Colorado Springs-based defense contractor Vectrus Inc. won a major role Friday in an $82 billion logistics contract that is a key part of its long-term strategy.
Vectrus, Kellogg Brown & Root Services Inc., Fluor Intercontinental Inc. and PAE-Parsons Global Logistics Services LLC all were awarded orders to support and provide logistics services to regional commands worldwide for the next 10 years under the Logistics Civil Augmentation Program (LOGCAP) 5 contract. “Work location and funding will be determined with each order,” a Department of Defense news release said.
Fluor and Kellogg Brown & Root had held the previous contract with DynCorp International Inc.; Vectrus and PAE-Parsons are new to LOGCAP. Under the program, contractors provide services such as food, shelter, water, laundry, medical and emergency, construction, maintenance and recreation to U.S. and allied troops in contingency operations worldwide.
Vectrus officials weren’t available Friday for comment.
The company’s largest contract, the Kuwait-Base Operations and Security Support Services (K-BOSSS) contract, will be folded into LOGCAP 5 contract. The K-BOSSS contract generated more than 40 percent of the nearly $1.3 billion in revenue Vectrus reported last year. The Army extended that contract last month for another year for $548 million, and it has an option for a six-month extension through Sept. 28, 2020.
Keeping the Middle East work was key to the company’s five-year goal of doubling revenue to $2.5 billion and doubling its profit margin to 7 percent by combining its strengths in logistics and information technology.
The contract caps a major turnaround for Vectrus, which lost the K-BOSSS contract in 2016 to another bidder. The company successfully protested that award, and the Army instead decided to combine that work with the larger LOGCAP contact. The Army has extended the K-BOSSS contract several times amid delays in bidding on the LOGCAP contract, which was to be awarded in mid-2018.
The initial loss of the K-BOSSS and another major contract prompted Vectrus to replace its CEO and lay off 64 employees from its Colorado Springs headquarters staff. Since then, Vectrus restructured its operations to better compete for military contracts and last year the company landed $350 million in new work that will generate revenue in some cases through 2027, and boosted 2018 revenue 14.8 percent to $1.28 billion.
Investors were expecting good news — the company’s stock is trading at the highest levels in nearly six months of nearly $30 a share, up more than 50 percent from late last year but still well short of its all-time high of nearly $40 a share in March 2018.
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