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Defense Contractors Making Shift to Services

Photo: DoD/Ken Hammond
Photo: DoD/Ken Hammond

Many defense contractors are no longer solely focused on large industrial manufacturing, such as building planes or tanks.

Much like the rest of the U.S. economy, they are adjusting to the service sector, offering top-notch expertise in fields such as security and intelligence.

Fearing a “realignment” of Defense Department spending, Washington-area defense contractors have also embarked on a bevy of mergers and acquisitions in those specialty fields, The Washington Post reports.

The big buys, such as BAE Systems’ recent purchase of L-1 Identity Solutions Intelligence Services, reflects the broader shift by defense contractors toward services.

BAE, like many others, “is in transition from being a metal bender to a services provider,” Loren Thompson, a defense industry consultant with the Lexington Institute, told the The Post.

The M&A moves are seen across the spectrum of both large and small companies, and will likely continue — at least until next year’s defense budget is released.

Then, these companies will see where they stand.

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