Lockheed in IDIQ Contract from DISA

Lockheed Martin Corporation ( LMT - Analyst Report ) has been selected as one of the seven awardees for a one-year indefinite delivery/indefinite quantity (“IDIQ”) contract for Test and Evaluation Mission Support Services (“TEMSS”) program by the U.S. Defense Information Systems Agency (“DISA”). The contract includes four one-year options with a potential ceiling value of $800 million for all awardees.

Lockheed will be playing its role by supporting the services through a 3 months firm fixed price phase-in task worth $0.4 million. The company will fulfill DISA’s mission by providing network, computing infrastructure and enterprise services for sharing information immediately and helping military and civilian agencies to make quick decision. It will pursue opportunities to provide testing, engineering, logistic, administrative, and operations and maintenance services.

The main reason for choosing Lockheed as one of the seven awardees is its proven expertise in Command, Control, Communications, Computers and Intelligence (C4I), information assurance, information technology and automated information systems for its various categories of customers, which include individual customers and joint entities. The company’s cyber security, information technology and information assurance are supported by several labs, test facilities and programs operated by the company.

Additionally, DISA will be aided by the Cyber Security Technology Alliance formed by the company that assembles leading technology providers to work together on solutions for early threat detection and protection using best practices, hardware, software and tools.

The other contractors include Alion Science & Technology, McLean, TASC Inc. Chantilly, Science Applications International Corp., McLean, ManTech International Corp., Fairfax, Oberon Associates Inc., Manassas (part of CGI Group Inc. ( GIB - Snapshot Report ) ), and American Systems Corporation, Chantilly.

Earlier also, the company has received awards from DISA due to its proven capabilities. In June 2012, the company received a contract from DISA to manage the transformation of the Department of Defense’s global data network. The contract with a ceiling value of $4.6 billion would run for three years and includes two two-year options.

Lockheed Martin is the largest defense contractor in the world. The company’s customer base includes the U.S. government, foreign governments, and other commercial buyers. The company’s platform-centric focus guarantees a steady inflow of follow-on orders from a leveraged presence in the Army, Air Force, Navy and IT programs. Also, going forward, its shareholder return will continue to be boosted by focusing on debt repayment, its ongoing share repurchase program and incremental dividend.

Recently, Lockheed Martin Corporation posted second-quarter 2012 continuing earnings of $2.38 per share, beating the Zacks Consensus Estimate of $1.92. This was also higher than the year-ago quarterly earnings of $2.06. On the revenue front, Lockheed Martin reported quarterly net sales of $11.9 billion, beating the Zacks Consensus Estimate of $11.3 billion.

Like Northrop Grumman Corporation ( NOC - Analyst Report ) , the company presently retains a short-term Zacks #2 Rank (Buy). We have a long-term Outperform recommendation on the stock.