General Dynamics Corporation’s (GD) business unit General Dynamics Information Technology has received a five-year contract worth $22 million to provide supply chain management services to Bureau of Diplomatic Security, which is the security and law enforcement arm of the United States Department of State. If all the options are exercised, the potential value of the contract is $2.2 billion.
Supply chain management service engages in the design, planning, execution, control, and monitoring of supply chain activities with the goal of creating net value, building a competitive infrastructure, leveraging worldwide logistics, and synchronizing supply with demand.
Per the contract, the company will deliver a full-spectrum global supply chain management solution. This includes providing the technology infrastructure required to integrate and manage the synchronized flow of security equipment and related information to more than 430 facilities worldwide. This task will ensure that up-to-date and accurate information about equipment status, lead-time and shipment-tracking information is being provided to the State Department, its embassies and annexes.
General Dynamics Information Technology is a part of Information Systems and Technology, a subsidiary of General Dynamics Corporation. General Dynamics Information Technology delivers innovative, agile and comprehensive logistics solutions that ensure that requirements from customers to carry out their missions are fulfilled.
General Dynamics has expertise in implementing new logistics systems or modernizing and maintaining existing systems that help in addressing critical supply chain challenges. Moreover, its diversified revenue structure in a number of uncorrelated markets keeps the overall growth momentum steady.
However, the company is largely tied to the U.S. defense budget, where the threat of budget cuts is high. Also, we have turned slightly cautious about the company’s steadily dropping order backlog, and risks related to the execution of key projects. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
Based in Falls Church, Virginia, General Dynamics Corporation engages in mission-critical information systems and technologies; land and expeditionary combat vehicles, armaments and munitions; shipbuilding and marine systems; and business aviation. General Dynamics along with its peer Northrop Grumman Corporation (NOC) is expected to release second quarter earnings on July 25, 2012. The Zacks Consensus Estimates for General Dynamics for second quarter 2012 and fiscal 2012 are $1.75 and $7.17, respectively.
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