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Lockheed Inks Deal with DISA Again

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Lockheed Martin Corporation (LMT - Free Report) has received a Global Systems Management Operations (GSM-O) contract worth $4.6 billion to manage the transformation of the global data network, which is known as the Global Information Grid for Department of Defense. The seven-year contract includes a three-year base contract period and two 2-year options to extend it to a total of seven years. GSM-O is the largest of three Defense Information Systems Agency (DISA) Global Systems Management contracts.

Previously, Lockheed had received a three-year contract in June this year, worth $4.6 billion to help in managing the changes to the Defense Department's global data network. The three-year contract included 2 two-year options. However, the whole pact falls under a seven-year global systems management operations contract.

Per the current contract, the company will supervise that GSM-O responsibilities are being transitioned easily and smoothly with its teammates that include AT&T, ACS, Serco, BAE Systems, ManTech, and other specialized and small businesses. Moreover, Lockheed Martin will be responsible for evolving the Global Systems Management Operations network in such a manner that it will help in supporting new communications capabilities and technologies, which in turn, will directly enhance the capability of war fighters' ability to achieve their goals.

GSM-O is headquartered at Fort Meade, Maryland, with several support locations globally. These operations provide programmatic, operations, and engineering services; material; equipment; and facilities to support the lifecycle management of the network.

Also, in August this year, Lockheed Martin was 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.

Based in Bethesda, Maryland, Lockheed Martin is a global security and aerospace company that is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services.

The company is expected to release its third-quarter 2012 results on October 24, 2012. The Zacks Consensus Estimates for third-quarter 2012 and fiscal 2012 are currently pegged at $1.85 per share and $8.10 per share, respectively.

We are bullish on Lockheed’s incremental dividend payout, a stable order backlog, and leveraged presence in the Army, Air Force, Navy and IT programs. Also, going forward, we expect shareholder return to continue to be shored up by the company’s focus on debt repayment. The company presently retains a short-term Zacks #2 Rank (Buy) that corresponds with our long-term Outperform recommendation on the stock.

The company mainly competes with General Dynamics Corporation (GD - Free Report) and Northrop Grumman Corporation (NOC - Free Report) .

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