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Science Applications Secures $2.9B Contract From U.S. Army

Zacks Equity Research
·3-min read

Science Applications SAIC recently received a contract worth $2.9 billion to keep supporting the U.S. Army with its mission engineering capabilities. The award carries a five-year performance period. Per the contract, the company will keep working on advanced technologies, and help the U.S. Army build, integrate, and maintain software platforms.

The task order covers applications including air and ballistic missile defense, close combat, fire support, command, control and communications, manned and unmanned aviation, intelligence/surveillance, interoperability, and automatic test equipment.

According to the agreement terms, Science Applications will have to support lifecycle activities necessary to define concepts and requirements. The company will also plan, develop, manage, improve, sustain, modify, test, field, train, and deploy retire systems in a time frame necessary to meet Army requirements.

Science Applications International Corporation Price and Consensus

Science Applications International Corporation Price and Consensus
Science Applications International Corporation Price and Consensus

Science Applications International Corporation price-consensus-chart | Science Applications International Corporation Quote

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Contract Wins Fuel Growth

Science Applications is benefiting from the continued flow of high-value contracts. A record level of awards reflects its disciplined business-development actions, consistent operational excellence and high customer satisfaction. Notably, as of May 1, 2020, the company’s total contract backlog was $16.6 billion.

Furthermore, having the government as a big client lends stability to the business and moderates fluctuation in revenues. Although the government generally has a lengthy approval process, the projects keep earning money for several years after the approvals.

Notably, Science Applications has been reportedly  awarded $2.8 billion in national security contracts for fiscal 2020. Earlier this month, the company received a single-award, cost-plus-fixed-fee and firm-fixed-price contract worth $60 million to continue supporting the U.S. Navy with its mission engineering capabilities.

Besides, last month, the company received multiple contracts worth $982 million from the U.S. Naval Sea Systems Command. In March, the company received a three-year contract worth $45.2 million to continue providing technical support for tactical warfare training to various Navy and Marine training formations.

Moreover, in January, the company received a $727-million Common Computing Environment (Cloud One) contract from the U.S. Air Force to aid the transformation of about 800 Air Force and U.S. Army mission applications to the cloud.

Bright Prospects Amid Competition

Competition from CACI International CACI in the IT services space remains steady. CACI continues to win high-value contracts and received contracts worth $1.5 billion this month to offer enterprise Information Technology, transport and cybersecurity services to the National Geospatial-Intelligence Agency (NGA) and its mission partners.

In the IT services industry, Science Applications also competes with IBM IBM and Accenture ACN, which are among the top IT service providers in the world.

Nonetheless, we believe the company is comfortably positioned in this space, given its back-to-back contract wins, which are supporting the business perennially.

Science Applications currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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