General Dynamics Information Technology, a business unit of General Dynamics Corporation (GD), has received a task order worth $14.3 million from TRICARE Management Activity (“TMA”).
Per the TRICARE Evaluation, Analysis and Management Support (“TEAMS”) contract, the company will provide program management services to the Defense and Veterans Brain Injury Center (“DVBIC”).
DVBIC is the primary traumatic brain injury component of the Defense Centers of Excellence for Psychological Health and Traumatic Brain Injury. Besides treating service members and veterans with all levels of traumatic brain injury, the center conducts an extensive research program and provides education about brain injuries to families, the public and clinical providers.
The services under the contract include program administration, conference planning, strategic communications and accounting support. The company will also coordinate information systems and technology services, including phone lines and computer access for DVBIC headquarters in Washington, D.C., and its Johnstown, Pennsylvania, and Charlottesville, Virginia, sites.
General Dynamics was originally awarded the TEAMS indefinite delivery, indefinite quantity contract in July 2008. Through the TEAMS contract, the company provides critical management support to the Defense Health Information Management System's Electronic Health Record (“EHR") program, which is an enterprise-wide medical clinical information system that generates, maintains, stores and provides secure online access to comprehensive patient records. Moreover, the company also provides program and functional management services to the Defense Blood Standard System program office, which ensures the distribution of safe and effective blood products.
General Dynamics continues to benefit from strong congressional support for its programs in the 2011–12 defense budgets. Diversification of revenue through exposure to a number of uncorrelated markets will keep the overall growth momentum steady. Looking forward, key drivers include the reviving fortunes for the business jet market, its stable business of U.S. military vehicles, an ongoing share repurchase program and strong cash flow generation.
However, the company is largely tied to the U.S. defense budget, where the threat of budget cuts is looming high. Also, we have turned slightly cautious about the company’s steadily-dropping order backlog, as well as the recent G650 crash and risks related to the execution of key projects. The company presently retains a short-term Zacks #2 Rank (Buy). We have a long-term Neutral recommendation on the stock.
Headquartered in Falls Church, Virginia, General Dynamics engages in mission-critical information systems and technologies; land and expeditionary combat vehicles, armaments and munitions; shipbuilding and marine systems; and business aviation. Some of its main competitors include Lockheed Martin Corporation (LMT) and Textron Inc. (TXT).
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