DynCorp restructures into three business units

May 5, 2013

Falls Church-based DynCorp International is consolidating its business units and starting a new group in an effort to expand into more international work.

The shift is only the latest in the defense contracting industry, which is rapidly reshaping to adapt to a slowdown in federal spending.

That adaptation is taking different forms. Some, such as Bethesda-based Lockheed Martin, are splitting their business units , while others, such as Hanover-based cybersecurity firm KEYW, are setting up separate commercially focused units.

Waltham, Mass.-based Raytheon last month announced it would consolidate its business units, including combining its intelligence and information systems business with its technical services unit. Last week, the contractor said the resulting intelligence, information and services business will have its headquarters at the company’s Sterling office.

At DynCorp, the company is moving from five business units to three: Dyn­Aviation, which will focus in areas such as aircraft maintenance and modifications; DynLogistics, which will encompass work such as training and security; and DynGlobal, a new unit meant to move the company into more international work.

Steven F. Gaffney, DynCorp’s chairman, chief executive and president, acknowledged that many other contractors are zeroing in on international work, but said DynCorp is hoping to leverage its long-standing relationships, including more than two decades working in the United Arab Emirates and in South America.

He also drew contrasts between DynCorp’s changes and that of other contractors. Gaffney said the restructuring wasn’t about cost-cutting nor is it about getting into entirely new businesses. Instead, he said DynCorp is seeking to expand its existing expertise to countries beyond the United States.

“I believe you should really stick with what you do,” Gaffney said. “I think the companies who try to reinvent themselves completely ... are going to struggle.”

He said the new structure will save the private equity-owned DynCorp some money, which will be invested into the global unit.

Roman Schweizer, an aerospace and defense policy analyst at Guggenheim Securities, said many contractors are restructuring in an effort to cut costs.

Still, he said in some cases it makes sense to have a separate unit to pursue different markets.

“The jury’s going to be out on whether these are going to be viable alternatives,” he said. “I think there’s sort of a mixed track record historically in how these endeavors pan out.”

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