,” said Scott Mecus, a director of research for the Federal Contractors. “But perhaps in the medium to long term, it’s a good thing.”
Matthew Akires, a stock analyst at Wales Vargo, noted that despite all the headlines that attract attention, the government has canceled little of the big contracts so far. He said: “If there are low pending fruits, they might have been cut,” I think they would have done so. “
Lidos seems to show this point. Founded by a nuclear physicist in 1969, the company Soon he was appointed To study the effects of nuclear weapons by the federal government, which has just stopped conducting tests in the atmosphere in favor of simulation. The company, then known as Science Applications Inc. (Then Saic), health care work Next yearWinning a federal contract to study radiotherapy for cancer.
Like many federal contractors, SAIC benefited when the Clinton administration reduced the federal labor force with hundreds of thousand Report 2011 Through the project on government control, a non -profit set that monitors federal contract. The George W. Bush administration has expanded more.
The company became public in 2006 and was called Leidos in 2013, as it revolves around Saic as a smaller consulting company. A series of acquisitions has expanded in size and access to them.
Today, Lids is made of various products such as scanners at the airport and guided missiles. It develops electronic offensive and defensive capabilities, performs an intelligence analysis, promotes computer systems in many federal agencies, conducts medical tests for old warriors and runs a Cancer research laboratory funded by the federal governmentIt employs more than 2000 scientists, technicians and officials.
Although these are not companies that are usually present within one company, the government contract creates a strong basis for the combination of them: all companies benefit from the intimate Leidos knowledge of the winning process often, which takes a long time.
“Understanding the purchases process, from the award to the contract to the bills to the payment cycle, is really important,” said Robert Garaa, who spent contracts in higher positions in federal contracting companies. “You need to have systems to do this.”
With the government Purchase More than $ 450 billion in services and more than $ 250 billion of goods every year, jumping through these collars can be profitable. According to the FBI report, Leidos, who uses nearly 50,000 people, got more than $ 16 billion in revenue last year and about $ 1.25 billion of profits. The company said that approximately 90 percent of its revenues came directly or indirectly from federal contracts, and that contracts with Pentagon or American intelligence agencies have generated about half of their revenues.
To date, Ledos has suffered a little work. In a report distributed in February, Mr. Akeers from Wells Fargo said that Leidos may be reduced to more than other contractors because more of her work lies on the civil side of the government professor’s book more than the army. He pointed out that the Ministry of Governmental efficiency of Mr. Musk has already set out savings for more than 200 million dollars in the IT contract in Lidus with the Social Security Department.
But it seems that the number was a mistake, and it seems that the only savings of LEDOS contract with the Social Security Administration worth about $ 500,000, and Mr. Aksrez indicated in a later report.
In other cases, the Trump administration’s priorities may bring new opportunities to the company. Leidos recently won a contract with the Ministry of Old Warriors Affairs to provide offers to verify the disability of the old warriors, and it may be possible in a good position to expand veteran health care work amid discounts in the department.
Mr. Mikos said: “They are conducting medical tests and disabilitys of disability.” “Old warriors still need care and you are trying to work in the accumulation of cases.” Lidos said he had not seen himself as a substitute for VA employees, but could help the administration better serve old warriors.
Peter Kasperovich, a spokesman for the Ministry of Old Warriors, said by e -mail that the agency was working to redirect billions of dollars in “non -critical efforts” to reduce accumulated actions and improve care. He added: “Contracts will be canceled in some cases, and new contracts will be established in other cases to reduce repetition and benefit from a better purchase strength.”
Of course, it may be a mistake to assume that the uncertainty that Mr. Trump and Mr. Musk will eventually pass, and return to contracting to the pre -election state. It usually provides federal contracts for companies with stable and predictable revenues, but lower profit margins than the most volatile private sector. If the federal government is no longer a reliable customer, the economics of the work may change.
“You have to pricing in” what possibility I think this will happen? “Companies may start assuming that the contract is worth, for example, 5 percent less than the amount announced by calculating such risks.
However, it can be said that the industry has survived worse, including spending discounts from a deal between President Barack Obama and the Republicans in Congress.
Almost at the same time, in June 2013, the news media published the disclosure presented by Edward J. Snowden, a Bouz Allen employee who has leaked one of the most important set of documents classified in the history of the United States. The price of the employer’s share decreased quickly more than 5 percent, as investors seemed to be concerned that the government would reduce its use of contractors on sensitive national security.
But within a month or two, the crisis passed, and Booz Allen rose by about 20 percent. As of this month, the price of his share was estimated several times.
Jack Beige and Kirsten Nuiz The research contributed.
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