O’Keefe says government cost-consciousness isn’t all bad

February 10, 2013

The threat of sequestration has stopped companies from spending as they wait for more certainty, said Sean O’Keefe, chief executive of Herndon-based EADS North America .

But while uncertainty about automatic spending cuts slated for March 1 is dampening investment, O’Keefe said the focus on cost is also creating positive changes.

For instance, he said federal agencies and contractors are considering contract payment structures that motivate better performance and adherence to cost and schedule limits.

A fixed-price contract with incentive fees — rather than a cost-plus contract that reimburses what contractors spend — “has a much better prospect of motivating industry to think more innovatively,” O’Keefe told attendees of a Northern Virginia Technology Council breakfast in Tysons Corner last week.

Still, he said EADS North America’s European parent company is holding onto more than $17 billion in its cash reserve, concerned about what’s ahead.

“To the extent that we can find some resolution ... and present some level of stability ... you’re going to find an enormous change,” he said, adding that the spending companies would do would act as a kind of economic stimulus.

Lockheed IT unit offering voluntary layoffs

Lockheed Martin ’s Gaithersburg-based information systems unit is offering a voluntary layoff program for a “select group” of mid-level managers.

In a memo issued by Lockheed and obtained by Dice, a technology job board, Patricia L. Lewis, vice president for human resources in Lockheed’s information systems and global solutions business, said certain employees within sectors including the transportation solutions and defense businesses are eligible.

According to the memo, employees can nominate themselves until Feb. 28. They will learn March 8 whether they’ve been accepted, and the separation date is March 22.

Lockheed spokeswoman Nettie Johnson said the company expects to reduce its workforce by about 300 to 350 employees.

SAIC holding off on divestitures

Following the sale of its operational test and evaluation business, McLean-based Science Applications International Corp. is not planning any other immediate divestitures, officials said last week.

Speaking at an investors’ conference in New York, John Jumper, SAIC’s chief executive, said the contractor’s effort to split into two companies “exposes a lot of the pieces of the business to further examination.”

Still, he said, it’s likely not the right time to sell off other parts of SAIC. “Part of the deliberative process is to try to control the number of moving parts,” he said.

GAO denies ValidaTek protest

The Government Accountability Office last week denied a protest filed by Arlington-based ValidaTek against a General Services Administration task order for information technology support services.

ValidaTek proposed a price of $40.65 million, significantly higher than winning bidder Herndon-based Zolon Tech’s $14.72 million bid. ValidaTek argued that Zolon’s price was unrealistic.

The GAO denied the argument, finding that ValidaTek did not furnish “any basis for questioning the agency’s determination.”

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