Sequestration. Shutdowns. Budgetary gridlock. This is hardly the golden era of government contracting.
Plenty of companies have reported a steady decline in revenues as the federal government pares spending, and there undoubtedly will be more cuts to come, whether or not Congress allows another round of funding to be sequestered.
But there’s a reason why so many businesses still feed at the government trough. Contracting has its advantages — if you are lucky enough to win the work. Just listen to Matthew J. Desch, the chief executive of Iridium Communications, the Tysons Corner-based satellite phone company.
Somehow amid all the fiscal fights at the federal level, Iridium managed to secure a $400 million, multi-year, fixed-price contract with the Defense Information Systems Agency to provide satellite services to the Defense Department and its federal partners. A second separate deal to support a satellite station in Hawaii could bring $38 million more over five years.
You could practically hear the sigh of relief in Desch’s voice as he briefed Wall Street analysts recently on the company’s financial performance.
“These landmark agreements, worth $438 million in total, will provide us with growing and predictable cash flow from our single biggest customer for the next five years,” Desch said.
And none to soon. Iridium finds itself in a transition. Growth in its commercial business has been slowing of late, and the company is sinking big dollars into plans to launch a next-generation constellation of satellites to fuel services for years to come.
“Our new deal with the U.S. government successfully answers one of the biggest questions we’ve had around our story all year,” Desch said, adding that the federal government accounted for 20 percent of Iridium’s revenue in 2012.
That’s the kind of breathing room our new boss, Amazon.com founder Jeff Bezos, likes to calls “runway.”
Federal dollars can be a launchpad to future success, or at least smooth the way for a soft landing.