Editor’s note: Per a Huntington Ingalls Industries Investor Conference Call, it appears Alion may “absorb” the Technical Services Division (TSD) going forward. Note that post M&A integration efforts are often very dynamic so this is always subject to change.
We last analyzed Huntington Ingalls Industries (HII) in a June 2021 blog, examining their organization, M&A activity, and noteworthy federal contracts. Since then, HII announced the acquisition of Alion Science and Technology (Alion) for nearly $1.7 billion from the private equity firm Veritas Capital. For such a large acquisition, what will Alion bring to Huntington Ingalls?
Alion was founded out of the Illinois Institute of Technology (IIT)’s Research Foundation of Armour Institute of Technology in 1936 with the goal of testing and developing new technologies. Today, it offers services in advanced engineering and research and development in areas such as ISR, military training and simulation, cyber, data analytics and other next-generation technology-based solutions.
Its top customers are defense agencies, to include the Navy, Air Force, Army, and Defense Threat Reduction Agency (DTRA). The company consists of approximately 3,500 employees, 80% of whom hold a security clearance.
Alion’s main M&A activity consists of its 2018 acquisition of MacAulay Brown (MacB) and its 2019 divestiture of its Naval Systems business unit to Serco.
Alion’s Impact on Huntington Ingalls
According to Huntington Ingalls, Alion will be integrated into its Technical Solutions division, likely under its Defense and Federal Solutions Group, led by Garry Schwartz.
The acquisition adds to a string of M&A activity that Technical Solutions has conducted since 2017. Their latest acquisitions of Fulcrum IT Services and G2, Inc as well as Systems Inc.’s autonomy business and Hydroid Inc. have demonstrated an increased investment in cybersecurity and unmanned systems capabilities, respectively. In conjunction with Fulcrum IT and G2, the Alion acquisition demonstrates a further investment in cybersecurity expertise. It also indicates a clear interest in growing HII’s services business within the Department of Defense and evolving the company beyond its roots and reputation as a shipbuilder.
The Alion acquisition better positions HII to offer more technology-based solutions that align with the future needs of defense customers. Through Alion, and legacy MacB, HII gains robust research and development (R&D) capabilities and a suite of labs and facilities that are based throughout the United States. Some Alion labs, which offer designing, prototyping, and testing capabilities, include their NY-based Sensor Development and Integration Laboratory, Ohio-based Wright Innovation Lab, and Wisconsin-based Rapid Engineering Solutions Center. HII will likely utilize these capabilities to develop advanced innovative technology centered on areas such as artificial intelligence, analytics, and C5ISR.
Sample of contracts gained through acquisition of Alion
Alion will help HII double down on its footprint in the Department of Defense. It will also expand the company’s footprint in the Air Force and enable HII to gain a substantial presence in DTRA. Some key Alion contracts include:
- U.S. Department of Defense, Joint Capability Embedded Technology Insertion and Integration (JCETII) Task Order — In 2018, Alion was awarded a five-year, $769 million ceiling value OASIS task order to support the Joint Capability Embedded Technology Insertion and Integration (JCETII) program. The program intends to expand upon current Intelligence, Surveillance and Reconnaissance (ISR), and cyber capabilities to supply the Department of Defense and Special Operations Forces with leading capabilities, and technologies for observation, visualization, and collaboration. Alion provides operational support, integration of developed capabilities, and research in the areas of remote sensing, communications, cyber operations, and security.
- U.S. Department of Defense, Defense Technical Information Center (DTIC), Cyber Security and Information Systems Technical Area Tasks Multiple Award Contract (CS TAT MAC) — In 2015, Alion was awarded a spot on a $5 billion ceiling value IDIQ to perform technical analysis, research, development and testing and evaluation efforts in the areas of: software analysis, information assurance, knowledge management and information sharing, as well as modeling and simulation (M&S). The company has been awarded ten task orders, providing services to the Air Force, Navy, Marine Corps, and NGA.
- U.S. Department of Defense, Defense Threat Reduction Agency, Force-on-Force Evaluation and Analysis of Key Performance Parameters (FREAK) Task Order — In 2018, Alion was awarded a five-year, $16 million ceiling value task order to develop modeling and simulation capabilities for challenging Chemical, Biological, Radiological, Nuclear and high-yield Explosives (CBRNE) scenarios. Alion developed the FREAK environment, which acts as a force-on-force, live-virtual-constructive simulation tool for counter WMD research and development.
The FedSavvy Strategies Takeaway
- Alion will provide Huntington Ingalls with an increased presence in the Defense Threat Reduction Agency and the Air Force, contributing to its already robust business in the DoD.
- The acquisition is part of a trend in Huntington Ingalls investments that intend to grow its services business within the Department of Defense.
- The acquisition signals a strong investment in research and development capabilities—made possible through Alion expertise and nationwide labs—that will enable HII to develop advanced technologies for defense customers in key areas, such as C5ISR and artificial intelligence.
- The addition of Alion helps to further diversify a largely Navy centric business to compete in a variety of technically differentiated markets.
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