Cyber Rule Could Quell the Urge to Merge for Government Contractors

SIGNAL | March 10, 2017

A revised NIST guideline raises the risk profile of M&A deals and presents challenges.

Do you work for a cyber company with federal government contracts? If so, hold onto your hat, because $210 billion in government information technology contracts will expire this year and be re-competed.

Federal IT security spending will continue to grow between 2016 and 2021, despite a relatively flat IT market, according to research firm Deltek. The bottom line: More money will be spread out over fewer contracts. This contract streamlining could mean big changes for the industry. “Consolidating contracting into fewer contracts will heighten competition,” reads a portion of the Deltek report. It also could trigger a wave of mergers and acquisitions as competitors expand their in-house capabilities.