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For defense-related contracting, sequestration lands softly for now

Several events this week showed that defense contracting, while not invincible to decreased government spending, is still doing alright.

The Daily Record reported Wednesday that Lockheed Martin performed better than expected in the third quarter of 2013. Some of that may have been attributable to increased international activity and planning for the worst, but Lockheed CFO Bruce Tanner said that sequestration cuts affected the company less than expected.

As Morningstar analyst Neal Dihora candidly put it, “Most of us are in the dark about what’s happening with the sequester.”

We have yet to see the third quarter earnings for Annapolis-based Telecommunication Systems, but the mobile communications technology company landed a $58.3 million contract in August to provide satellite network support services for the U.S. Marine Corps.

TCS also won a $14 million contract with the U.S. Army on Tuesday under the Global Tactical Advanced Communication Systems Contract (GTACS), which originated in 2012. It was the first GTACS contract awarded directly to Telecommunication Systems. The contract vehicle has a ceiling of $10 billion over five years.

As reported in The Daily Record Thursday, the state has announced a program to help businesses land contracts for military construction projects, aiming to reach small and mid-size businesses that might be intimidated by the process of pursuing and winning a contract. This program began with a specific set of projects in mind — 16 contracts that the U.S. Army Corps of Engineers is expected to announce soon.

DLLR Secretary Leonard Howie said at that announcement that he would like Maryland companies to win 75 percent of federal government contracts, rather than the 34 percent they won in 2013.

While some activity, like the TeleCommunications Systems contract, was allocated prior to major budget cuts, Howie is optimistic that Maryland companies will continue to see contracting opportunities related to the national defense.

“There are certain things that we will not be able to avoid doing,” he said.