“Veritas Capital Fund Management LLC may have just created the largest U.S. federal information technology contractor.”
“In just two months, Veritas bought Northrop Grumman Corp.‘s IT services business for $3.4 billion and Perspecta Inc. for $7.1 billion, and now plans to merge them under Peraton Inc. The venture capital firm bought Peraton from L3Harris Technologies Inc. in 2017 for $690 million. Both deals are expected to close in the first half of 2021. The result is the metamorphosis of Peraton, the No. 45 IT contractor in fiscal 2020, into a company with a footprint more than 13 times larger and positioned to take over the top federal IT contractor spot in fiscal 2021.”
“In this week’s This Is IT, Bloomberg Government uses its historical contract data to determine what that newly combined company might look like and how these deals fit into a broader mergers and acquisitions trend in the federal market.”A New IT Leader?
“Perspecta, Peraton, and Northrop’s IT services brought in a combined $3.5 billion in IT obligations in fiscal 2020. Had the companies been a combined entity then, they would have been worth enough to be the No. 2 IT contractor last year. That mega-firm would have been about $150 million shy of taking the top spot, but still solidly above the No. 3 position by more than half-a-billion dollars.”
“Perspecta and Northrop were the No. 3 and No. 11 IT contractors in fiscal 2020, respectively. But it’s difficult to tell exactly how much revenue Northrop’s IT services business gets from federal agencies because it doesn’t detail company finances that way in the data it reports to the federal government.”
“To estimate Northrop’s IT services obligations, BGOV filtered historical contract data by IT services. It’s possible some obligations were missed or, conversely, some were included that shouldn’t have been. If all Northrop IT obligations were counted, another $246 million would be included and put the combined company into the No. 1 spot…”
“One of the largest contracts Peraton is likely to benefit from accessing is Alliant 2 Large Business (A2). The company was in on the predecessor vehicle and received $34 million in obligations, but didn’t win a spot on A2. Perspecta and Northrop each hold a spot on A2 and have been obligated a combined $190 million on the vehicle since its start in 2017. A2 was the fourth-largest IT contract vehicle in fiscal 2020 and will likely obligate more funds as task orders on Alliant Large Business expire. Those factors, combined with its $50 billion ceiling, indicate A2 was probably a target for Peraton in the acquisitions…” Read the full article here.
Source: This Is IT: Peraton Eyes Top Federal IT Spot with Perspecta Buy – By Laura Criste, February 2, 2021. Bloomberg Government.
Northrop Grumman and Perspecta were named to the list of NXT UP firms poised to make big waves in the Federal sector in 2020 and for years to come.
