British defense giant BAE Systems announced two partnerships Tuesday, largely aimed at diversifying the company’s American business as military spending slows.
The company will team up with fellow European aerospace firm Airbus to launch a line of radar satellites used for mapping and remote sensing
BAE also said it would work with New York-based Infor, a commercial software firm, to market IT products to both federal agencies and commercial customers.
For BAE, these partnerships are an opportunity to develop products that have broader applications beyond the federal market, the company said.
Defense contractors are expecting a rough year in the face of declining budgets. Contractors have increasingly focused on moving business overseas or expanding into commercial operations. The information services sector, which provides software support, maintenance and other services to government agencies, has been hit especially hard. The sector lost more than 11,000 positions in the past year, although there have been signs of improvement.
As much as the partnerships help BAE, the deals also allow the contractor to use its existing relationships with the government to help Airbus and Infor drum up more federal business.
“Our goal is to take those areas where we have a leadership position, partner with [other leaders] like Airbus and build something that’s better than the aggregate of both of us,” said Peder Jungck, vice president and chief technology officer of BAE’s intelligence and security division.
In addition, the government increasingly wants to lower the risks of technology work by using tried-and-tested gear and software, said Jungck, which is another reason behind BAE’s tie-ups.
“They’re saying, ‘show me you can already perform the work in question,’ so we’re allowing them to see the product before they have to contract it,” he said.
For example, BAE will upgrade some of its own operations in the United Kingdom using Infor’s software products. The company has also invested in a tech lab in Reston in which BAE analysts will learn how to install and maintain Infor software before providing it to the government.
Earlier this month, BAE Systems said it was closing its support solutions sector to cut costs. It is distributing the work among the company’s other three sectors.
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