Lockheed Martin has signed an 18 million contract extension with the Ministry of Defence (MoD) just days after threatening to spin off its government IT services division.
The extended deal means the defence contractor will continue to deliver its Joint Asset Management and Engineering Solution (JAMES), a system that keeps track of military equipment and assets, for another six years, since signing an initial 20 million contract in 2004.
It comes in the same week that the company revealed it plans to review the future of its government IT services arm, expecting to either spin the division off to shareholders or sell it to another firm.
Lockheed's public sector arm is judged to be underperforming, with net sales falling nine per cent year-on-year to 2.4 billion and profitability plummeting from 189 million to 102 million.
TechMarketView analyst and research director Georgina O'Toole said: "It appears that IT services is a very different proposition to defence manufacturing & services (and we suspect Lockheed has found SIAM is a very different game to a managing a large defence programme)."
However, the firm's latest deal with the MoD underlines its ongoing healthy relationship with the UK government as a defence contractor.
The JAMES system now handles more than 10 million transactions per month, carried out by 27,000 users, and the MoD relies on it to quickly track equipment status and location across the British Army, Royal Navy and Royal Air Force.
The tool can even track how many miles a vehicle has driven or how many shots a weapon has fired, according to Lockheed Martin.
Andrew Mickleburgh, deputy head of the MoD's support chain information services transformation projects, said: "[JAMES] is seen as a force multiplier by the front line command user community, and there is no doubt that the planning and decision support capability JAMES provides will show ever-increasing utility in the years ahead."
O'Toole added that JAMES will be an important proof point for Lockheed Martin as it looks to net more business with the MoD, which is increasing budgets for logistics support.
"Lockheed will be in a good position to benefit as the MoD seeks to undertake significant upgrades to its logistics information systems," she said.
"The MoD predicts that the share of Contractor Logistics Support (CLS) within defence acquisition will grow from 20 per cent to 65 per cent by 2017."
