Science Applications (NYSE:SAIC) SAIC recently received a major single-award defense contract which has an estimated ceiling value of approximately $200 million.
The deal requires the company to provide indefinite delivery and indefinite quantity for laboratory operations and support to the Defense Intelligence Agency. The work is required to be performed in Huntsville, AL, and expected to complete on Mar 29, 2031.
In its press release, Science Applications stated that “The DIA provides warfighters, weapons developers, policy makers, and homeland security with intelligence assessments on foreign weapons systems. They use scientific and technical methods to evaluate intelligence data to determine the characteristics, performance, operations, and vulnerabilities of foreign weapons systems.”
Continued Flow of Contracts
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 Jan 31, 2021, the company’s total contract backlog was $21.5 billion.
Furthermore, having the government as a big client lends stability to the business and moderates fluctuation in revenues. Though the government generally has a lengthy approval process, the projects keep earning money for several years after their approvals.
Last month, Science Applications received a contract worth $3.6 billion from the U.S. Army to continue supporting the U.S. Army Combat Capabilities Development Command, Aviation & Missile Center (DEVCOM AvMC), Software, Simulation, Systems Engineering and Integration (S3I) Directorate.
Intensifying Competition
Competition from CACI International CACI in the IT services space is steady. CACI continues to win high-value contracts and received contracts worth $1.6 billion during its third-quarter fiscal 2021.
In the IT services industry, Science Applications also competes with International Business Machines (NYSE:IBM) IBM and Accenture (NYSE:ACN) 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 #5 (Strong Sell).
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